It’s going to cost more to build Ford electric cars until at least 2030

Ford CEO Jim Farley says its electric vehicles won’t be as cost-effective to produce as internal-combustion (ICE) vehicles until 2030-2035.

During an appearance at the Bernstein Strategic Decisions Conference, Mr Farley was asked when Ford will achieve cost parity between its electric and combustion-powered vehicles.

“2030 to 2035. We are right there, right now. It’s between the second and third cycle of the EV products,” said Mr Farley.

Ford is currently finishing development of its second-generation electric vehicles, with the first set to enter production in 2025, and has already commenced work on its third-generation EVs.

“We’ve got to stop thinking of just the power train. The vehicle is dramatically, dramatically simpler,” said Mr Farley on the cost of building EVs.

“It turns out that the battery is so expensive that we have to actually redesign the whole vehicle for complexity reduction, and most of the savings is in labour and the complexity of the parts being reduced.

“I would say what we’ve learned is large mega castings, massive simplification of the design of the vehicle can eliminate a lot of that gap.”

The company announced earlier this year it expects to lose US$3 billion (A$4.49 billion) before taxes in its Model e electric vehicle business this year, up from US$2 billion last year, as it readies new production sites in Kentucky and Tennessee.

Ford’s investment in three EV and battery production plants is expected to cost the company around US$11.4 billion (A$15.7 billion) and create around 11,000 jobs.

Nevertheless, Ford has said it expects production costs versus revenue of its first-generation EVs will break even this year.

Mr Farley said there has been a lot of focus on Ford reducing prices of the Mustang Mach-E and the price war going on with EVs in China.

“We increased prices since launch by $11,000 in the case of Lightning and $6,000 in the case of E-Transit. No one writes that story, no one’s watching that story,” said Mr Farley

“Everyone keeps talking about Mach-E versus Model Y, which we had to respond to because we cross-shop against those vehicles.

“But people need to realise that the competitive landscape of EVs is just in a few segments. It’s a tiny part of the industry.”

Mr Farley says the Mustang Mach-E accounts for two-thirds of its EV production volume, with the F-150 Lightning and E-Transit following behind.

He anticipates that, overall, China and Europe will have a 50-60 per cent EV adoption rate by 2030 while other large markets like Africa, South America and the Middle East will only be able to reach “10, 15, 20 per cent max in that time frame”, and India only able to reach a 10 per cent EV market share.

Mr Farley doesn’t seem confident the US will be able to achieve a 50 per cent EV adaption rate by 2030 either, saying “it’s going to take a lot more regulatory support.”

Recently California has been pushing for tougher EV adoption regulations and looking to adopt an ICE ban by 2035.

Ford CEO said “good luck” to the state if it wants to achieve this target, with a lack of electric heavy-duty utes being his main concern.