- April 4, 2024
- Posted by: legaleseblogger
- Category: Related News
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Ford Delays Launch of New Electric Vehicles Amid Auto Industry Transition
In another sign the auto industry is downshifting its transition to electrification, Ford Motor Co. will delay the launch of new three-row electric vehicles in Ontario, adjust the timing of its next-generation electric truck, and offer hybrid powertrains across its entire internal combustion engine lineup in North America by the end of the decade.
The delay in launching new electric vehicles reflects a growing realization among industry executives, including those at Ford, that expectations for the adoption and growth of electric vehicles were misguided. The spike in sales due to a global microchip shortage and limited inventories led to skewed expectations about the necessary production capacity for EVs and batteries. Despite the increased availability of all vehicles, most customers are not yet prepared for EVs due to concerns over cost, inadequate charging infrastructure, and long charging times.
Ford’s first-quarter EV sales in the U.S. jumped 86%, with hybrid sales increasing by 42% year-over-year. Despite this, the company anticipates a $5 billion loss in its Model e EV division for 2024, aligning with adjustments to its planned $12 billion EV investments. Similarly, Tesla’s global sales dropped by 8.5%, and GM saw its U.S. EV sales decline to nearly 16,500 in the first quarter.
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“As the No. 2 EV brand in the U.S. for the past two years, we are committed to scaling a profitable EV business, using capital wisely and bringing to market the right gas, hybrid, and fully electric vehicles at the right time,” stated Ford CEO Jim Farley. “Our breakthrough, next-generation EVs will be new from the ground up and fully software enabled, with ever-improving digital experiences and a multitude of potential services.”
Read more:Here’s why the auto industry got the EV adoption timeline wrong
To provide the market for three-row EVs with more time to evolve and benefit from emerging battery technologies, Ford is postponing the launch of these vehicles. The company is also focusing on developing smaller, more affordable EVs and creating a new platform with a specialized team in California. Consequently, the start of production for three-row vehicles at the Oakville Assembly Plant will be pushed to 2027 instead of the originally planned 2025.
“Hybrid is emerging as a favorable route,” noted Daniel Ives, an analyst at investment firm Wedbush Securities Inc. “It postpones the challenges of EVs in the current market conditions. Globally, demand for EVs has softened, necessitating Detroit automakers to pivot toward a hybrid strategy.”
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It could be disastrous if more EVs launch, and they don’t go over well, he added: “Ford needs to make sure that the timing, the product and the execution is flawless.”
On a down day across Wall Street, Ford’s stock dropped 3.2% to close at $13.21 per share.
The shift toward hybrids, though, isn’t without costs, said Mike Austin, senior research analyst at market research firm Guidehouse Inc. There is far less competition in the three-row SUV segment than in other areas where Ford has product, like with the Mustang Mach-E. The Kia EV9 stands alone in the larger-size EV market.
“Yes, the Model e division is losing money, and Ford needs to be wary of its investments and not rushing into a market where there is no demand,” Austin said. “But if it’s later, it might be coming into a more competitive market and miss the advantage of being early.”
Coming later, though, also would allow it to leverage technology advancements, whether it’s better battery chemistries or improvements to vehicle weight, electric systems, or motor efficiency that would provide more desirable characteristics like longer range, said Sam Fiorani, vice president of global forecasting for AutoForecast Solutions LLC. That’s particularly important for a larger vehicle.
“Early adopters just wanted an EV to show off they had an EV or to be as green as possible,” he said. “Regular car buyers see that EV developments are progressing at such a rate that the car you buy today is outdated tomorrow.”
Ford isn’t alone in scaling up hybrids as the growth in EV adoption slows. GM CEO Mary Barra said in late January that the Detroit automaker would bring hybrid models to the U.S. market, a shift from its all-EV strategy.
Ford’s decision also comes after the U.S. Environmental Protection Agency finalized tailpipe greenhouse gas emissions rules for model years 2027 through 2032. The final rules offered a slower increase in stringency in the first three years than the original proposal. Ford’s announcement reflects the flexibility offered by that change, Austin said.
Retooling of the Oakville plant from the gas-powered Edge crossover is still expected to begin in the second quarter. Some skilled trades workers will maintain their position through the updates, but most of the 2,700 employees at the plant will be on layoff until production resumes again.
The company says it will work with Canadian labor union Unifor, which represents 3,200 members there, to mitigate the effect of the delay on workers. In the 2023 contract with Ford, a provision says that if the retooling period at Oakville extended beyond the expected eight months, the company and the union would meet to discuss extending income and benefit transition supports, according to the union.
“Unifor is extremely disappointed by the company’s decision,” Unifor National President Lana Payne said in a statement. “Our members can be assured that we will push the company to explore every single possible opportunity to lessen the impact of this decision on them and their families.”
Oakville is Ford’s only assembly plant in Canada, and Farley said the Blue Oval remains committed to manufacturing in the country: “We value our Canadian teammates and appreciate that this delay will have an impact on this excellent team. We … believe this decision will help us build a profitably growing business for the long term.”
Ford also is tweaking the timing of the next all-electric F-Series truck that will be built at the sprawling $5.6 billion Blue Oval City campus being constructed in Tennessee — a part of the $11.4 billion in investments Ford announced in 2021 in that state and Kentucky, the single largest manufacturing investment in its history. Deliveries of the trucks will begin in 2026. The automaker previously said their production would begin in 2025.
Construction continues on the BlueOval SK joint venture battery plants in Tennessee and Kentucky, though one of the plants in Kentucky has already been delayed by a year. Progress at BlueOval Battery Park in south-central Michigan’s Marshall also proceeds for Contemporary Amperex Technology Co. Ltd.-licensed lithium-iron-phosphate battery production after the automaker in November announced it was scaling back the plant’s size by 43%. That technology is less expensive than traditional lithium-ion batteries. Ford is also expanding Ohio Assembly Plant in Avon Lake for a Ford Pro commercial EV; installation of tooling is expected to begin in spring 2025.
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