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Chip Shortage Skewed Early Ford EV Demand: Farley

Following the onset of the pandemic in early 2020, automakers faced a multitude of labor and supply chain issues – most notably, the semiconductor chip shortage, which wreaked havoc on production and inventory levels. This threw a serious damper in Ford’s efforts to launch its much-ballyhooed all-electric vehicles as well, as the Ford Mustang Mach-E, Ford F-150 Lightning, and Ford E-Transit all arrived right in the middle of this crisis. During Ford’s Q4 2024 earnings call, CEO Jim Farley pointed to the chip shortage, in particular, for causing long-lasting ripple effects in EV demand early on, which continue to cause problems to this day, too.

Ford F-150 Lightning Mobile E-Scooter Business - Exterior 004 - Front Three Quarters

“When we had the chip crisis, there was a bonanza of supply-driven demand,” Farley explained. “Like, there was nothing to buy. Shelves were completely empty. And Tesla, because of the way they did the Model 3 and Y electric architecture, they could build as many as they could build. They had no chip issues. So in that moment, when Y was relatively new, they could scale very quickly with Model Y and the prices exploded for them. It went from $50,000 to $70,000 and it stayed there for about 18 months. And everyone looked at that, including Ford, and said, that’s the new norm. It wasn’t a new norm.”

“As soon as we all had capacity, like Mach-E, because we had under called Mach-E and Lightning by a lot, like by a third – by two-thirds. As soon as that capacity started coming on, we started to hit those 5,000 to 7,000 a month production numbers, Tesla had already figured out. They were bringing their prices down. We had to bring our prices down. And at first I thought, oh, this is Tesla being predatory.”

“Turned out that wasn’t the case. It turns out, actually, we all had the same situation. To get to that kind of level of scale, we had to go to mainstream customers, and the mainstream customers can do the math on hybrid. We see that every day at Ford. We’re now number three and probably number two this year on hybrid in the U.S. And the customers don’t have to change their habit on hybrid and they can immediately do the math on the efficiency of the fuel economy. The math on EVs is more complicated.”

2024 Ford Mustang Mach-E GT Bronze Appearance Package - Exterior 001 - Front Three Quarters

This rapid spike in EV demand was followed by a sharp decline over the past few months, which has had ripple effects across the industry – even for Tesla, which is now set to reduce its global workforce by around 10 percent. As for Ford, it will respond by expanding its hybrid offerings to span the entire Blue ICE lineup by 2030 while also shifting its focus away from larger, pricier models toward smaller, less expensive EVs – a move inspired by cheap Chinese competition – with the first being a $25k crossover slated to launch in 2026.

We’ll have more on Ford’s EV strategy soon, so be sure and subscribe to Ford Authority for 24/7 Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. William

    The Nationwide boycott against EVs is what ended demand. When repair shops have posters on the wall listing all the problems and expenses of EVs then you know where EVs stand…nowhere.

    Reply
  2. Geowar

    Wrong Billy. What is this “boycott” you speak of? You and your ilk may think “boycott”, while the rest of us pass you by. It’s the future whether you like it or not. Be sure to start pissing and moaning when Israel and Iran go to war and your monthly fuel bill doubles. Yea, and make sure you blame Biden.

    Reply
    1. Jack

      There’s a hug boycott actually, not sure what fantasy land you live in. EVs are not the answer to a problem that doesn’t exist. We have more oil in this country than anywhere in the world. Biden, or more honestly his handlers, are to blame for all these issues going on including the EV push. Don’t worry though, Trump will correct this non sense in short order.

      Reply
    2. Dan

      There is indeed a grassroots boycott against EVs. Online discussion forums, repair shops, auto clubs, tire shops, etc. It has worked beautifully as seen how billions in EV projects had to be cancelled. The boycott is now shifting to hybrids.

      Reply
  3. Mf

    The fact that their products were overpriced and unappealing is what skewered demand for their EVa.

    Mach E was a focus hatchback sized vehicle that couldn’t go WOT through a 1/4 mile in the performance versions that cost twice as much as a focus hatchback.

    Lightning doubled in price, didn’t work for towing, was horribly overpriced, and forced you into a garbage vertical screen for a nicer trim. They also lagged behind the gas f150 in design and interior.

    It had nothing to do with chips, it had to do with poor product planning.

    Reply
  4. Sam

    Just talked my wife out of an EV. She bought a Toyota 4Runner instead. Toyota is way ahead of everyone by not focusing on EVs, they are literally laughing at the other manufacturers that are getting crushed by EVs.

    Reply

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