Ford CEO Jim Farley said he does not believe price parity between EVs and gas cars will come until after the end of the decade, which holds potentially harsh consequences for the adoption of sustainable powertrains as automakers aim to lower costs.
Since the beginning of the more widespread production of electric vehicles, many people have said the biggest bottleneck in widespread adoption is the lack of price parity, or price equality, they have with gas cars.
There are still many more affordable options in gas-powered vehicles, but there are also EVs that fall below the average transaction price for a new car, which according to Kelley Blue Book, was $55,089 in April. That’s down $10,096 from a year ago. In the overall market, it was $48,275, and there are plenty of EVs under that price.
However, EVs still need to reach a point where there are numerous options for $15,000, $20,000 and even $25,000 with acceptable range ratings for consumers. Farley believes the date may be well into the future.
At an Investor Conference that Farley spoke at May 30, he said EVs will continue to be more expensive than gas counterparts until second- and third-generation versions go into production after 2025.
However, the real parity won’t occur until between 2030 and 2035, Farley said, because those cost savings will take place due to “dramatically lower labor content,” and the vehicles will be built with less complexity and with fewer parts.
Automakers won’t be the only ones to suffer, either, in Farley’s estimation. While Ford has 600,000 subscribers in its software business, which has grown from 200,000 at the same time last year, true profitability in the EV side of its business will come from direct-to-consumer sales through online platforms and further growth of the software subscriptions.
Companies will also have to work together if sustainability is the ultimate goal. It comes down to more than just a business perspective, and companies have to be willing to set aside competitive advantages to help one another.
“Cooperation is essential,” Farley said.
Cooperation is just what Ford is doing, as it announced a special partnership with Tesla, which will open its Supercharger Network to the Detroit-based company in an early move that eventually will lead to adopting Tesla's Charging Connector in a few years.