It’s time for the US to “fall back in love” with smaller cars, according to Ford’s chief executive.
In a wide-ranging interview at the Aspen Festival of Ideas, Jim Farley said the auto industry should focus on smaller electric cars and commercial vehicles. He acknowledged that American consumers are “in love with these monster vehicles” but said they need to “fall back in love” with small cars.
“We need to start falling back in love with smaller vehicles. It’s very important for our society and for EV adoption,” said Farley. “We’re just in love with these monster vehicles, and I love them too, but it’s a major weight issue.”
The average weight of a new vehicle sold in the US last year was 4,329 lbs (2,000 kg) – an increase of 1,000 lbs (450 kg) from 1980.
Ford expects to introduce a $30,000 all-electric vehicle that will be profitable in roughly two and a half years, breaking a price barrier that has made EV adoption a luxury out of reach for all but the wealthiest customers. automotive industry.
Farley told the festival last week that the company’s new EV would be a competitor to China’s BYD, which the Biden administration is seeking to effectively ban from the US market by quadrupling import tariffs. It will also rival a new entry-level electric car from US automaker Tesla, due next year.
Farley said Ford would focus on those — not larger all-electric trucks and SUVs. Those larger vehicles, using internal combustion engines, have traditionally driven profits for American automakers, especially Ford.
“You have to make a radical change as one [automaker] to arrive at a profitable EV. The first thing we need to do is put all our capital toward smaller, more affordable EVs,” Farley said during an interview with CNBC’s Julia Boorstin.
“That’s the duty cycle we’ve found now that really matches. These giant, bulky EVs will never make money: the battery costs $50,000, even with low-nickel, LFP chemistry. They will never be affordable.”
A Ford spokesman clarified that he was referring to the company’s Super Duty models, which require massive battery packs to achieve 500-mile ranges and are said to be heavier than a Honda Civic.
But he said the stakes are high for Ford and other automakers over the next five years as they look to compete with Chinese electric vehicle makers. Farley said it was essential that Ford, which lost $132,000 on every EV sold in the first three months of the year, make EVs profitable in the next five years.
“If we can’t make money in EVs, we have competitors who have the largest market in the world, who already dominate globally, already creating their own supply chain around the world,” Farley said. “And if we don’t make EVs profitable in the next five years, what’s next? We’re just going to scale back in North America.”
Last month, the Biden administration announced it would impose a 100% tariff on electric vehicles made in China, which can retail for up to $10,000 — far less than the $53,000 average in the US. The move was interpreted as a political gesture to protect jobs in the US auto industry in the critical swing states of Pennsylvania and Michigan.
“For too long, China’s government has used unfair, non-market practices,” the administration said, adding that the action against Chinese electric cars was designed to ensure that “the future of the auto industry will be made in America.” by American workers”.
But the Atlantic Council warned that Biden’s electric vehicle tariff strategy is “unlikely to change Chinese behavior” unless it is shared by G7 allies.
“The US can impose high tariffs on EVs because China only represents 1-2% of US EV imports. In contrast, electric vehicles from China already account for over 20% of EV imports into Europe, making tariffs more likely to increase costs for consumers.