【By Observer Net, Ruan Jiaqi】
Faced with the competitive pressure from Chinese electric vehicle manufacturers, one of the "Big Three" of Detroit, Ford Motor Company, has declared that it has found a "solution."
According to reports from The Wall Street Journal and "Business Insider" on the 11th, on Monday local time, the automaker announced that it will invest $5 billion to change its approach to producing electric vehicles. According to the plan named "Universal Electric Platform," Ford will spend $2 billion to completely renovate the assembly line at its factory in Louisville, Kentucky, shifting from producing fuel-powered SUVs to electric vehicles; meanwhile, it will also invest another $3 billion to build a new battery factory in Michigan, using locally produced batteries instead of imported ones from China. This will create a new production line for affordable high-tech electric vehicles.
The first product under the plan will be a four-door mid-size electric pickup truck, which Ford plans to launch in 2027. According to the report, thanks to the cost reduction from the new production line, the starting price of this car will drop significantly to $30,000. Cox Automotive's Kelley Blue Book showed that the average price of new electric vehicles in the U.S. in July was approximately $56,000.
Ford claims that this unnamed new car will be "the most affordable electric pickup in the market." Ford CEO Jim Farley said that Ford needs to take such measures to compete with Chinese electric vehicle manufacturers like BYD.
"We have anticipated this for years. We knew that Chinese companies would become our main competitors in the global market, such as BYD, and emerging startups from around the world," Farley said. "Large technology companies are also eyeing the automotive sector. They are all challenging us traditional automakers."
On Monday local time, Ford CEO Jim Farley introduced the new investment plan in Kentucky. Ford website
American magazine Wired reported that according to Farley, Ford's new production method is an "excellent weapon" to counter Chinese automakers, and also a "perfect example" of how Western companies can participate in competition.
"BYD's model is like this: 700,000 employees, 200,000 power system engineers. How do we beat them?" Farley asked and answered himself. "The fact is, the drive system developed by Ford's team is like the 'Apollo 13 moon mission,' with power consumption precise to the watt, so our batteries can be much smaller than BYD's. Their cost advantage in vertical integration is offset by our innovation in power systems. We cannot beat them in scale or vertical integration, but we can beat them in innovation."
However, the example Farley gave is slightly inappropriate, because from the perspective of the "moon landing" goal, the Apollo 13 mission was actually a failure: when the spacecraft was approaching the moon, an oxygen tank exploded during flight, almost causing a fatal disaster. Ground control centers and astronaut teams worked together to the limit, eventually allowing three astronauts to safely return to Earth, creating a miracle in the history of space rescue.
Nevertheless, Doug Field, Ford's Chief Executive for Electric Vehicles, Digital, and Design, also holds the same attitude.
He boasted at the Monday event, "Compared to the first generation of electric vehicles, we can achieve the same range with one-third less battery. Will we compete for labor in battery manufacturing? No, but if we think creatively, reducing the battery size by one-third can give us competitiveness."
According to U.S. media, Field was previously a senior executive at Tesla and Apple. He joined Ford in 2021 to lead the technological transformation. He added, "This is a bold and arduous task, aimed at competing with the best opponents in the world."
Doug Field, Ford's Chief Executive for Electric Vehicles, Digital, and Design. Video screenshot
Farley has high hopes for the "Universal Electric Platform," calling it Ford's "next Model T moment," the most thorough transformation since the Model T. The Model T, introduced by Ford in 1908, was known for its affordability, making cars accessible to ordinary families. As the first mass-produced car in the world, it had a groundbreaking significance.
Ford claims that the new production method speeds up the assembly time by 15%, reduces the number of workstations from unloading to loading in the factory by 40%, and reduces the number of parts needed for new electric vehicles by 20%. "Its five-year ownership cost is lower than a used Tesla Model Y that has been driven for three years."
When mentioning Tesla, Farley said that Ford has realized that most current electric vehicles have not met consumers' real needs. Ford executives believe that if electric vehicles are more affordable and still come with rich additional features, Americans will be willing to switch to buying them.
"I can't be 100% sure everything will go smoothly," Farley admitted. He mentioned that Detroit automakers have tried multiple times to produce small cars to make profits, but all failed. "This is itself a gamble."
Ford's electric vehicle strategy has been in the works for three years, with billions of dollars invested, but so far, it has struggled in the electric vehicle market. The New York Times reported that over the past two and a half years, Ford has lost $12 billion in its electric vehicle business, and in the first half of this year, it lost $2.2 billion, with expected losses to increase further this year.
The Wall Street Journal reported that high tariffs and regulatory barriers have blocked Chinese automakers from entering the U.S. market, but their expansion in Mexico and Latin America is rapid. With the rapid rise of Chinese automakers, global demand for electric vehicles continues to grow, forcing American automakers to increase investments in this technology field.
Like Ford, the largest U.S. automaker General Motors has also reduced its electric vehicle plans and turned its attention to smaller models. General Motors has decided not to produce electric pickups at its Orion plant in Michigan, but to return to the production of fuel-powered pickups. At the same time, the company also plans to restart the production of the small Chevrolet Bolt electric vehicle project.
The Wall Street Journal cited informed sources last week, stating that despite Trump's high tariffs, General Motors still decided to purchase batteries from the world's largest battery supplier, Contemporary Amperex Technology Co. Limited (CATL) in China, for the production of Chevrolet Bolt electric vehicles, with a cooperation period of about two years. Until this Detroit automaker and its South Korean partner LG Energy Solution establish a low-cost battery production line in the United States.
General Motors responded that purchasing Chinese-imported batteries is a "transitional" arrangement, and its ultimate goal is to independently produce low-cost batteries using lithium iron phosphate (LFP) technology. A spokesperson said, "For many years, other American automakers have relied on foreign suppliers to obtain lithium iron phosphate batteries and related technical licenses. To remain competitive, General Motors will temporarily purchase battery packs from similar suppliers to power its most affordable electric vehicle models."
The Wall Street Journal mentioned that although the low-cost lithium iron phosphate battery technology was invented in the U.S. in the late 1990s, it was commercialized in China. Now, Chinese companies such as CATL and BYD have leading expertise in manufacturing lithium iron phosphate batteries, and China has the most complete battery raw material supply chain.
U.S. media believe that this decision by General Motors indicates that American automakers and battery manufacturers are still lagging behind China in the field of low-cost battery manufacturing. And cheaper batteries can reduce the price of vehicles, thereby promoting more consumers to accept electric vehicles.
Nunzio De Filippis, co-CEO of logistics management company CargoTrans, told U.S. media that due to the trade war under Trump, General Motors will have to bear high tariff costs. Including the 25% tariff on foreign auto parts imposed by Trump, the total tariff on Chinese electric vehicle batteries will reach 80%.
This April, Trump announced a 25% tariff on all imported foreign cars, claiming that the U.S. will enter a "golden age," shouting "jobs and factories will return strongly." However, with the release of U.S. automakers' financial reports, the harsh reality is that the U.S. tariffs are hitting themselves.
Ford, General Motors, and Stellantis "Detroit Three" predict that by 2025, the tariffs will cause a total profit loss of $7 billion for the U.S. automotive industry, with Stellantis losing $1.5 billion, Ford losing $2 billion, and General Motors losing $3.5 billion.
Additionally, the tariffs on basic materials such as steel, aluminum, and copper currently used by the U.S. automotive industry have reached 50%, causing sharp increases in the prices of raw materials and components used by U.S. automakers.
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Original: https://www.toutiao.com/article/7537565883053523499/
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