- Despite an industry slowdown, Ford CEO Jim Farley says the company is still laser-focused on building EVs.
- Farley believes that affordability is what makes used EVs so popular right now.
- The real challenge is getting close to China's cost without sacrificing quality and features, he says.
The auto industry is having a bit of an existential wobble when it comes to EVs. Automakers across the globe have written down their investments into electrification—and that's no surprise given slipping sales, the loss of the federal tax credit in the U.S., and a regulatory rollback here. It also puts pretty much every brand west of China at a potential disadvantage in the long run, as car companies delay their plans to go fully electric.
Ford has been watching from the shadows and isn't focusing on the pullback. Instead, CEO Jim Farley is convinced that the solution to a successful EV adoption is getting as close to dead-even as possible with China's offerings.
Farley is doubling-down on that idea recently. In a recent interview with the Rapid Response podcast, the CEO began linking together the correlation between higher gas prices and truly affordable EVs: used ones.
"[W]hat’s selling in EVs is more important, which is that the truly affordable EVs are more popular. Used EVs are super popular right now. So the market has changed," said Farley. "I like to look at the used market even more than the new market to understand what consumers’ mindset is, and they’re more interested in hybrids."
Ford's lesson on what EVs sell in the U.S. has been an expensive one. Recently, it discontinued the Ford F-150 Lightning in favor of the F-series hybrid, with a planned "EREV" Lightning on the way to replace it. Ford continues to sell battery-electric versions of the Mustang Mach-E and E-Transit, but its so-called "high-end" EVs (aka: the Lightning and planned next-gen Transit) are no more.
That strategy is something that Farley believes will feed into the future of what consumers really want. He later continued:
"We got out of our high-end EVs, but what we decided to do is double down on our affordable ones. And that is what’s selling today around the world, not just in the U.S. You look at Australia, you look at China, you look at Europe. All those markets are moving to a pure EV being more of a commuter-type, low-cost vehicle. That’s really where the market has already gone."
To Farley's point, consumers are absolutely gobbling up cheap EVs. Looking at China, you'll see that its "cheap" threshold is around 100,000 CNY—that's about $14,500 USD at the time of writing. Even BYD has some uber-affordable models like the Seagull that start around $8,000. Here in the U.S., $14,500 doesn't even get you the average used EV.
The real competition isn't just other EVs as a whole. The domestic automaker's dream of high-margin battery-electric cars (the "value over volume" approach) boosting the scaling of EV programs isn't panning out as they hoped, especially without the EV tax credit convincing buyers to make the switch.
Now, global automakers must face the increasing number of low-cost options at their doorstep. Ford knows that if Chinese brands can deliver affordable EVs with decent range and without cutting out basic features like power windows or the FM radio, eventually consumers will start asking a simple questions to legacy brands: "Why can't you?"
A quest to more affordable cars is noble, but it's still fraught with challenges that Ford will need to overcome.
So while the industry retreats from EVs and Ford retreats from high-end models, the company is still continuing along the path to electrification. It's just going to start with the cheap stuff.
