During its recent Q4 and Full Year 2024 earnings call, Ford CEO Jim Farley touched on the electric vehicle side of the OEM’s business, giving a positive outlook for the sector.
Calling an EV strategy “critical for any car company,” Farley said the OEM was deep in the development of its next generation of EVs, which will be “affordable, high volume and great for our business.” The “sweet spot,” according to the Ford CEO, is small- and medium-sized trucks and utility customers.
“These vehicles use case fits perfectly for EVs, daily commuters, well suited as a second vehicle in the household,” said Farley, highlighting that EVs have not become the primary vehicle for most households. “They require smaller, much lower cost batteries. These vehicles can be offered at lower prices to help adoption of EVs for the customers who really appreciate their lower operating costs. But for larger retail electric utilities, the economics are unresolvable. These customers have very demanding use cases for an electric vehicle.”
The combination of the need for higher tow capacities, driving in off-road environments and the longer driving range requirements has not made the best retail business case for larger EVs, according to Farley, as well as the lack of proper aerodynamics and they’re gross vehicle weight, which would demand larger and more expensive batteries.
“Retail customers have shown that they will not pay any premium for these large EVs, making them a really tough business case given the expense in the batteries,” said Farley, adding, “our commercial customers do show potential for large EVs.”
Overall, the Ford Model e division, first created in 2022, reported a full-year EBIT loss of $5.1 billion. According to the earnings report, the segment ended with $1.4 billion in cost improvements, with a $100 million increase in spending due to the launch of new battery plants and next-generation EV development.
When asked about the Trump Administration and its affect on the EV market during the Q&A, Farley stressed that the OEM was confident of its EV strategy.
“Believe it or not, most things that are happening are kind of playing to our strength,” said Farley. “We believe that if the EPA or the California waiver is pulled, if there’s some change to the CO2 regime in the U.S. starting from [2027]…that [there] will still be some kind of modest CO2 improvement required. But more importantly, EVs are 8% of the U.S. industry. They’re growing. And people who buy these vehicles don’t go back to combustion for large parts. So this is a very vibrant market.”
