Ford is trying to stop its electric car bleeding.
Back in March, I wrote that, “Ford reported that it’s going to lose $3 billion on electric cars in 2023. Unlike most automakers, Ford reports its electric vehicle numbers separately, but experts estimate that most car companies are losing similar amounts on the dead end business.”
“Ford plans to make 2 million electric cars every year by 2025. That would be impressive considering that Ford only sold 61,575 of them in 2022. It sold 3,624 electric vehicles in Feb 2023.”
By July, it was a loss of $4.5 billion.
“Ford said the higher loss projection for Ford Model e reflected “the pricing environment, disciplined investments in new products and capacity, and other costs.” Ford also now expects to reach a 600,000-unit EV production run rate during 2024, instead of the end of this year, on the way to achieving a 2 million annual run rate.”
Now, Ford is finally pulling back.
Ford Motor said Thursday that many customers in North America are no longer willing to pay a premium for an electric vehicle over an internal-combustion or hybrid alternative.
As a result, it’s postponing about $12 billion in planned spending on new EV manufacturing capacity.
Customers’ reluctance to pay extra for EVs has complicated Ford’s ambitious and expensive plans to sharply increase production of those vehicles.
This isn’t a sudden development. EVs are a luxury market. That market has mostly been tapped. Ford and GM jumping into it just burned a lot of money. Now, Ford is trying to burn it at a slower rate. There was never a huge customer base for electric cars. And the only way to expand that customer base is regulatory bans on real cars, which is what California and other lefty states are doing, but those bans are aimed for the mid 2030s. And Ford is sensibly taking more of a wait and see attitude.
GM, which has also been losing a lot of money, is also pulling back.
General Motors is abandoning a self-imposed target to build 400,000 electric vehicles by mid-2024, the latest sign that automakers are concerned about the viability of the market for battery-powered cars.
The move on EVs is a surprise one for a company that has bet its future on the technology, anticipating that it will eventually phase out sales of gasoline-powered vehicles next decade. It comes as rivals, including Tesla and Ford Motor, have also raised red flags about consumer demand for EVs and buyers’ willingness to pay a premium for them over traditional models.
Compared with its competitors, GM has been among the most bullish in pursuing a transition to EVs. Investors cheered its declaration in early 2021 that it would phase out nearly all gasoline- and diesel-powered vehicles by 2035, among the first automakers to vow a full switch to electric.
The question now is whether these pullbacks signal that the car companies wagered too heavily on EVs or are simply confronting hiccups in their transformation toward an electric-dominated future that Tesla pioneered. GM Chief Executive Mary Barra on Tuesday said she believed it was the latter.
“As we get further into the transformation to EV, it’s a bit bumpy, which is not unexpected,” Barra told analysts during GM’s earnings call. “What we’re moving to is something that we can react in a much more agile way to make sure that we have the right vehicles.”
The federal government and states have two options going forward. They can either stop their planned car bans or reckon with a reality in which the US car market will be dominated by China. While we can’t build affordable EVs, China and some Asian automakers will be able to.
Mandating electric cars means turning over the automobile industry to China.