Ford ‘Skunkworks’ Is Designing a Low-Cost, Dedicated EV Platform

Jackson Wheeler
7 Min Read


  • During its 2023 earnings call with analysts, Ford revealed it’s been developing a low-cost EV-dedicated platford to quickly launch new vehicles and get them to profitability with 12 months.
  • It also said it will dial back on capital spending on larger EVs like the current F-150 Lightning, admitting that in the short term, big trucks for the consumer market are better served by hybrid and plug-in hybrid powertrains.
  • Ford will bolster future Model e EV business unit profits by selling more aftermarket software and services to customers.

As Ford Motor Company pulls back from the electric vehicle business for the short term, a small team of engineers have been developing a dedicated low-cost EV platform to make new models profitable within the first 12 months on the market, CEO Jim Farley told Wall Street analysts in the company’s 2023 and fourth-quarter earnings report Tuesday.

“We developed a super-talented skunkworks team to create a low-cost EV platform. It was a small group, small team, some of the best EV engineers in the world and it was separate from the Ford mothership.

“It was a startup. And they developed a flexible platform that will not only deploy to several types of vehicles, it will be a large install base for software and services that we’re now seeing at Pro.”

Ford will spend less capital on larger EVs like the current F-150 Lightning and have a “small number” of them focusing on “geographies and product segments where we have a dominant advantage, like trucks and vans … with breakthrough efficiency compared to our Gen I (EV) products,” Farley said. Ford will devote most of its EV product strategy to smaller, less-costly models.

The message is that big trucks for the consumer market are better served by hybrid and plug-in hybrid powertrains, at least for the time being.

“All of our EV teams are ruthlessly focused on cost and efficiency on our EV products,” Farley continued. “Because the ultimate competition is going to be the affordable Tesla and the Chinese OEMs (original equipment manufacturers).”

“All of our EV teams are ruthlessly focused on cost and efficiency on our EV products.”

Farley once again emphasized Ford’s renewed concentration on hybrids, which already makes it the third largest in hybrid sales, after Toyota and Honda, though with concentration on pickup trucks.

Hybrids “will play a necessary role in our industry’s revolution,” Farley said.

In addition to the new, flexible platform, Ford is betting on the software and services sold on top of a new vehicle’s transaction price to reach “mid- to high-single-digit EBIT profit margins” over an EV’s lifecycle. That’s EBIT, as in earnings before income tax, and those targets come close to matching the type of profit margins Teslas have enjoyed for several years.

Farley said Ford was over-optimistic about the potential profitability of current EVs because of Tesla’s success in making its own chips during the 2021-22 pandemic supply chain shortages.

ford e transit and f 150 lightning

Ford

Ford E-Transit and F-150 Lightning.

Ford will bolster future Model e EV business unit profits by selling aftermarket software and services to customers. Farley touted the profitability of software and services added to its Pro business unit of commercial vans and pickup trucks.

For 2023, Ford’s Model e business unit lost $4.7 billion, heftier than the $3 billion loss Farley projected last May. Model e includes the Mustang Mach-e, F-150 Lightning, and the Explorer EV launching in Europe this year.

By contrast, and in helping pay for EV costs, the Pro commercial truck business made $7.2 billion in 2023, which is up 19% over 2022, and the Blue internal combustion line made $7.5 billion, up 8% for the year.

“We do really well with state and local government fleet sales,” Farley said of Ford Pro, which includes the E-Transit EV van, “best-selling two-ton EV in the U.S. and Europe.” Pro’s paid software subscriptions are up 46% year-over-year, to 510,000 subscriptions.

EBIT for the whole of Ford in 2023 was $10.4 billion, same as 2022, from $176.2 billion in gross revenue, up 11%.

Chief Financial Officer John Lawler said that Ford projects U.S. market volume will be 16 million to 16.5 million in 2024, with transaction prices coming down. Ford will post EBIT of $10 billion to $12 billion for the year, he said. About 40% of Ford’s capital spending of between $8 billion and $9.5 billion will be for EVs, “including products already in development,” Lawler said.

Headshot of Todd Lassa

As a kid growing up in Metro Milwaukee, Todd Lassa impressed childhood friends with his ability to identify cars on the street by year, make, and model. But when American automakers put an end to yearly sheetmetal changes, Lassa turned his attention toward underpowered British sports cars with built-in oil leaks. After a varied early journalism career, he joined Autoweek, then worked in Motor Trend’s and Automobile’s Detroit bureaus, before escaping for Mountain Maryland with his wife, three dogs, three sports cars (only one of them British), and three bicycles. Lassa is founding editor of thehustings.news, which has nothing to do with cars.

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Jackson Wheeler is a skilled editor at Speedofdaily.com, specializing in automotive content. With a background in Journalism and Automotive Engineering, he combines his passion for cars with his writing expertise to deliver captivating articles. Jackson's deep knowledge of automotive technology and his racing experience make him a valuable asset to the team, providing readers with informative and engaging content.
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