More Gas
Cars and Trucks, Fewer E.V.s as Automakers Change Plans
Ford,
General Motors and other automakers are slowing investments in electric
vehicles and doubling down on more profitable gasoline cars and trucks.
Neal E.
Boudette
By Neal E.
Boudette
July 18,
2024
For much of
the last five years, automakers have been spending billions of dollars in a
frantic race to develop electric vehicles and build factories to produce them,
with expectations that consumers would flock to these new models.
But in the
past 12 months, the growth rate of electric vehicle sales has slowed sharply as
some car buyers have balked at the high prices of electric cars and trucks and
the hassles of charging them, especially on long trips.
The shift in
consumer sentiment is now forcing many automakers to pull back on aggressive
investment plans, and pivot, at least partly, back to the internal-combustion
engine vehicles that still account for most new car sales and a large share of
corporate profits.
The latest
example came on Thursday when Ford Motor said it would retool a plant in Canada
to produce large pickup trucks rather than the electric sport-utility vehicles
it had previously planned to make there.
Ford’s move
comes a day after General Motors said it expected to make 200,000 to 250,000
battery-powered cars and trucks this year, about 50,000 fewer than it had
previously forecast.
The Rise of
Electric Vehicles
Europe to
Impose Higher Tariffs on Chinese E.V.s: The tariffs, some as high as 45%, are
intended to protect Europe’s automotive sector, but they could escalate a trade
war with China.
Ford vs.
G.M.: In the race to be second to Tesla in the U.S. electric vehicle market,
Ford leaped to an early lead four years ago over General Motors. But the
contest looks much different today.
Tax Credits:
The Inflation Reduction Act was a compromise between competing priorities.
Evaluating the law on the effectiveness of the $7,500 tax credit for E.V.s is
tricky.
“After the
pandemic, there was a huge exuberance around E.V.s, and I think a lot of the
manufacturers thought that growth was going to continue,” said Arun Kumar, a
partner and managing director in the automotive and industrial practice at
AlixPartners, a consulting firm. “But the reality is that’s not the case, and
it’s a smart move to make sure you’re not losing market share in internal
combustion.”
Car
companies’ hesitation about electric vehicles comes at a politically fraught
moment for the industry. U.S. auto regulations could change significantly if
former President Donald J. Trump wins the election in November. Mr. Trump has
pledged to undo many of President Biden’s policies, including those that
promote the use of battery-powered cars to address climate change.
But even
before the presidential campaign ramped up, Ford, G.M. and other automakers had
been slowing their investments in electric vehicles, delaying some new models
and work on battery plants. Just a few years ago, G.M. and Ford expected to
have the capacity to make more than one million electric vehicles a year by the
middle of the decade.
At a CNBC
event this week, Mary T. Barra, the chief executive of G.M., said it would take
longer to reach that capacity level because of slower growth in electric
vehicle sales.
Even Tesla,
the leading producer of electric cars, has changed its plans because it no
longer expects sales to grow 50 percent a year; its global sales fell 6.6
percent in the first six months of the year. The company has slowed plans to
build an electric-car factory in Mexico and canceled a meeting in April between
its chief executive, Elon Musk, and the Indian prime minister, Narendra Modi,
to discuss a new plant in that country.
The Ford
factory in Oakville, Ontario, recently stopped making the gasoline-powered Ford
Edge S.U.V., and was slated to shift to new electric versions of the Ford
Explorer and Lincoln Aviator, both three-row S.U.V.s. Instead, Ford will turn
the factory into a third production location for its Super Duty pickup truck,
one of its most profitable models.
Jim Farley,
the chief executive of Ford, said the company’s other Super Duty plants in
Kentucky and Ohio couldn’t produce as many vehicles as its commercial customers
wanted.
“We can’t
meet the demand,” he said in a statement. In April, Mr. Farley said the number
of Super Duty orders Ford had was double the number of trucks it was able to
build. In the first half of this year, Ford produced more than 200,000 Super
Duty trucks.
Ford said
the Oakville plant should start making Super Duty trucks in 2026, with a
capacity of 100,000 vehicles a year. The company plans to spend $3 billion to
expand production of the trucks.
Toward the
end of the decade, Ford plans to introduce updated Super Duty trucks. Among the
new designs is an electrified model, most likely a hybrid truck that combines a
powerful internal combustion engine with an electric motor. A purely electric
powertrain would probably not provide the towing power and driving range that
Super Duty’s customers need.
Super Duty
models include the F-250 and F-350 models, which often sell for $70,000 or more
and are typically used as work trucks in construction, forestry, mining and
other industries.
The move to
make Super Duty trucks in Oakville will secure about 1,800 jobs at the plant,
as well as 50 others at an engine plant in Windsor, Ontario. To support
increased Super Duty production, Ford also expects to add overtime work and
employees at a transmission plant in Ohio, and component and axle plants in
Michigan.
In April,
Ford said it would delay the start production of the electric Ford Explorer and
Lincoln Aviator in Oakville from 2025 to 2027, raising concerns about the
status of jobs at the plant.
The Canadian
auto workers union, Unifor, welcomed the new plan for pickup production. “We
came to an agreement that will not only see our members back to work sooner, it
protects our members’ jobs well into the future,” Lana Payne, the president of
Unifor, said in a statement.
Ford said it
still planned to make the electric Explorer and Aviator, but did not say when
or where it would do that.
Neal E.
Boudette is based in Michigan and has been covering the auto industry for two
decades. He joined The New York Times in 2016 after more than 15 years at The
Wall Street Journal. More about Neal E. Boudette
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