Ford Motor Co.

Ford’s Farley: Next-Gen EVs Will Need to Turn Profit In First Year

Feb. 7, 2024
The automaker’s CEO teased a skunkworks’ development of a flexible platform for future vehicles.

Jim Farley has set the bar: Ford Motor Co.’s second-generation of electric vehicles will need to be profitable within 12 months of being launched later this decade.

The president and CEO of Ford said Feb. 6 the company’s “ultimate competition” in the EV market will be Tesla Inc.’s planned cheaper EV as well as Chinese competitors. To measure up to those products, he said on Ford’s fourth-quarter earnings conference call, his team will push hard to lower manufacturing costs and trim capital spending where it can: Capex this year is forecast to be between $8 billion and $9.5 billion versus $8.2 billion in 2023.

Another key factor in meeting the profitability goal, Farley told analysts and investors, will be “a super-talented skunkworks team” that has been working on a platform for making lower-cost and smaller EVs that will be better able to integrate technologies for which Ford can set up subscriptions.

“We made a bet in silence two years ago,” Farley said on the conference call. “It was a […] small team, some of the best EV engineers in the world, and it was separate from the Ford mothership. It was a startup and they’ve developed a flexible platform that will not only deploy to several types of vehicles but will be a large install base for software and services that we’re now seeing at Pro.”

Ford has used isolated development teams several times throughout the past decade to launch strategic, or just-plain-cool projects. The 2017 GT supercar came out of a similar skunkworks team with many engineers sneaking into a basement design studio after hours.

Plowing a path to EV profitability is a big ask: Ford’s Model e division housing its EV operations posted a 2023 loss before interest and taxes of $4.7 billion and that figure is likely to grow a bit this year because of price cuts Ford and other companies have had to institute as consumers have become choosier. Farley and his lieutenants don’t expect to close that entire gap by the end of 2026, the year they plan to begin launching Ford’s second generation of EVs, and aren’t committing to a timeline for making all of Model e profitable.

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