Ford CEO Jim Farley: A profitable $30,000 EV is on the horizon

During the Aspen Ideas Festival on Friday, Ford CEO Jim Farley said the automaker aims to launch a $30,000 EV. Ford aims for the EV to be profitable in about two and a half years, CNBC reports.

Zoom out: Earlier this year, Ford delayed the start of making a big three-row SUV to 2027. They also delayed a next-generation pickup, codenamed “T3,” to 2026 to focus on smaller EVs first, instead of the larger trucks and SUVs that have historically been big profit boosters.

The problem is the bigger the vehicle, the more expensive they are to make. 

Key quote: “That’s the duty cycle that we’ve now found that really matches. These big, huge, enormous EVs, they’re never going to make money. The battery is $50,000. … The batteries will never be affordable,” Farley said during an interview with CNBC’s Julia Boorstin, referring to vehicles like Super Duty models or vehicles that need massive battery packs to achieve 500 miles of range. 

By the numbers: Ford has been struggling to mitigate EV-related costs and provide affordable options for middle-class buyers. 

• In the first quarter, their EV unit lost $1.32 billion on 10,000 vehicles, translating to a $132,000 loss per vehicle sold.

• Ford anticipates their EV business arm, Model e, will incur $5 billion in losses this year.

Between the lines: The losses include substantial investments in research and development (R&D) for its next generation of EVs. The company's objective is to set EV prices that cover the actual building costs within the next year, instead of including the R&D expenses.

The big picture: Farley didn’t give many details about the new $30,000 EV, which is being developed by a special team at Ford. He mentioned that its main competitors will likely be Chinese automakers like BYD and possibly an entry-level Tesla, which is currently on hold as far as we know.

In a recent open letter on LinkedIn, Farley wrote:

“We are in a global race to compete in a future where electric propulsion will undoubtedly be a giant force in transportation. America cannot cede innovation leadership to China, Europe, or any other region.”

This is good news for car buyers and dealers, as lower price points mean lower barriers to entry and less of a chance for excess inventory. Analysts and researchers have been saying for years that more affordable EV options have to be made available in order for widespread adoption to take root. 

What we’re watching: The targeted demographic for these less expensive vehicles is lower-income buyers who might not have the means to install or access reliable charging (think shared housing communities). Are lower-priced EV options really going to spur adoption for these folks?

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