Electric car price war is coming, says Ford CEO

Ford CEO Jim Farley believes the electric car market will soon enter a price war with the next $25,000 models. He added that the electric vehicles will be sold 100% online and will have a non-negotiable price.

Thanks to production constraints and high demand, nothing looks like a price war when it comes to electric cars right now. On the contrary, low inventory and high demand are causing dealerships to charge high premiums for electric vehicles – but a major industry player thinks that’s about to change.

At Bernstein’s Strategic Decisions Conference on Wednesday (via ABC), Ford CEO Jim Farley said he expects the cost of building electric vehicles to come down in the coming years — enough. low to sell EVs in the roughly $25,000 range.

He thinks this will lead to a “huge price war” in the industry:

So I think our industry is definitely heading for a huge price war.

He noted that the Mustang Mach-E starts at around $45,000, but the battery alone costs Ford $18,000. That doesn’t leave much room for lower prices.

Farley thinks significant cost improvements are coming for batteries, and Ford is developing its next-generation EV platform that he says will lead to significant reductions in manufacturing costs.

Half the fasteners, half the workstations, half the welds, 20% less fasteners. We designed it, because it’s such a simple product, to radically change manufacturability.

In order to be prepared to be more price competitive during this potential “price war”, Farley said Ford was also prepared to reduce distribution and advertising costs.

Farley did not share any specific plans on a $25,000 electric vehicle model, but there are already a few plans in the industry.

VW has its ID.Life concept, which the German automaker says is a preview of its next around $24,000 electric car. Tesla has also talked about launching a $25,000 electric car, but CEO Elon Musk recently said he’s put work on the model on hold as the company focuses on ramping up production of its existing vehicles.

Electrek’s Grasp

It’s an interesting take. I think this year could be one of the few – if not the only – year that EV battery costs are increasing due to a bunch of different factors. So when it comes to seeing EV prices come down, I think we might have to wait a bit.

I think Farley’s point is still correct, but it will probably be closer to 2024-25. I think EV demand will still far exceed EV production at this point, but there will be many more options, which should create better competition, including on price.

What do you think? Let us know in the comment section below.

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