- Ford’s electric strategy is smart, says Elon Musk
- Ford recently formalized a new division dedicated to the electric car
- It operates much like a startup and is expected to lose $3 billion in 2023 alone.
Elon Musk validates Ford’s strategy on electric cars. In response to a tweet, the boss of Tesla, SpaceX and Twitter indicated that the strategy applied by his competitor is intelligent. He also mentioned the strong demand for one of Ford’s models: the electric F150 Lightning. Musk was responding to a tweet from Meet Kevin, the CEO of HouseHack (real estate).
While Ford has just presented its quarterly results, Meet Kevin spoke of the losses generated by the manufacturer’s electric cars, while Tesla is making profits. And this ends its publication by congratulating Elon Musk and the Tesla team.
In reaction, Musk explained that he is “Always difficult with margins for new vehicle lines, especially when there are major technological changes.” And rather than push his competitor, the CEO of Tesla has on the contrary been complimentary.
Always tough with margins for new vehicle lines, especially when there are major technology shifts.
I think Ford’s overall strategy with EVs is smart.
The electric F-150 (Lightning) has high demand.
— Elon Musk (@elonmusk) May 3, 2023
Tesla is not worried?
This may sound surprising, coming from Elon Musk. Still, his response to this tweet is entirely in line with Tesla’s official discourse, as far as competition is concerned. During the latest quarterly results conference call, Karn Budhiraj, vice president of Tesla, assured that the manufacturer wishes the success of all electric cars, and assured that there is no “malicious” attack to destroy the competition.
“Definitely not. We open superchargers. We have made our patents available for free. (…) we try to be useful here. So we’re not looking to destroy competitors or anything like that. We try to help competitors, frankly, in any way we can”Elon Musk later said.
In summary, Tesla wants to be benevolent. And at the same time, this official speech can also signal that despite increasingly tough competition on the electric car market, it is not worried. Be that as it may, as several American media report, a price war is taking shape today between Tesla and Ford. And the difference between the two manufacturers is that Ford can continue to generate losses on electric vehicles, as long as it continues to make profits on its thermal cars.
Note that for his part, in April, the CEO of Ford, Jim Farley, declared that with his aggressive strategy which consists in lowering prices (several times since the beginning of the year), Elon Musk is inspired by Henry Ford.
Ford: the electric car becomes a mainstay
In any case, the electric car is now a priority for Ford, which recently decided to review its organization. Instead of presenting its financial results by region, the automaker subdivides its business into three segments, including Ford model e, a division dedicated to electric cars that operates more or less like a startup.
As we mentioned in a previous article, Ford forecasts losses of 3 billion dollars for this electrical division, for the year 2023. This is more than the 2.1 billion dollars of losses in 2022, and the 900 million dollars in losses in 2021. “Startups lose money by investing in capabilities, building knowledge, growing volume and gaining market share”said Ford chief financial officer John Lawler, according to Fortune magazine.
But the financial balance could be reached in 2024. And in terms of production, Ford plans to release 600,000 electric cars in 2023. Production which, in 2026, should increase to 2 million electric cars.
