Ford has been signaling for a while now that demand for electric vehicles (EVs) is not increasing at the pace that it had expected, so the news that it is delaying production of a next-generation all-electric pickup truck and canceling plans for a three-row electric SUV is not a huge surprise.
Nevertheless it’s worth noting a few points, starting with the fact that the electric pickup was going to be built at its new BlueOval City facility going up near Memphis, Tenn. When BlueOval was first announced in 2021, Ford said it would be the “the largest, most advanced, most efficient auto production complex” in the company’s history. The cost? $5.6 billion.
After Ford announced in late 2023 that it was scaling back production of its new F-150 Lightning electric truck, the mayor of Haywood County, the home of BlueOval, was quoted by Fox 13 as saying this:
Mayor Livingston told FOX13 he is in constant contact with Ford. He suspects the company’s sizable investment will pay off for decades to come.
“It’s too big to fail — literally,” he said. “You’ve never had a company like Ford Motor Company come to this area and put the stake it’s had in Tennessee. It won’t fail.”
“Too big to fail,” eh?
I have been thinking for a while that the “forced” switch to EVs could lead to bailouts for the auto sector. Mayor Livingston’s comments don’t give me any reason to think that I’m wrong.
BlueOval City may be fine, but the news out of Ford is another reminder to those talking up the boost in EV factory building that was fueled, in part, by the Inflation Reduction Act. Building a factory is one thing. Whether people will want to buy (if they are given a choice) what is made there is quite another.
Ford is now saying that it will be prioritizing the development of hybrids, a popular choice these days. I’m old enough to remember when Toyota’s CEO came under fire from some (progressive) state pension funds for, among other examples of wrongthink, continuing to stress the importance of hybrids. The fool! What did he know about cars? Ford has not, of course, given up on EVs. It announced, CNBC reported, that it’s working on electric commercial vehicles such as a new electric commercial van in 2026, followed by two EV pickup trucks in 2027.
Write-offs and other one-offs arising from these changes could amount to as much as $1.9 billion. A billion here and a billion there, and soon . . . (well, you know the rest).
Ford will also be reducing the share of its capital expenditure dedicated to EVs from 40 percent to 30 percent.
CNBC noted that Ford has previously said (my emphasis added):
It would not launch a vehicle if there wasn’t a clear path to profitability within the first year. It was a change from selling EVs at a loss to grow share and assist in meeting fuel and emissions standards.
And here we approach a key part of Ford’s problem. Essentially it has two customer groups. The first is made up of people who buy vehicles (and are not buying enough EVs). The second, which also supplies the company with quite a bit of money, is government, and government wants Ford to make and sell more of the type of vehicle that the first client group does not want to buy (in sufficient quantities).
Sooner or later, something will have to give.
Ford sells a lot of cars internationally (its second largest market, by volume, is . . . China). Adding to its woes is pressure from Chinese competition.
Ford acknowledged it was struggling with competition from China. It said: “Chinese competitors leverage advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences to expand their global market share.”
American EV tariffs might protect U.S. manufacturers in the U.S. and, depending how high their EV tariffs go, the EU, but that’s not all that is at stake.
The Guardian wouldn’t be the Guardian without a spot of propaganda:
Hybrid cars combine a polluting petrol engine with a smaller battery. Farley emphasised that hybrids “make a real difference in CO2 reduction”, although they still produce far more carbon in production and usage than pure electric vehicles.
Far more? Depends on how it’s calculated. There are large variables, including the sources of the electricity used to manufacture the vehicles and, of course, to power them. Full credit to the Guardian for including the emissions generated in the manufacture of these vehicles as well as their use when comparing them. Those often get overlooked. Click on the link given in the Guardian report for one take.
Here’s another, via the Seattle Times:
To find the total emissions of a vehicle, we must consider its entire life cycle, said Ashley Nunes, a researcher at Harvard’s Department of Economics. That means combining the emissions churned out by manufacturing the vehicle, transporting it to consumers, manufacturing the fuel, burning the fuel and scrapping the thing when it’s finished.
Nunes assumes a 180,000-mile life span for a given vehicle and the figures break down like this:
An internal combustion engine generates about 370 grams of carbon dioxide emissions for every mile driven. That’s 66.6 million grams over the course of 180,000 miles, or 66,600 kilograms, which equals 73.4 tons of emissions over the car’s full life.
A hybrid generates 270 grams of carbon dioxide per mile, roughly 53.6 tons in its life.
A plug-in hybrid generates 230 grams of carbon dioxide per mile, about 45.6 tons in its life.
An EV generates 195 grams of carbon dioxide per mile, about 38.7 tons in its life.
For the difference between the two types of hybrid, please go here.
But there is something else. If there are car buyers who won’t switch their conventional cars into EVs, but will switch into hybrids, isn’t that something that rational climate policy-makers should encourage?
Looking at the difference between hybrids, are 230 grams of CO2 per mile “far more” than 195? Are 270? More relevantly, is the difference (taken as a whole) between the emissions generated by the different types of vehicle really going to make any material difference to the climate?
Somehow I suspect not.