- Car companies tend to lose money on electric vehicles.
- But Lisa Drake, Ford’s VP of global powertrain and purchasing operations, told Business Insider that the Mustang Mach-E electric SUV will be profitable as soon as it goes on sale at the end of this year.
- Sharing suppliers and parts with Ford’s hybrid vehicles helped reduce costs for the Mustang Mach-E.
- Visit Business Insider’s homepage for more stories.
Automakers are in a tough spot. Governments are pushing them to make electric vehicles out of concern for the contribution gas-powered vehicles have made to rising global temperatures and increasingly erratic weather conditions.
But electric vehicles are, at the moment, more expensive to build and less profitable than their gas-powered counterparts. There are also questions about how much the demand for electric vehicles will grow in the near term, as they accounted for less than 2% of US auto sales through the first 10 months of 2019. (That figure rises to about 2% if you include plug-in hybrids.)
The late Fiat Chrysler CEO Sergio Marchionne said in 2017 that the automaker was losing up to $20,000 on every Fiat 500e it sold, and in 2019, General Motors CEO Mary Barra said she didn’t expect the company to start making money on electric vehicles until sometime in the early 2020s.
But from the moment Ford releases its Mustang Mach-E electric SUV at the end of this year, each one it sells will turn a profit, Lisa Drake, Ford‘s vice president of global powertrain and purchasing operations, told Business Insider.
“If you’re not profitable on these vehicles, it doesn’t really matter how **** they are and how great they do in the market, because at some point, you’ve got to make money on the car,” she said. “I think we have a unique advantage.”
Sharing suppliers, and even specific parts, with Ford’s hybrid vehicles has helped to keep costs low, Drake said. The Mustang Mach-E’s mobile charging cable and inverters are the same ones Ford uses in its Fusion Plug-in Hybrid sedan, and Ford will use the same battery cells featured in the Mustang Mach-E in another vehicle that has yet to be announced.
“The scale that I can get and the cost reductions that I can get because I can source a wide range for [hybrid and fully-electric vehicles] together gives me an advantage on keeping the costs low versus somebody who only makes EVs,” Drake said. “When I can use that scale to my advantage, it keeps the cost down so that we can have a reasonable revenue level and MSRP level and still be profitable.”
The Mustang Mach-E will start at $43,895 and have around 210 to 300 miles of range, depending on the trim, Ford says. Ted Cannis, Ford’s global director of electrification, said the Mustang Mach-E will have the best driving dynamics of any Ford SUV.
“Yes, it’s going to be fuel-efficient and better for the planet, but it’s going to give you more — more stuff, more space, more performance, more capability,” he said.
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A Ford exec explains why the Mustang Mach-E will be profitable immediately (F)