Ford asks suppliers to cut EV costs in an all-win-or-lose push for profitability
Ford is putting “everything on the table” to keep up with Tesla and fast-rising Chinese EV makers like BYD. In a new memo, Ford asked suppliers to cut EV costs after its Model e unit continued to bleed billions in Q1.
Like many rivals, Ford introduced significant price reductions to keep up with Tesla’s price cuts. Although the move has helped boost demand, it’s also costly.
For example, after dropping Mustang Mach-E prices 17% earlier this year, volume shot up by 141%.
Ford’s Mustang Mach-E was the second best-selling electric SUV last quarter, behind Tesla’s Model Y, with 9,589 units sold. That’s up 77% over Q1 2023. The F-150 Lightning remained the top-selling electric pickup in the US, with 7,743 models sold (+80% YOY).
All Ford electric vehicles saw double-digit (or triple-digit) growth in Q1, with E-Transit sales up 148% (2,891).
However, in its first-quarter earnings last month, Ford revealed its Model e EV business lost another $1.3 billion. The loss comes after Model e posted a net loss of around $4.7 billion last year.
The automaker expects the losses to continue piling up, with Model e projected to lose another $5.5 billion this year.
Ford has already delayed several projects, including its three-row electric SUV, as it works to “substantially reduce the costs of the batteries,” according to CEO Jim Farley.
Farley believes the company can better compete with smaller, more affordable EVs. As a result, Ford is shifting funding (including around $12 billion in EV investments) to optimize profitability.
Ford is asking suppliers to cut EV costs
Ford’s CEO stressed that Model E needs to “stand on its own.” To do so, Ford has already implemented several cost-cutting measures.
Its most recent is to work with its suppliers. In a recent memo (obtained by Crain’s Detroit Business), Ford asked suppliers to help cut EV costs as it works toward profitability.
“We have all invested heavily in the success of the EV business, and we will all win or lose together,” stressed Ford’s chief supply chain officer, Liz Door. “To enable affordability, it is of paramount importance that our EV portfolio achieves further levels of material cost efficiency.”
In the note, Ford asked its suppliers to create “incremental cost-reduction proposals” for current and next-gen EVs. These include the F-150 Lightning, Mustang Mach-E, E-Transit, and P800 electric pickup and Ford’s larger electric SUV.
“We need your best ideas to drive cost reduction, even if they have been previously rejected by Ford,” Door said. With “Everything on the table,”
Ford is seeking investment ideas that support profitability. Examples of investments could include “commercial, design, content, footprint, and value chain” actions.
The actions could also involve “adjusting capacity downward where necessary, repurposing capital as needed, understanding spending curves and discussing all options,” the memo stated.
Electrek’s Take
Ford is looking for anything to slow its EV unit from bleeding billions of dollars. The company expects every new EV to make money in the first 12 months of launching. To do so, working with suppliers will be critical.
Rivian is another company that has worked with its suppliers to gain control of costs. The EV maker invited supplier partners to its Normal, IL manufacturing plant to discuss win-win opportunities to cut costs.
Meanwhile, Ford is following Toyota with plans to introduce more hybrids as a bridge to its next-gen vehicles. A move that could set it further behind in the long-run.
If you’re in the market for a new EV, Ford’s recent price cuts make the Mach-E and F-150 Lightning even more attractive. You can use our links below to view deals on Ford’s electric vehicles in your area.
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The Canadian home improvement chain picked up a pair of Volvo VNR Electric semi trucks, and it’s putting them to work on last-mile delivery routes in the Greater Toronto Area.
This month, the Canadian home improvement retailer Home Hardware began operating two Volvo electric semi trucks out of its St. Jacobs, Ontario truck depot. The pair of trucks will fulfill last-mile deliveries throughout the area, and mark the company’s first step towards transitioning its entire fleet to zero-emission vehicles.
The Volvo VNR trucks have an operating range of 442 km (about 275 miles). Their delivery routes will take them from Home-brand stores within a 100-150 km (about 90 miles) radius of the St. Jacobs distribution centre.
“We are proud to introduce our new battery-electric trucks to our privately-owned fleet,” said Kevin Macnab, president and chief executive officer, Home Hardware Stores Ltd. “Recognized by the Private Motor Truck Council as Safest Large Fleet, as well as Trucking HR Canada as a Top Fleet Employer and a Fleet of Distinction, Home Hardware Stores, Ltd. is committed to forward-thinking logistics that evolve our supply chain to best support our dealers so they can serve their communities.”
Home Hardware debuted their new Volvo VNR Electric trucks at the company’s 60th anniversary celebration and annual franchise event, the Home Hardware Homecoming, held last week in Toronto, Ontario, Canada.
Electrek’s Take
Home Hardware is the latest in a growing list of companies – and they’re already adding to the tally of tens of millions of all-electric, zero emission miles driven by Volvo customers. By the time Volvo rolls out its next-generation VNL and FH electric semis next year, it will be the company’s third generation of Class 8 EVs, and it will be backed by more than 100,000,000 miles of real-world data collected by thousands of trucks across dozens of companies.
