Ford’s Small Car Comeback: The $30,000 EV Revolution

After abandoning small cars, is Ford realising the error of its ways?

Ford, the very company that phased out the likes of the Fiesta and Focus, is now making headlines with a bold announcement – it wants people to fall in love with small cars again. As such, there is a sub-$30,000 electric vehicle in Ford’s pipeline, set to hit the market by 2027.

Ford’s CEO, Jim Farley, dropped this bombshell during the Aspen Ideas Festival, and throws up several contradictions when it comes to Ford product strategy of late, suggesting a u-turn on its plans. Especially considering that SUVs and trucks dominate their current lineup, especially in the US.

Why the Change?

So, what’s driving this change? The automotive industry is in a state of flux, with manufacturers grappling to find the right balance between profitability and sustainability.

Farley appears to acknowledge this turmoil, stating that the industry is still figuring out its direction. He seems to have come to the conclusion that the future lies in making smaller, more affordable EVs.

Historically, American carmakers, including Ford, have struggled to make money on small cars. The profitability of larger vehicles like the F-150 Lightning has kept the focus away from compact models.

However, Farley believes that for EV adoption to truly take off, the industry needs to fall back in love with smaller cars. This sentiment echoes the frustration of many consumers who find current EV options either too expensive or impractical for everyday use.

The Economic Reality

Now, let’s talk numbers. Ford’s EV division reported a staggering $1.32 billion loss in the first quarter of 2024, equating to a loss of $132,000 per vehicle sold.

These figures highlight the immense financial challenge of producing EVs, particularly when it comes to the cost of batteries. Farley pointed out that the battery alone for a large EV could cost around $50,000, making it virtually impossible to turn a profit on these models – although by large he meant huge, referring to trucks like the Superduty F-350 range.

Despite these challenges, Ford is pushing forward. The new sub-$30,000 EV is being developed by their “Skunk Works” team and is expected to hit markets in “two and half years” which would suggest early 2027.

The Bigger Picture

Farley’s announcement isn’t just about a new car; it’s about a strategic pivot. By focusing on smaller, affordable EVs, Ford aims to stay competitive, especially against Chinese automakers who are already making waves with low-cost EVs.

Farley emphasised that if Ford doesn’t crack the code of making profitable EVs in the next five years, they risk shrinking into a North American-only market.

This strategy shift also involves delaying the production of larger vehicles like the three-row SUV and the next-generation pickup to focus resources on the smaller EV project. It’s a bold move, reflecting the urgency and high stakes in the current automotive landscape.

Consumer Impact

What does this mean for you, the consumer? For one, it could lead to more affordable EV options, making the switch to electric more accessible. Farley stressed the importance of creating vehicles that match consumers’ needs and lifestyles, particularly for those living in urban environments where smaller cars are more practical.

The next few years will be crucial as Ford navigates these changes. It’s an interesting, if desperate, time for the automotive industry, with innovation and competition driving rapid shifts.

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