It Costs 30% Less to Make an EV?

[Sun Devil]

I read in interesting article with an interview of Ford's CEO Jim Farley. It is an interesting article for many reasons, but the eye catching item in my opinion is that it reads, "He [Jim Farley] said a key issue is how production will impact labor concerns since it costs 30% less to manufacture the electrical vehicles." My question is does Jim Farley mean there is 30% less in labor costs to build an EV or that it costs 30% less to build an EV in general? I assume it is 30% less in labor.

Here is the article: Ford CEO Farley calls for making EVs more affordable, bringing mining back to US (detroitnews.com)

I appreciate your thoughts. If it really does cost 30% less to build an EV, it will be interesting to see if the prices of EVs will come down as batteries become more abundant. In any event, kudos to Ford for making EVs more affordable.

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[Lime Green]

Labor and materials, overall it’s about 30% less, probably even greater than 30% in a few years as process streamline and production ramps up…. With one caveat: The battery pack. Batteries are expensive AF. That’s why it costs $10K to go from the standard battery pack to the extended range pack that’s not quite 30% larger (estimated). EVs have fewer parts and are quicker to assemble. No complex engine, transmission and plumbing. Battery costs and lower sales volume attempting to capture adequate market are the factors contributing to high purchase prices. The key to future EV success is driving down battery costs by increasing production quantities. Ultimately better energy density will be needed to facilitate more towing/ cargo capability and larger trucks.

 

[GolfR]

I agree with Lime Green. Simply look under your hood at all the routed wiring, tubing, and exhaust pipes and it easy to see how eliminating all of that would make it much easier to put an EV together.

Tesla built their Giga Factory to address the battery economies of scale but they are still expensive. With all the special metals that go into rechargeable batteries there are some major challenges with getting battery costs down. There will also be a major political headache as lithium and other components come from around the world and my prediction is that those resources will become the new oil and the few countries that have them the new OPEC.

 

[RonTCat]

I read in interesting article with an interview of Ford's CEO Jim Farley. It is an interesting article for many reasons, but the eye catching item in my opinion is that it reads, "He [Jim Farley] said a key issue is how production will impact labor concerns since it costs 30% less to manufacture the electrical vehicles." My question is does Jim Farley mean there is 30% less in labor costs to build an EV or that it costs 30% less to build an EV in general? I assume it is 30% less in labor.

Here is the article: Ford CEO Farley calls for making EVs more affordable, bringing mining back to US (detroitnews.com)

I appreciate your thoughts. If it really does cost 30% less to build an EV, it will be interesting to see if the prices of EVs will come down as batteries become more abundant. In any event, kudos to Ford for making EVs more affordable.

Labor. Everything else is way higher than ICE vehicles.

 

[LightningShow]

Labor. Everything else is way higher than ICE vehicles.

Most of the vehicle is the same as an ICE vehicle, so what do you mean by "everything else" here?

 

[astricklin]

Labor. Everything else is way higher than ICE vehicles.

Really... Everything..??? Explain.

The entire cab of the lightning is exactly the same as the ice version. The fact that they are sharing so many components with the current truck is the exact reason they are able to price the lightning as they have.
How is the body or interior of the mach-e 'way higher' cost then an escape?
Headlights and taillights, window glass, steering and suspension components...how are these 'way higher' for a bev?

Once companies are building bev models at the same scale as ice models all of these components are going to have equivalent cost to the ice counterpart.

 

[RonTCat]

Most of the vehicle is the same as an ICE vehicle, so what do you mean by "everything else" here?

The BEV powertrain. Engineering, testing, materials... everything related to the specific BEV components. That will get fixed in a few years once things scale.

Obviously the carryover ICE components are roughly the same cost...

The point of the OP was BEV specific... how can carryover be "30% less"?

 

[astricklin]

You do realize that the components of the bev powertrain have been around for decades. At the turn of the 20th century electric vehicles were actually quite prevalent.
I don't know for sure, but I would imagine that because the bev powertrain is much less complicated with many fewer parts involved, it costs significantly less in R&D than a new ice engine/transmission.

