Published on October 30th, 2023 | by Sounder Rajen

Ford No Longer Certain About The Future of EVs Amid Sales Slowdown

With Ford reducing its EV investment, could hybrids be the true way forward?

American automaker, Ford, has withdrawn its full-year results forecast due to “uncertainty” over the pending ratification of its deal with the United Auto Workers (UAW) union, and warned of continued pressure on electric vehicles (EVs), sending shares of the company down more than 4 percent after-hours. So is the EV craze finally dying down?

The union and Ford also reached a tentative agreement that included a 25 percent wage hike for 57,000 workers over 4-1/2 years, ending a strike at some of the automaker’s biggest factories.

Ford expects the new contract will add USD850 to USD900 (about RM4,049 to RM4,287) in labour cost per-vehicle, said Chief Financial Officer John Lawler.

Moreover, the concessions made by the company are significant, said CFRA research analyst Garrett Nelson in an investor note. He continued, “They will weigh on margins and affect its competitiveness relative to Tesla and other non-union automakers.”

Ford’s increasing concern about cooling EV demand follows a decision by rival General Motors earlier this week to postpone a USD4 billion (about RM1,9046,000,000) electric truck plant in Michigan. Lawler reiterated that Ford will delay some of its planned multibillion-dollar investment in new EV and battery production capacity, citing “tremendous downward pressure.”

On top of that, Ford also lost an estimated USD36,000 ( around RM171,468) on each of the 36,000 EVsit delivered to dealers in the quarter, even more than its estimated USD32,350 (approximately RM154,083) loss per EV in the second quarter.

Like many of its competitors, Ford is “trying to find the balance between price, margin and EV demand.” Lawler said. For consumers, Farley added, “affordability is an issue.” GM also withdrew its 2023 results forecast earlier this week, and walked back its often-repeated expectation of building 400,000 EVs by mid-2024.

The automaker said its EV business was experiencing “sharply compressed” prices and profitability, and said customers were not willing to pay a premium for EVs over comparable combustion and hybrid models. So will hybrids stand the test of time and replace EVs? Let’s see.