Like a military contractor with a black-box project, Ford has a secret project.
“We made a bet in silence two years ago,” CEO Jim Farley told investors on an earnings call this week. “We developed a super-talented Skunk Works team to create a low-cost EV (electric vehicle) 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.”
Skunk Works? Explain, Please.
Skunk Works is the clandestine but registered trademarked nickname for a secret projects team within defense contractor Lockheed Martin, famous for developing stealth aircraft technology. The term originated from a reference to a “Li’l Abner” comic strip by Al Capp.
The analogy fits, in part, because few at the company appear to know about the EV project. TechCrunch reports, “It includes engineers from Auto Motive Power (AMP), the EV power startup that the automaker acquired in November 2023.”
The Verge reports that former Tesla engineer Alan Clarke, leader of much of Tesla Model 3 development, heads the team. It’s located in California, far from Ford’s Midwest power base.
EV Prices Are Coming Down
Farley told investors the team was focused on developing affordable EVs “because the ultimate competition is going to be the affordable Tesla and the Chinese” automakers.
The price of the average electric car fell by nearly a fifth in 2023 but remains higher than the price of the average gas-powered car.
Many automakers have approached EVs by first building more expensive models for wealthier buyers, hoping to let economies of scale bring production costs down so they can sell more affordable models later.
China, Tesla Adding Pressure
But they’re under pressure. Tesla reportedly could introduce a sub-$25,000 EV as soon as 2025. And, while no Chinese automakers sell cars under their own names in America, they are quickly taking over the stage in the automotive world.
China’s BYD overtook Tesla’s position as the world’s largest builder of EVs last year, shortly before China became the world’s largest exporter of cars. Within the last month, BYD has begun acquiring its own fleet of ships to move cars around the world faster, and China’s Geely has launched its own satellites to control its self-driving car efforts.
Ford’s rivals today are from China as much as from Detroit.
American automakers will need affordable models that compete with the prices China’s automakers can sell for as Chinese companies threaten to make inroads into the American market.
Ford’s most affordable EV today is the Mustang Mach-E, which starts at $44,795 (including a mandatory $1,800 destination charge). It does not currently qualify for the federal government’s $7,500 EV tax credit. However, Ford is offering many buyers a $7,500 incentive until April 2 while working to get the vehicle to qualify again.
