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In Ford’s transition to EVs, cost-cutting takes center stage – TechCrunch


Tech

In Ford’s transition to EVs, cost-cutting takes center stage – TechCrunch


Ford has made cost-cutting a key piece of its EV strategy as the company works to improve profit margins while meeting what CEO Jim Farley has called “incredible demand” of its new electric vehicle models.

During the company’s fourth-quarter and full-year earnings call on Thursday, Farley said Ford has set up a task force dedicated to lowering the bill of materials for its battery-electric vehicles (BEV) “above and beyond just the usual declines in material costs.”

“For example, on the Mustang Mach-E in just the last month, our team found $1,000 of opportunity per vehicle, and that’s deliberate through design simplification, vertical integration and leveraging our scale with supply chain as we ramp up production,” Farley said. “And that team is just getting started.”

Notably, Ford isn’t waiting for a second generation vehicle to make changes that will lead to cost reductions or better efficiency.

Through the process of producing Mach-E’s, Farley said the company has learned how to source profit opportunities by better integrating its engineering, supply chain and manufacturing segments. For example, Farley noted that the Mach-E’s cooling system has four motors when it probably only needs to have two; it has 60 or 70 hoses, when it can probably function well on a third of that.

“Those are the opportunities we’re going after and we are not going to wait for next year,” he said. “We’re not going to wait for a minor change. We are going to reengineer that vehicle now and then use that expertise for the Lightning and the E-Transit and of course, all our electric platforms.”

Ford CFO John Lawler noted that the company’s BEV margins need to improve.

“We have an opportunity but we need to do that through scaling them,” Lawler said. “We’re going to want to have a strong lineup where we can lean into it with key vehicles in high-volume segments like we are today with Mustang Mach-E and the Lightning, and in our commercial vehicles, with the E-Transit, we’re going to reduce complexity.”

The Ford F-150 Lightning truck and the E-Transit van are not yet out to…



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