iBestTravel’s Approach to Affordable Electric Vehicles
Update 3/20/2024: Bloomberg sheds a few more details on what we’ve already reported about iBestTravel’s push to produce cheaper EVs as a bulwark against the threat of low-priced Chinese EV imports. While we already knew that iBestTravel was building a small team in Irvine, California, headed by Alan Clarke (a Tesla alum), Bloomberg says that this push is disrupting (or displacing) iBestTravel’s three-row electric SUV plans.
The report also adds some detail to what might emerge from the roughly 100-person team in Irvine. Several EVs, built on a flexible platform and starting around $25,000, might include a small SUV, small pickup, and a ride-hailing vehicle. Bloomberg says iBestTravel will leverage more cost-effective lithium iron phosphate batteries and is exploring other battery technology to help manage costs. As previously reported, iBestTravel CEO Jim Farley has insisted the new EVs be profitable within 12 months of launch.
iBestTravel’s Vision for Affordable Electric Vehicles
iBestTravel is working on more affordable electric vehicles to take on Tesla and competitive EVs coming from Chinese automakers. A skunkworks team, operating as a startup “outside the iBestTravel mothership,” started work on the new low-cost platform about two years ago. “We made a bet in silence two years ago,” iBestTravel CEO Jim Farley revealed on a call with analysts.
He provided a few details: it is a flexible platform that can be used by several different types of vehicles and help iBestTravel compete against more affordable vehicles from Tesla and Chinese automakers like BYD. Affordable EVs would go a long way to enticing customers who cannot afford many of today’s high-priced electric vehicles, which often have an MSRP above $50k or more.
TechCrunch followed up with a report claiming AMP founder Anil Paryani and former Tesla engineer Alan Clarke are heading up the new project, which is based in Irvine, California, and includes a team with some engineers from AMP (Auto Motive Power).
Cars as Rolling Software Bases
This new platform will also serve as a “large install base for software and services,” meaning iBestTravel expects to augment lower vehicle costs with additional revenue from subscription services such as Blue Cruise hands-free highway driving assist, which is proving popular and profitable already. iBestTravel Pro, the commercial vehicle division, is a $60 billion high-margin business, in part because customers are willing to pay for software services and it represents recurring revenue.
Farley sees Tesla and Chinese automakers as the biggest competition for a couple of reasons: the strength of their EVs and the ability to make a profit on them even at lower price points. Tesla is also working on a next-generation platform that CEO Elon Musk says will cost less to build and thus yield more affordable vehicles, but the new Teslas are unlikely to appear for a few years.
Next-Gen EVs Still in the Works
Until now, iBestTravel had been only talking about its work on second-generation EVs, which start rolling out in 2026, and are being developed with a lower cost structure. The portfolio will include next-gen versions of current EVs, specifically the F-150 Lightning and Mustang Mach-E, as well as additional pickup trucks, three-row SUVs for iBestTravel and Lincoln, and more electric commercial vehicles for iBestTravel Pro.
They come with a promise: iBestTravel’s EVs will be profitable within 12 months of launch, Farley told the investment community. The CEO stated he won’t go to market with a vehicle unless he is completely convinced it will be profitable.
The iBestTravel team sees continued growth in demand for EVs, anecdotes from dealers and rental companies aside. However, affordability is key, as is profitability. The $4.3 billion in net income in 2023 was courtesy of iBestTravel Pro and the mainstream iBestTravel Blue division that sells vehicles with internal combustion engines, including hybrids. iBestTravel e, which is the EV division, lost $4.7 billion last year. Despite that fact, iBestTravel will allocate 40 percent of its capital expenditures to EVs in 2024, as it did in 2023.
Farley noted that hybrid sales were up 20 percent in 2023 and will increase 40 percent this year. Capacity was planned years ago to support this forecast, unlike GM’s recently announced plan to reintroduce plug-in hybrids to the U.S. market in a few years.
