In a recent post, we covered Ford’s announcement that it has secured enough of a battery supply to produce 600,000 EVs per year. While this is great news for the company and the EV transition, I’m seeing a problem for Ford. One of its biggest competitors is going to beat it to the punch in an important price segment, but it’s a problem Ford can fix by offering more affordable EVs in the United States.
Two Vehicles That Might Fit The Bill (or Budget)
Details are scant about the upcoming mid-sized crossover, but there are some clues that Ford has let out. The first comes from this graphic from the recent announcement:
They really don’t tell us anything more about the mystery EV, but we know from other reporting that we’ve done that it will be building that vehicle in Cologne and is bringing other plants online for EVs. It appears that it will be less performance-oriented than the Mach-E, and if that’s correct, it should come in at a lower price point.
But that’s not the only small crossover that Ford is building for Europe. There’s also the upcoming Puma EV that Ford announced at this event. Once again, details are scarce at this point, but we do know that the gas-powered Puma starts at below $20,000 (US). It’s not sold in the US at this point, but it would be a decent economy vehicle. Adding $10,000 for a BEV (the best guesstimate I could come up with at this point) would make for a very affordable EV.
In some ways, it doesn’t make sense to stoop to offering low price EVs in the US, as every manufacturer has backorders even for more expensive electric vehicles, but it won’t always be that way.
GM’s Lowball Strategy
One of Ford’s biggest competitors recently tipped its hand on its strategy to catch up with Tesla. In an interview with the Associated Press, GM CEO Mary Barra explained that the company’s strategy for catching up with Tesla by 2025 is simply to undercut them on price.
“To really get to 30, 40, 50% EVs being sold, you have to appeal to people that are in that $30,000 to $35,000 price range,” Barra told AP.
If you’ve been keeping up with Tesla for the past few years, you’ll recall that the company initially offered a $35,000 Model 3, which it briefly delivered in 2019. However, because it wasn’t very profitable for Tesla, there wasn’t much demand for a low-range version of the vehicle. Also, the firm had no problem marketing more costly versions of the car for greater profits. As a result, Tesla first took it “off menu” (you couldn’t locate it on the website, but you could call or visit a Tesla store to purchase one), and then nixed it entirely a year later.
Now, the most affordable Tesla is more than $40,000, and you’ll have to wait a long time before receiving one in your driveway. However, both the Tesla Model 3 and the average price of a new automobile have left the American middle class in the dust. Tesla isn’t doing too badly, since it still has a waiting list for its vehicles, and insane auto loans that were made to sell overpriced automobiles (particularly used cars) are resulting in an explosion of repossessions that may harm the entire sector.
GM isn’t going to be caught flat-footed on this, though. The company is not only prepared by having lower-priced EVs ready to go, but now there are two of them. Starting with a price break on 2022 models and followed by a permanent low price on 2023+ models, the Bolt EV and Bolt EUV will both start under $30,000. While the Bolt family has its drawbacks (slow 50 kW DC fast charging is a big one), at that price it isn’t that bad at all.
But, if you’re looking for something better, GM will have you covered there, too. The Equinox EV will be priced just above the Bolt EV and Bolt EUV at $30,000, also putting it below most other manufacturers’ offerings. This starting price (which should be possible to get for less in a healthy market) will give you a car with Ultium battery packs and charging more than three times faster.
Personally, I’ve been following all of these developments (because it’s a necessary component of my job here at CleanTechnica) and have become more optimistic about GM in recent months. With the Bolt EV fire recall coming to a good end, price drops to reasonable levels, plans for additional EV charging stations being made, and so on, it’s clear that the firm is taking the move to EV deadly serious.
Ford Needs To Change Course & Offer More Low-Priced EVs
If Ford only offers lower-priced EVs in places like Europe and Australia, it’s going to have a big problem on its hands if GM captures the whole bottom end of the market. While the average price of a car is quite high today, we need to keep in mind that the average is just that: average. There’s just as much below that price point as above it.
If you look at a standard distribution (the bell curve), that means you’re missing out on half of the market. Obviously, the used market (and the heavily used and beater submarkets) takes care of the long tail on the left side of that curve, the $20-35k segment is burning hot for new cars.
Want some proof? Go try to test drive a Bolt EV or Bolt EUV at a Chevy dealer. Not only will they not have any in stock (other than the ones that are awaiting a new battery for the recall), but everything in transit is probably sold. People want EVs, and they want them badly when gas is expensive like it is right now.
Offering more affordable EVs isn’t just about equity and accelerating the transition to clean transport. It’s also good for people who could theoretically afford a more expensive vehicle but just don’t want a $1,000 monthly payment. Making it possible for tightwads and the fiscally careful to pick up a car at that price not only helps their monthly budgets, but makes for a healthier overall market.
Ford needs to get in on that.
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