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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BYD’s new EV is about the size of a Tesla Model 3, but half the cost in China. After launching the e7, BYD is already boasting that it will be the “winner’s choice” for midsize EV sedans. Here’s our first look at the new low-cost electric sedan.
Will the new BYD e7 EV rival the Tesla Model 3 in China?
After previewing the e7 for the first time a little over a month ago, BYD officially launched the midsize electric sedan on Saturday.
The new e7 is available in three “Smart” trims, starting at 103,800 yuan, or about $14,500. For a limited time, BYD is offering a renewal price of 99,800 yuan ($13,900).
Buyers can choose from two BYD Blade battery options: 48 or 57.8 kWh, providing CLTC driving ranges of 450 and 520 km, respectively.
BYD’s new midsize EV sedan is about the size of a Tesla Model 3: 4,780 mm long, 1,900 mm wide, 1,515 mm tall, and 2,820 mm wheelbase.
Although it looks similar to other BYD models, the e7 has a few unique design elements, including a “Smiling and high-spirited” front face design, full-score LED headlights, and a duck tail.
We knew it would be a lower-priced EV after the preview showed the e7 with traditional door handles, rather than the flush ones found on newer models.
Like BYD’s other new vehicles, the interior is relatively simple with a 15.6″ central infotainment at the center and a 5″ driver display cluster. It’s also loaded with the advanced version of BYD’s smart cockpit and DiLink100.
The “ingeniously crafted comfortable cockpit,” as BYD calls it, is available with ergonomic cloud-sensing seats, an integrated hand gear, and a panoramic sunroof.
Although the e7 is part of BYD’s e-series, a lower-priced lineup aimed at younger drivers or taxi services, it’s now being absorbed into its Ocean series with other popular EVs like the Dolphin and Seagull.
BYD’s new EV is over half the cost of a base Tesla Model 3 RWD model in China, which starts at 235,500 yuan ($32,700). But, to be fair, the base Model 3 has a CLTC driving range of up to 634 km (394 miles). For 275,500 yuan ($38,200), the Model 3 Long Range AWD is rated with up to 713 km (443 miles) CLTC range.
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Hyundai is gaining traction where most automakers are struggling to stay afloat. Despite a flood of low-cost electric cars and an intensifying price war, Hyundai sees an opportunity “to write a new chapter” with its first dedicated EV rolling out in China.
Will Hyundai’s new EV spark a comeback in China?
Leading up to its debut, we thought it could be the IONIQ 4 with a sleek new look. The ELEXIO is Hyundai’s first custom-tailored EV for China.
During its global debut earlier this month in Shanghai, Hyundai said China is a “must-fight place,” calling it “the core of Hyundai Motor’s global strategy.” The company also revealed its “In China, for China, to the World” strategy as it looks to make a comeback in the world’s largest EV market.
According to Hyundai, the company is already seeing early success. On Monday, Hyundai’s joint venture in China, Beijing Hyundai, announced that its losses improved by over 100 billion won ($72 million) in the first quarter.
The company posted a net loss of 42.3 billion won in the first three months of 2025, down from the massive 146 billion won ($105 million) in Q1 2024. At this pace, Hyundai could see a profit by the second quarter in China.
Hyundai said lower operating costs spurred the cost improvements after the company sold its Chongqing plant last year.
It’s also due to rising exports. Beijing Hyundai exported 14,999 vehicles in Q1, up significantly from just 608 a year ago. Hyundai’s Chinese JV is investing 8 billion yuan ( $1.1 billion) as it looks to revamp the business.
Although it’s already seeing some success, Hyundai’s new ELEXIO electric SUV is expected to accelerate its momentum. With the EV launching in the second half of 2025, Hyundai could turn a profit by the end of the year. It may even happen as early as the second quarter.
Hyundai claims the new EV opens “a new starting point for the transformation from traditional fuel vehicle giant to electrification” in China.
The ELEXIO electric SUV, dubbed the Chinese version of its popular IONIQ 5, rocks a new look with crystal cube LED headlights and a full-length light bar that stretches across the front.
Based on Hyundai’s E-GMP platform, which powers the IONIQ 5, the ELEXIO is rated with up to 435 miles (700 km) CLTC driving range. More details, including prices and trim options, will be revealed closer to launch. Check back soon for the latest.
What do you think of Hyundai’s new electric SUV? Would you buy the ELEXIO in Europe, the US, or other global markets? Let us know in the comments.
Source: Newsis, Beijing Hyundai
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Tesla announced it paid Powerwall owners $9.9 million through its virtual power plant programs in 2024.
Distributed energy is working.
A virtual power plant (VPP) consists of distributed energy storage systems, like Tesla Powerwalls, used in concert to provide grid services and avoid the use of polluting and expensive peaker power plants.
Peaker plants are fossil fuel-powered power plants that are activated in peak energy usage times to ensure the grid has enough power to supply the demand and avoid brownouts.
It is a fairly new technology that aims to decentralize the grid, helping make it more secure and stable while reducing costs.
Tesla has been an early adopter of the technology through the deployment of its Powerwall, a popular home battery pack.
In areas with high penetration of the home battery, Tesla can make a deal with the local electric utility to pull power from the Powerwalls in customer homes when needed, and those homeowners get compensated at an attractive rate.
Today, Tesla announced that it paid Powerwall owners nearly $10 million through VPPs in 2024:
We paid out $9.9M to Powerwall owners who supported the grid through Virtual Power Plant participation in 2024.
Tesla’s first VPP launched in Australia in 2019. The company first aimed for 50,000 homes, but we learned that it is at about 7,000 homes and 35 MW as of the end of last year when Tesla was looking to sell the virtual power plant.
In 2021, Tesla launched a VPP pilot program in California, in which Powerwall owners would voluntarily and without compensation let the VPP pull power from their battery packs when the grid needed it.
It helped Tesla prove the usefulness of such a system.
Following the pilot program, Tesla and PG&E, the electric utility covering Northern California, launched the first official virtual power plant through the Tesla app.
This new version of the Tesla Virtual Power Plant actually compensates Powerwall owners $2 per kWh that they contribute to the grid during emergency load reduction events. Homeowners are expected to get between $10 and $60 per event.
Later, we reported that Tesla’s California VPP expanded to Southern California Edison (SCE) to now cover most of the state.
Last year, Tesla’s California VPPs reached over 100 MW in capacity, and the company also started building significant VPPs in Texas.
Some Powerwall owners are now reporting making hundreds of dollars per year per Powerwall through Tesla’s virtual power plant.
Electrek’s Take
This is awesome. I love distributed energy. VPPs not only make home energy storage more financially viable, but they also often mean that fossil fuel-powered peaker plants are being replaced by solar power and energy storage, as most Powerwalls and other home battery packs are linked to home solar power.
It’s not super popular yet because it requires the cooperation of the electric utilities and the regulators, but it appears to be viable in most places.
If you have home solar and energy storage, or looking to add solar and energy storage at home, it’s worth looking into.
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