Report: Ford goes after Tesla Model 2 with £20,000 EV in 2026

The first car from Ford’s “skunkworks” electric car engineering team will be a $25,000 (£19,700) crossover, according to a new report.

Financial publication Bloomberg said it will be positioned as a direct rival to Tesla’s long-awaited mass-market model, known as the ‘Model 2’, which is tipped to cost €25,000 (£21,400).

The new Ford will launch with a lithium-iron-phosphate (LFP) battery, said to be 30% cheaper than a traditional lithium ion pack. The company will also consider other battery technologies to cut costs further. It is possible that Ford could employ sodium ion batteries, for example, which are being evaluated by the likes of Stellantis and the Renault Group for their cost-effectiveness.

The small electric crossover will be followed by a similarly sized pick-up and a car for ride-hailing services, according to Bloomberg. The publication added that these models’ development is being led by Alan Clarke, who was previously in charge of engineering the Tesla Model Y.

Ford CEO Jim Farley revealed last month that Ford is working on an affordable EV platform and admitted that most buyers are unwilling to pay over the odds to go electric.

He added that the firm made the decision to assemble a “skunkworks” team two years ago, having been “too optimistic” about interest in premium models due to the availability of cheap credit pre-Covid and the pent-up demand for all cars amid the semiconductor chip crisis.

This drove a “temporary spike in supply” and Ford struggled to find buyers for the cars it had built as it realised that – after the early EV adopters were on board – mainstream buyers were not prepared to pay a premium to go electric.

“As the Covid shock retreated, we learned that as you scale EVs to 5000-7000 units a month and you move into the [majority of customers], they are not willing to pay a significant premium for EVs,” said Farley.

Ford is not alone in adjusting its electrification strategy to better appeal to the mainstream market. Renault has stolen a march on the class with the £25,000 Renault 5, which will soon be rivalled by the Citroën ë-C3 and Volkswagen ID 2.

Both Renault and Volkswagen have announced plans to enter even smaller segments with a new Twingo and the ID 1 respectively, each priced at around £17,000. Media reports suggest the two firms could share development of a platform to reinforce the business case for these models.

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