Ford CEO Sees EV Price War Coming

Ford CEO sees electric vehicle price war as EV costs decline
https://www.washingtonpost.com/business/ford-ceo-sees-electr…

DETROIT — Ford’s chief executive says he expects the cost of building electric vehicles to fall to the point that in coming years automakers will be battling each other for sales of EVs priced around $25,000.

CEO Jim Farley told the Bernstein Strategic Decisions Conference on Wednesday that the $25,000 price tag will democratize EVs. Materials to build that vehicle will cost around $18,000, he said.

I’m waiting for end of model year close out pricing. What pay MSRP, plus?

intercst

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It stands to reason that, with almost everyone building nothing but SUVs, the market for SUVs will be saturated and the fat SUV GP the manufacturers have been chasing will evaporate.

Steve

I’m waiting for end of model year close out pricing. What pay MSRP, plus?

Car mfrs are limiting production to the best selling vehicles (due to the shortage of electronic components)–so no way to say what will be available when the end of summer arrives. It could extend well into 2023.

Car mfrs are limiting production to the best selling vehicles (due to the shortage of electronic components)–so no way to say what will be available when the end of summer arrives. It could extend well into 2023.

That’s fine. I can wait until 2024 or 2025 to get the “right” price.

intercst

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It stands to reason that, with almost everyone building nothing but SUVs, the market for SUVs will be saturated and the fat SUV GP the manufacturers have been chasing will evaporate.

Eventually. From December 2021:

Global SUV sales set another record in 2021
www.iea.org/commentaries/global-suv-sales-set-another-record…
Global SUV sales have proven very resilient throughout the pandemic, growing by over 10% between 2020 and 2021. In 2021, SUVs are on course to account for more than 45% of global car sales – setting a new record in terms of both volume and market share.

DB2

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Note that he did not say SUVs, he said EVs.

Limited supplies of chips and SUVs can keep SUV prices high. But the need to grow EV sales–especially the low end–is where the price war is likely to be. Especially with GM cutting Bolt prices.

The article notes they will need to get costs out of the low end electrics to compete. Dealers share will also decline. But the simplicity of the electric vehicle compared to the internal combustion models makes that seem possible. Although they doubt that can be done soon. Rising production volumes adds potential efficiencies.

The electric F-150 is sold out for two years. And won’t be included. The new electric Mustang could be a prospect.

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Note that he did not say SUVs, he said EVs.

It’s also interesting to me that most EVs have an SUV or CUV body-style. The Tesla Model 3 sedan is kind of an outlier.

intercst

But the need to grow EV sales–especially the low end–is where the price war is likely to be. Especially with GM cutting Bolt prices.

The article notes they will need to get costs out of the low end electrics to compete.

The above is true during the right time period which is not now but in the future. While car makers are production constrained there is no need to push low price, low profit models. Get as much cash as you can right now to fund the fabs you’ll need for volume production later. As production catches up with demand then the price wars can begin but that’s several years in the future.

In The Gorilla Game this period is called The Tornado when you sell all you can produce and growth is high, like Tesla’s 2021 80% sprint.

I wonder why GM lowered the price of the Chevy Bolt. It does not make strategic sense! Any ideas? To save the Chevy Bolt assembly line?

The Captain

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I’m waiting for end of model year close out pricing. What pay MSRP, plus?

That feels good now, but you pay for it when you sell it. A used car is almost always worth less than one that’s a model year newer. It’s probably not as much as you save on the front end, but it’s in the hundreds, anyway.

I wonder why GM lowered the price of the Chevy Bolt

On a lark, and with nothing else to do, I stopped by a Chevy dealership yesterday afternoon and found four sales guys jawing outside under the awning. I announced that I’d like to “look at” the Bolt EUV (the larger of the two.) The guy who met me passed me off to the guy who “is better with EV’s”, who promptly told me they have none to look at or drive, because they’re all under recall because batteries caught fire.

Eventually he acknowledged they had two on the lot, but I couldn’t get in one because GM wouldn’t allow it but I could “look at” it. So I did. While over there he told me I could order one and the price was around $38,000 (I told him not according to GM.) He recovered without missing a beat and went on to tell me that they come with a free (GM will install) home charger (?)), they get 256 range (GM says 247), but he can’t predict when, or if they will get more.

So, great price cut, I guess.

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I wonder why GM lowered the price of the Chevy Bolt. It does not make strategic sense! Any ideas? To save the Chevy Bolt assembly line?

The Bolt’s brand name was badly damaged by the battery fires and recall even as Chevy was preparing to roll out a refreshed Bolt while adding the new, bigger, Bolt EUV, with increased volume production.

No surprise that demand was lacking for the vehicles, who wants to pay $33,000 for a compact hatchback with a reputation for catching on fire and only ~260 miles range? So, Chevy rolled out an advertising campaign and a price cut to move metal and try to rebuild the brand name so their large investment in the vehicle won’t be wasted.

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No surprise that demand was lacking for the vehicles, who wants to pay $33,000 for a compact hatchback with a reputation for catching on fire and only ~260 miles range? So, Chevy rolled out an advertising campaign and a price cut to move metal and try to rebuild the brand name so their large investment in the vehicle won’t be wasted.

So…

To save the Chevy Bolt assembly line? :wink:

The Captain

So…

To save the Chevy Bolt assembly line? :wink:

Exactimundo! :smiley:

they come with a free (GM will install) home charger (?)), they get 256 range (GM says 247), but he can’t predict when, or if they will get more.

I’m reminded of the vapor ware tactics from the early PC days. A new improved model was announced, but sales plummeted as buyers decided to wait for the new model.

No wonder companies like Ford and Tesla are taking note and preparing for the worst. Sales could be soft while buyers wait for the arrival of $25K EVs.

I can wait until 2024 or 2025 to get the “right” price.

If you can pay cash (or have financing already arranged), then just wait for the economic crash that is supposedly coming. You may have a variety of choices–or not. Others are likely doing the same.

<<I wonder why GM lowered the price of the Chevy Bolt. It does not make strategic sense! Any ideas? To save the Chevy Bolt assembly line?>>

The Bolt’s brand name was badly damaged by the battery fires and recall even as Chevy was preparing to roll out a refreshed Bolt while adding the new, bigger, Bolt EUV, with increased volume production.

No surprise that demand was lacking for the vehicles, who wants to pay $33,000 for a compact hatchback with a reputation for catching on fire and only ~260 miles range? So, Chevy rolled out an advertising campaign and a price cut to move metal and try to rebuild the brand name so their large investment in the vehicle won’t be wasted.

Also, I assume they need to sell some Bolt models to help meet their CAFE numbers.

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It’s also interesting to me that most EVs have an SUV or CUV body-style. The Tesla Model 3 sedan is kind of an outlier.

Ironically, it’s also the best selling EV … US and worldwide (maybe excluding cheap brands in China) … by far.

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