Ford CEO Jim Farley expects the cost of producing electric vehicles to fall low enough in the coming years that some electric vehicles will be offered at $25,000. He believes this will lead to a “huge price war” in the industry.
Due to production constraints and high demand, there is currently no price war in the electric vehicle market. On the contrary, low inventory levels and high demand lead to dealers setting large surcharges for electric vehicles, but this will change soon, according to Jim Farley.
He noted that the cost of the Mustang Mach-E starts at about $45,000, but the battery assembly alone costs Ford $18,000. Farley believes that the cost of batteries will decrease significantly, while Ford is developing a platform for next-generation electric vehicles, which, in his opinion, will lead to a sharp reduction in production costs.
To be prepared for more competitive pricing during this possible “price war,” Farley said Ford is also willing to cut distribution and advertising costs.
VW and Tesla are also rumored to be working on electric cars for $25,000.