DETROIT – The strike against Ford may be over, but the company’s electric vehicle woes are far from solved. The entire auto industry, grappling with steadily softening EV demand over cost and existential infrastructure challenges, is beginning to pull back its efforts to grow the sector.
Tesla, of course, is dealing with falling sales figures and gross margins amid an ongoing price war whose aim is to entice customers to go electric. General Motors, still locked in the throes of the auto strike, canceled an earlier plan with Honda to develop an affordable EV, citing the results of “extensive studies.”
GM additionally ditched a target it once had to make 400,000 EVs by mid-2024 and went on to push back the production of its coming EV lineup
The production delay, according to CEO Mary Barra, will “make the trucks more efficient and less expensive to produce, and therefore more profitable.”
In a similar move, Ford said Thursday that it was postponing around $12 billion in planned EV investments, including the construction of a new battery plant. The company’s electric unit, called Model e, lost $1.3 billion for the quarter, a loss of about $36,000 per vehicle delivered.
At the same time, the company warned that, once its tentative agreement with the UAW is ratified, its vehicles will run $850 to $900 more expensive than before. And with EV profitability low, an especially sobering fact considering how weak EV demand is currently, Ford, according to Former CEO Mark Fields, needs to keep its internal combustion engine (ICE) business alive and well in order to keep funding electric losses.
“The auto industry, it’s all about getting scale economies and pennies count,” Fields told CNBC. “The ICE business really funds the EV business. You’ve got to keep that golden goose keep producing for them.”
Ford’s attempt to make up the extra $900 per vehicle in cost due to the new contract, Fields warned, could wind its way into product decisions, including whether Ford chooses to move production outside of the U.S.
Electrification, he said, is coming. But it’s not right around the bend.
The best way forward for automakers right now, he said, involves the approach Ford and Toyota are taking: meet consumers where they are with hybrid and plug-in hybrid vehicles.