Is that an insurmountable head start for companies like Tesla to make up? It’s hard to know (and my brain is broken, anyway), but I invite you to check out this episode of Quick Charge recorded a few weeks ago (below) talking about Volvo Truck’s lead, and then share your take on the state of the electric semi truck market in the comments.
Quick Charge
SOURCE | IMAGES: Volvo Trucks.
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The newest edition to the CAA-Quebec roadside fleet is a fully electric Lion5 flatbed – and the CAA says it’s the first 100% electrique tow truck in service in North America!
Based on the Lion5 medium-duty truck and upfit with a flat bed body developed by XpaK Industries, CAA-Quebec (think AAA, but in Quebec) is marking an important milestone in its 80-history with the deployment of the first electric tow truck in Canada.
“Roadside assistance has always been in CAA-Quebec’s DNA, and it goes without saying that we are taking the lead in electric towing. We have a responsibility to set an example and take a leadership role in protecting the environment,” said Marie-Soleil Tremblay, president and CEO.
As far as the truck itself goes, the Lion5 chassis is packed with 210 kWh of in-house, 800V battery packs. Those are good for a range of up to 310 km (a touch over 190 miles) courtesy of an energy-efficient, high-torque electric motor putting 315 hp that Lion Electric claims can eliminate between 75 and 100 metric tons of greenhouse gas per year compared to a comparable diesel truck.
What’s more, the Lion5-based tow truck promises to reduce CAA-Quebec’s energy (read: fuel) costs by about 80%, and regular maintenance costs by about 60% compared to gas or diesel vehicles in the same class.
“With this new 100% electric, made-in-Quebec tow truck, we are helping to redefine the future of the towing industry,” said Patrick Gervais, VP Trucks and Public Affairs at Lion. “We are proud to be part of a cleaner and more sustainable future with players like CAA-Quebec and XpaK.”
The Lion5 tow truck was delivered in July, and will spend a year being put through its paces in a multitude of towing situations and extreme weather conditions. CAA-Quebec’s roadside assistance service will share its experience with partners throughout Canada and the AAA in the US.
Electrek’s Take
“Electrek’s Take” is where we put our industry experience to use interpreting the news we report. Here, in an article about a “first ever” new commercial segment being entered by a highly visible EV, I probably should be talking about operating costs, “dollars and sense,” and the importance of stabilized costs for a fleet manager’s projections.
Instead, I’m just going to picture some bro-dude’s lifted 4×4 Ram pickup getting hauled out of a parking spot he’s ICE’d and giggle a bit. You try it, too, and let me know if it made you smile in the comments section.
SOURCE | IMAGES: Lion Electric, via TowCanada.
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Best known in the US as the OEM behind Nikola, Italian truck brand IVECO entered the 2.5 to 3.5 ton medium duty commercial van segment at this week’s IAA Transportation conference with this: the eMoovy electric chassis cab.
Co-developed with Hyundai and riding on a modified platform of the Korean brand’s Staria ST1 van, the IVECO eMoovy is entering a red-hot commercial EV space with a 215 hp electric motor and either a 63 kWh or 76 kWh battery good for up to 199 miles of range.
The IVECO version leverages the Hyundai’s excellent 800V architecture. That means the eMoovy supports ultra-fast 350 kW charging and V2x functionality, so it can be used to back up a job site, supply power to workers, or even power a home (presumably).
A long time coming
We’ve known than a commercialized IVECO version of the Hyundai van (which isn’t sold as an EV, that I’m aware of) has been in the works for some time. In fact, Peter Johnson wrote about the 2022 deal way back in February.
In that article, Peter wrote that, while Hyundai would develop and build the chassis, IVECO would customize the electric vans to suit broader commercial markets and distribute the vehicles throughout its network. If that sounds familiar, that’s because (on the surface, at least) the deal seems pretty similar to the one IVECO has with Nikola … which begs the question: will Nikola get an eMoovy variant to sell in the US?
The new electric van will directly target Ford E-Transit customers in Europe, so there’s no reason to believe it won’t be an attractive alternative for commercial fleets on this side of the pond, as well – especially with the “big rig” street cred that could come with the Nikola association.
Electrek’s Take
The commercial EV market is driven by dollars and cents. If EVs have a lower total cost of ownership (TCO) than their gas or diesel counterparts? They’ll continue to sell, and their market share will continue to grow. The only question Hyundai and IVECO need to answer is whether North American truck buyers be more likely to buy a Hyundai-branded van, or a Nikola one.
We asked a similar question to Kia’s James Bell on Quick Charge a few weeks back. Listen to his response to those questions, below, then share your thoughts in the comments section at the bottom of the page.
Kia’s James Bell on Electrek Quick Charge
SOURCE | IMAGES: IVECO, CarScoops.
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