The struggle with slow customer adoption of electric vehicles is causing automotive manufacturers to face challenges, despite the ongoing phase-out of the internal combustion engine. Ford Motor, in particular, recently announced that it will be postponing its planned $12 billion investment in new electric vehicle manufacturing capacity. The reason behind this decision is the reluctance of customers in North America to pay the premium prices demanded by EVs.
Ford’s decision to delay its investment was reported by CNBC, which revealed that the company plans to push back the construction of a second battery plant in Kentucky. However, Ford representatives clarified that this delay does not affect its commitment to producing future electric models. According to Ford Motor CFO John Lawler, the company is focused on meeting customer demand and is capable of balancing the production of gasoline, hybrid, and electric vehicles.
Despite Ford’s dedication to electric vehicle production, its electric-vehicle business unit, Ford Model e, suffered a significant loss of $1.3 billion in operating costs during the third quarter of this year. This loss is nearly double the loss incurred during the same period in 2022.
The diminishing interest in electric vehicles has become evident beyond Ford’s struggles. Hertz, a multinational car rental company, recently announced a slowdown in its electrification plans for its fleet. The reasons cited were increased repair costs and Tesla’s constant price cuts, which have affected the resale value of its stock.
In addition to Hertz, Honda and GM have also scrapped their joint plans to invest $5 billion in the development of more affordable electric vehicles. GM has scaled back its EV targets as it assesses customer demand. These developments indicate that the transition to an all-electric lineup in the coming years will be more challenging than anticipated.
Mercedes-Benz CFO Harald Wilhelm provided further insight into the difficulties faced by the EV market. He described it as a “pretty brutal space” due to some manufacturers selling EVs at lower prices than internal combustion engine cars, despite higher production costs. He expressed doubts about the sustainability of this current situation and suggested that electric cars are unlikely to decrease in price anytime soon. It is evident that the EV revolution will be a longer journey than initially expected.
As the automotive industry faces challenges in the electric vehicle market, manufacturers are realizing the complexities involved in transitioning to a fully electric lineup. Despite difficulties, many companies remain committed to their electrification plans. However, it is clear that customer adoption, pricing, and production costs will play significant roles in shaping the future of electric vehicles.
