Over the past five years, automakers have spent billions of dollars in a frantic race to develop electric vehicles and build factories to produce them, hoping that consumers will flock to the new models.
But over the past 12 months, the pace of growth in electric vehicle sales has slowed as some buyers balk at the high price of electric cars and trucks and the difficulty of recharging them, especially on long trips.
This shift in consumer behavior is now forcing many automakers to revise their ambitious investment plans and return, at least in part, to internal combustion engine vehicles, which still account for most new car sales and a large portion of corporate profits.
The latest example came last Thursday from Ford Motor, which announced that it would retool a plant in Canada to produce full-size pickup trucks rather than electric sport utility vehicles, as it had previously planned to do.
Ford’s decision comes a day after General Motors said it plans to make between 200,000 and 250,000 battery-powered cars and trucks this year, about 50,000 fewer than it had planned.
“After the pandemic, there was a lot of exuberance around EVs [véhicules électriques]and I think a lot of manufacturers thought that growth was going to continue,” says Arun Kumar, partner and managing director of the automotive and industrial practice at AlixPartners.
“In reality, that’s not the case, and it makes sense to make sure that we don’t lose market share in the internal combustion space,” he adds.
A Trump effect
Automakers’ hesitation toward electric vehicles comes at a politically sensitive time for the industry. U.S. auto regulations could change dramatically if former President Donald Trump wins the election in November. Mr. Trump has pledged to reverse many of President Joe Biden’s policies, including those that encourage the use of electric cars to combat climate change.
Even before the presidential campaign gained momentum, Ford, GM and other automakers had slowed their investments in electric vehicles, delaying some new models and the construction of battery manufacturing plants.
A few years ago, GM and Ford planned to produce more than a million electric vehicles per year by mid-decade.
At a CNBC event this week, GM CEO Mary T. Barra said it would take longer to reach that level of capacity because of slowing growth in electric vehicle sales.
Even Tesla, the world’s largest producer of electric cars, has changed its plans because it no longer expects sales to grow 50% annually; its global sales fell 6.6% in the first six months of the year.
The company slowed plans to build an electric car factory in Mexico and canceled a meeting in April between its CEO, Elon Musk, and Indian Prime Minister Narendra Modi to discuss a new factory there.
The Return of the Super Duty
Ford’s Oakville, Ontario, plant recently stopped building the gasoline-powered Ford Edge SUV and was set to switch to new electric versions of the Ford Explorer and Lincoln Aviator, two three-row SUVs. Instead, Ford will turn the plant into a third production site for its Super Duty pickup, one of its most profitable models.
Ford CEO Jim Farley 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 keep up with demand,” he said in a statement. In April, Farley revealed that Ford had more than twice the number of Super Duty orders it could build. In the first half of this year, Ford produced more than 200,000 Super Duty trucks.
PHOTO CHARLES KRUPA, CANADIAN PRESS ARCHIVES
The Ford logo on the front of a truck
Ford says the Oakville plant is expected to begin producing Super Duty trucks in 2026, with a capacity of 100,000 vehicles per year. The company plans to spend $3 billion to expand production of the trucks.
Ford plans to introduce updated Super Duty trucks toward the end of the decade. Among the new offerings is an electrified model, most likely a hybrid truck that combines a powerful internal combustion engine with an electric motor.
A purely electric powertrain likely wouldn’t provide the towing power and range Super Duty 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.
Super Duty truck production in Oakville will retain about 1,800 jobs at the plant, as well as 50 more at an engine plant in Windsor, Ont. To support the increased Super Duty production, Ford also plans to add additional hours and hire workers at a transmission plant in Ohio and component and axle plants in Michigan.
In April, Ford announced it would delay the start of production of the electric Ford Explorer and Lincoln Aviator in Oakville from 2025 to 2027, sparking concerns about the jobs situation at the plant.
Canadian autoworkers’ union Unifor welcomed the new pickup production plan. “We’ve reached an agreement that will not only get our members back to work sooner, but also protect their jobs for the future,” Unifor President Lana Payne said in a statement.
Ford says it still plans to build the electric Explorer and Aviator, but hasn’t said when or where it will do so.
This article was first published in the New York Times.
Read the original article (in English; subscription required)