 

[RonTCat]

You do realize that the components of the bev powertrain have been around for decades. At the turn of the 20th century electric vehicles were actually quite prevalent.
I don't know for sure, but I would imagine that because the bev powertrain is much less complicated with many fewer parts involved, it costs significantly less in R&D than a new ice engine/transmission.

Yes, but you have to build a laboratory to test new BEV powertrain designs. These aren't free... and ICE laboratories are already built.

 

[astricklin]

Yes, but you have to build a laboratory to test new BEV powertrain designs. These aren't free... and ICE laboratories are already built.

Sure and they built a whole new factory to assemble the things. I understand that there's a lot of infrastructure investment involved but that is going to get amortized over what, 20-30 years or more. The actual cost of the vehicle components and assembly is what I believe we are discussing here.

 

[Pioneer74]

Sure and they built a whole new factory to assemble the things. I understand that there's a lot of infrastructure investment involved but that is going to get amortized over what, 20-30 years or more. The actual cost of the vehicle components and assembly is what I believe we are discussing here.

Keep in mind, the new factory only does the final assembly. It uses the existing Body and Paint buildings to assemble and paint the cabs and boxs.

 

[RonTCat]

Sure and they built a whole new factory to assemble the things. I understand that there's a lot of infrastructure investment involved but that is going to get amortized over what, 20-30 years or more. The actual cost of the vehicle components and assembly is what I believe we are discussing here.

OK, powertrain components for BEV are double that of ICE. Assembly is 30% less, but assembly is maybe 15% of total cost, so .3x.15 or 4% of vehicle cost. Not really significant. What's significant is the UAW sees 30% less members. That's what this is really about...

 

[Pedaldude]

One of the most expensive aspects of manufacturing is precision.

Modern internal combustion engines are built with the same tolerances and dynamic compression ratios as one-off purpose built 1980's Formula 1 engines that were rebuilt after every race or two, with some only being used for a few laps during qualifying. The engines being built today are reliable over years and hundreds of thousands of miles. This comes from meticulous testing and amazingly specialized manufacturing that is staggeringly expensive. R&D for a battery pack doesn't even come close.

Automatic transmissions are so expensive to create that GM and Ford have cooperated with their new 10 speed transmissions to share the costs involved.

Simply eliminating the rear live axle obviates an entire Ford factory from the equation.

Long drive shafts are a pain to balance and and create issues that are simply eliminated by having two motors.

Electric motors are ubiquitous and scalable. While not cheap, they're not terribly expensive and the machines to make them are widely available. To make a more powerful motor, you can make it bigger or add more of them.

Batteries are expensive but if you took out the licensing costs, had better economies of scale and most importantly; could find a way to actually recycle and recover the raw materials, it could be a sustainable solution.

It doesn't surprise me at all that a BEV F-150 would enjoy a very significant reduction in costs over the ICE version. I would wager that there would also be a huge discount if Ford were able to sell trucks with 190HP pushrod V8s and 4 speed transmissions. Modern powertrains are incredibly expensive to both manufacture and warranty.

We're at the point now where almost anything can be made without the involvement of a human. Swatch introduced a mechanical movement watch entirely built, assembled and regulated by machine almost ten years ago. It's pretty much a matter of time before everything else is made that way. Foundry work, which will probably always be as much art as science is an exception and the Lightning pretty much mostly eliminates that.

 

[gtotco]

The BEV powertrain. Engineering, testing, materials... everything related to the specific BEV components. That will get fixed in a few years once things scale.

Obviously the carryover ICE components are roughly the same cost...

The point of the OP was BEV specific... how can carryover be "30% less"?

Production is a marginal cost. R&D has zero marginal cost basically by definition since it is done prior to production.

 

[GolfR]

What's significant is the UAW sees 30% less members. That's what this is really about...

Bingo, this is all about UAW's power and positioning for future negotiations. This is no different than the fear from 20-30 years ago that robots would replace all the people in auto factories. No doubt the UAW would love to get it's fingers into the battery and electric motor factories.

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