By making a battery-powered version of America’s No.-1 selling vehicle, the F-Series pickup, plus mass-market models like the Ford Transit commercial van, and the Ford Mustang sports car, Ford Motor Co. brings to bear a crushing, not-so-secret weapon — volume — which newcomers like electric-vehicle manufacturer Tesla and other startups can’t match.
“Pricing power,” is a key part of the plan for achieving profitability for Ford’s big-volume, battery-powered electric vehicles, said Lisa Drake, Ford COO, North America, and vice president, Global Purchasing, in a recent presentation for Wall Street analysts, investors and media.
“Let’s start with Ford’s pricing power. Launching our BEVs with our most iconic brands allows us to take their strengths and desirability to a whole new level,” Drake said. Ford said in the presentation it expects 40% of its new-vehicle volume to be BEVs by 2030, up from low-single digits today.
Building or buying parts by the million is a huge price-per-unit advantage over building or buying parts by the thousand, or even hundreds of thousands, Drake said. Part of Ford’s advantage is that its electric vehicles will share a lot of components with conventionally powered versions of the same model.
“When we source our next-generation models with supplier contracts with nearly 4 million units of volume for an F-Series life cycle for everything from tires to display screens, we know we are getting the best from our suppliers on cost, quality, and first-mover technology,” she said.
“Contrast that with the startup BEV maker, looking to buy 120,000 display screens over the life cycle of their truck. The buying power and scale advantage Ford has and the value of non-EV parts of a pickup truck, nearly 50% of the trucks’ material cost, is sizable,” Drake said.
“The same holds true for how we look at the cost advantage of electrifying our E-Transit, leaning into the scale of the world’s best-selling cargo van,” she said.
Ford also intends to generate volume-related cost advantages on the parts of its battery-powered electric vehicles that are exclusive to BEVs, such as the batteries themselves, which Ford intends to manufacture in-house. Drake said, “We are absolutely committed to designing, engineering and manufacturing our own batteries.”