Ford and GM both recently announced moves to help improve affordability – and profitability – of their electric vehicle offerings.
Ford is developing its next-generation EVs to “surprise customers and be profitable within a year of launch,” CFO John Lawler said during the company’s recent 2023 earnings presentation, while GM announced the appointment of former Tesla executive Kurt Kelty as the new vice president of batteries.
During Ford’s earnings presentation, CEO Jim Farley disclosed plans to concentrate on EVs in sectors where Ford holds a competitive edge, such as trucks and vans.
"Our next Gen 2 products will be profitable in the first 12 months of their launch," Farley assured.
Farley said two years ago, Ford formed a "super-talented skunkworks team" tasked with creating a low-cost EV platform, which led to the development of a versatile platform that can underpin a range of vehicle types while supporting a vast ecosystem of software and services.
The push for affordability and efficiency is not just about staying competitive; it's a response to the evolving market dynamics and consumer expectations.
"All of our EV teams are ruthlessly focused on cost and efficiency in our EV products because the ultimate competition is going to be the affordable Tesla and … Chinese OEMs," Farley said.
Farley admitted past missteps, particularly in understanding the price sensitivity of mainstream EV customers. "We learned that as you scale EVs to 5,000 to 7,000 units a month and you move into the early majority customer, they are not willing to pay a significant premium for EVs," he noted.
At GM, Kelty, known for his role in Tesla's battery development, will bring more than three decades of experience, with the mission to enhance battery technology and reduce costs.
Kelty, set to begin his role Feb. 19, will spearhead GM's comprehensive battery cell strategy, encompassing the management of raw materials, advancement and commercialization of new battery technologies, and the lifecycle of batteries, aiming to address the industry's critical challenge of balancing affordability with high performance at scale.
The hiring comes at a time when GM is under pressure to make its EV segment profitable, amidst reliance on revenue from its traditional gas-powered vehicles. CEO Mary Barra has projected profitability in the EV sector later this year.
GM President Mark Reuss said Kelty’s background in battery chemistry development, supply chain establishment and system partnerships will be instrumental in achieving GM's ambitious electrification goals and establishing the company as a frontrunner in EV technology.
The company plans to invest $35 billion in EVs and related technologies by 2025. Kelty's addition to the team is expected to significantly bolster GM's position in the rapidly evolving EV market.
