Despite headlines focusing on the fact that automakers around the world are rapidly phasing out the internal combustion engine, it appears that many companies are struggling with slow customer adoption of electric vehicles.
Yesterday, Ford Motor announced that it is postponing the $12 billion it planned to spend on new electric vehicle manufacturing capacity, citing customers in North America are reluctant to pay the premium charged by electric vehicles. demanded.
According to CNBCFord plans to reduce its planned spending on manufacturing capacity, including a planned second battery factory on a new campus in Kentucky. Although representatives of the Blue oval were keen to point out that this would not affect the commitment to the production of future electric models.
“The customer is going to decide what the volumes are,” Ford Motor CFO John Lawler said in a recent briefing. “Ford is able to balance production of gas, hybrid and electric vehicles to match the rate of EV adoption in a way that others cannot.”
Regardless, the company announced that its electric vehicle business unit, called Ford Model e, lost $1.3 billion on an operating basis in the third quarter of this year. That is almost double the loss compared to the same period in 2022.
Not such a bright spark?
The initial buzz for electric vehicles has waned, and this Ford news shows that reality is now starting to sink in. Hertz, the multinational car rental company, recently stated that it is slowing car growth. electrification of its fleetciting higher repair costs and Tesla’s constant price cuts affecting the resale value of its shares.
In addition, Honda and GM have scrapped plans to spend $5 billion on joint development of more affordable electric vehicles, as GM has scaled back some of its recent EV targets as it works out customer demand.
While most manufacturers remain committed to an all-electric offering over the next ten to fifteen years, many now recognize that the transition will be a lot more difficult than initially expected.
Harald Wilhelm, CFO at Mercedes-Benz, recently described the EV market as a “pretty unforgiving space,” citing the fact that some manufacturers are now selling EVs cheaper than combustion engine cars despite higher production costs, according to Reuters.
“I find it hard to imagine that the current status quo is completely sustainable for everyone,” he added. And this probably only means one thing: electric cars aren’t likely to drop in price anytime soon, and the EV revolution will be a longer journey than planned.