Ford Asks Suppliers to Cut Costs to Boost EV Business Profitability

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Ford Motor Co. has reached out to its electric-vehicle suppliers, urging them to reduce costs in a bid to enhance profitability, according to a company memo obtained by Reuters. The memo indicates that Ford is exploring various avenues to achieve this goal, emphasizing that “everything is on the table.”

The move comes as Ford faces pressure from competitors, notably Tesla, which has been offering discounts and significant price cuts to maintain consumer demand amidst high interest rates. To remain competitive, analysts argue that EV manufacturers, including Ford, need to introduce more affordable vehicles to appeal to a broader audience, particularly amid rising competition from Chinese automakers like BYD.

Liz Door, Ford’s chief supply-chain officer, emphasized the urgency of the situation in the memo, stating, “Everything is on the table. Consider this a call to action.” She underscored the importance of delivering affordable EV products to customers and stressed the need for further material cost efficiency within Ford’s portfolio.

In response to inquiries, Ford emphasized its commitment to building a profitable EV business and acknowledged the importance of collaboration with suppliers. The company stated, “We value our suppliers’ collaboration and asked them to share their ideas for cost reductions.”

Door’s memo outlined specific areas for potential cost reductions, including optimizing manufacturing operations and minimizing capital spending. Additionally, she requested suppliers to present proposals for cost reductions, particularly for key vehicles like the Ford F-150 Lightning electric pickup truck, Transit electric van, and Mustang Mach-E SUV, during upcoming face-to-face meetings. These proposals may include ideas requiring investment but aimed at supporting long-term profitability.