By Abhirup Roy and Nora Eckert
(Reuters) - Ford Motor (NYSE:F) Co has asked its electric-vehicle suppliers to reduce costs in an attempt to support profitability, saying "everything is on the table," according to a company memo seen by Reuters.
Discounts and sharp price cuts from competitors, including EV market leader Tesla (NASDAQ:TSLA), to sustain consumer demand amid high interest rates have forced Ford to reciprocate. To re-ignite demand and stave off competition from Chinese automakers such as BYD, analysts have said EV makers need to introduce vehicles that are affordable to the masses.
"Everything is on the table. Consider this a call to action," Liz Door, Ford's chief supply-chain officer, said in the memo, which was earlier reported by Crain's Detroit Business.
"It is in our best interests that we are able to deliver affordable EV products to our customers," Door added. "To ensure affordability, it is of paramount importance that our portfolio achieves further levels of material cost efficiency."
In response to a request for comment, Ford said it was focused on building a profitable EV business. "We value our suppliers’ collaboration and asked them to share their ideas for cost reductions," the company said in a statement.
Door asked suppliers to ensure efficient manufacturing operations and reduce capital spending. She also called for further cost-reduction proposals on such vehicles as the Ford F-150 Lightning electric pickup truck, Transit electric van and Mustang Mach-E SUV, to be presented in face-to-face meetings soon, including ideas that might require investment but support profitability.
The Dearborn, Michigan-based automaker recorded a $1.3 billion operating loss for its EV and software division in the first quarter. Executives expect this section of the company to sustain a pretax loss of between $5 billion and $5.5 billion for the year.
While Ford continues to develop affordable and smaller EVs by a "skunk works" team in California, the company in the near term is focusing on boosting sales of hybrid vehicles, which are preferred by many consumers, before adopting fully battery-powered cars.