As the auto industry transitions to all-electric vehicles, with billions of dollars invested in new production facilities and technology development, there are still lingering questions over long-term costs. That includes the production side, but also the consumer side, as despite lower running costs, EVs typically have a higher price tag than equivalent internal-combustion models. Now, the CEO of GM’s crosstown rival, Ford Motor Company, has indicated that EV cost parity likely won’t happen before the 2030 calendar year.
According to a recent report from Reuters, Ford CEO Jim Farley addressed the issue of EV cost parity during a recent investor conference, during which he predicted that EVs would continue to be more expensive than equivalent ICE vehicles until the second- and third-generation vehicles began rolling off the line after 2025. Around the 2030 to 2035 calendar years, Farley predicts that EV cost savings would be realized by “dramatically lower labor content,” as well as lower parts requirements, smaller batteries, and lower materials costs.
Farley added that further savings could be realized via lower distribution costs as EV sales move increasingly online. What’s more, new software-driven digital services could open up the potential for higher revenue streams, as could new insurance products using data harvested from both vehicles and drivers. Farley stated that offering insurance could be “a natural for Ford.”
Late last year, a report from Bloomberg indicated that the average cost for EV batteries increased 7 percent in 2022, as compared to costs in 2021. The increase followed a steady price decline recorded over the previous decade, dropping from $1,000 per kWh in 2010 to $141 per kWh in 2021. The increase in 2022 was attributed to higher materials costs and greater demand, plus delays in new supply.
At the recent investor conference, Farley also addressed industry-wide consolidation efforts, predicting that cooperation would be “essential” in the years to come. Ford recently struck a deal that allows Ford customers access to the Tesla supercharger network.