According to media reports, Ford Motor Company has issued a "call to action" to its suppliers, requesting assistance in reducing the production costs of electric vehicles (EVs).
Based on an internal memo seen by Reuters, Ford has recently reached out to component manufacturers for EV projects, seeking suggestions for cost reductions to support its goal of achieving profitability in the EV business.
Electric vehicles have consistently incurred substantial losses for Ford, with an average loss of tens of thousands of dollars per EV sold. In the first quarter of this year, Ford's electric vehicle and software division recorded a $1.3 billion operating loss. Executives anticipate that the division's pre-tax losses for the year will fall between $5 billion and $5.5 billion.
Liz Door, Ford's Chief Supply Chain Officer, stated in the memo, "We have all invested heavily in the electric vehicle business, and we will either thrive together or fail together. Everything is on the table, and we need everyone to take action."
Currently, competitors including electric vehicle market leader Tesla are offering discounts and significant price reductions to maintain consumer demand in a high-rate environment, prompting Ford to take corresponding measures. Analysts suggest that in order to reignite consumer demand and compete against Chinese automakers like BYD, electric vehicle manufacturers need to introduce vehicles that are affordable to the masses.
"Providing affordable electric vehicles to customers is in our best interest," added Liz Door. "Achieving higher levels of material cost efficiency in our product lineup is crucial to ensure affordability."
In response to requests for comment from journalists, Ford stated that the company is focused on building a profitable electric vehicle business. In a statement, Ford said, "We value collaboration with our suppliers and hope they will share ideas for cost reduction."
Liz Door urged suppliers to ensure efficient production operations and reduce capital expenditures. She also called on suppliers to develop "incremental cost reduction plans" for a range of existing and upcoming electric vehicle models, including the F-150 Lightning electric pickup, Transit electric cargo van, and Mustang Mach-E SUV.
"We need your best ideas to drive cost reduction, even if those ideas were previously rejected by Ford. We are also willing to consider ideas that may require investment but support profitability," stated Liz Door in the memo.
The memo states that cost reduction ideas may include "business, design, parts content, footprint, and value chain." Door also noted in the memo, "This includes quickly reducing capacity when necessary, reallocating capital as needed, understanding spending curves, and discussing all options with Ford."
"Cost will be Ford's leverage," Door concluded.
