Ford’s Challenges In Electric Vehicle Market

The Challenges that Ford Motor Co. is Facing in the Electric Car Market

As electric vehicles (EVs) are on the rise, many car manufacturers are making the transition from traditional vehicles to EVs. Ford Motor Co. is one of the car manufacturers that is leading the way in this direction. However, reports suggest that the company is facing some challenges in the electric car market.

Ford Motor Co. announced that it would need another year to meet a year-end target to reach an annual production rate of 600,000 EVs, which it now expects to hit in 2024. The company has also abandoned plans to make 2 million EVs a year by the end of 2026. Since making these announcements, many people have been questioning the reasons behind Ford’s decision to scale back production.

So here it is – Ford Motor Company publicly and clearly backing down on their aggressive EV production/sales targets based on market reality – mainstream US consumers will not venture to buy EVs/PHEVs unless the prices are lower, way lower.

Do you think other OEM’s will follow soon and “revise” their EV/PHEV roll-out timetable to Wall Street, or will this be isolated to Ford, in their specific situation? Tesla certainly isn’t holding back full production, but the vast difference between them and every other OEM on per-unit economics is striking.

In the US we are out of early adopters and inventory shortages now, so the real “demand” is revealing itself. It looks now that all of the lofty projections and EV/PHEVproduction/sales goals of all of the OEMS, State and Federal Government may have been wildly optimistic, based on a single OEM’s unprecedented success in the very high end of the market, combined with the fact that over the last couple of years anything with 4 wheels (new, used, really old, EV) has been in demand at record prices.

Now, with about 100 new EVs coming on stream in the next 30 months, with trillions of dollars invested in the production of these units, it looks like, at the very least, this hyperdrive timetable is going to be way off.

EV inventory building up rapidly (105-day supply at last count), price wars already rolling out, and now Ford, the first OEM in the US saying they are dialing back on the aggressive sales projections originally stated, what’s next?

On the bright side, retention rates for folks already in EVs/PHEVs is off the charts, so I have to say, part of the solution, I think, that also helps regular folks get into ICE units as well, is a new form of “ownership” for personal transportation, a vehicle subscription/mini-lease (AutoNation’s new term)/long term rental, whatever you want to call it, where someone can chose and drive the vehicle of their choice first, without an immediate long term financial commitment, with the benefit of the vehicle write down in usage payments, and an option to buy. More prevalent in Europe now than in the US, I think it will migrate here, and Driveitaway and other SaaS providers and direct operators will begin to become a significant percentage of new car “sales.”

I think AutoNation’s new introduction of just such a program, their Subscription/Mini-Lease through AutoNation Mobility, will go a long way to move this forward throughout the industry for many other retailers.

In any event, with lots of money already bet on a fast transition to EVs/PHEVs, it should be an interesting few years…

One of the reasons behind Ford’s decision is the slowing demand for plug-in models. According to reports, Ford is experiencing challenges in the electric car market due to several factors, including price competition from traditional automakers and market leader Tesla Inc. In a bid to keep pace with Tesla, Ford recently cut prices on its EVs.

Ford’s price cuts are aimed at keeping pace with EV market leader Tesla Inc., which has slashed sticker prices this year. As a result, Ford now expects to see losses from EVs hit $4.5 billion this year, up from an earlier estimate of $3 billion. This is more than double the $2.1 billion that the company lost on EVs last year.

Despite these challenges, Ford is still aiming to achieve an 8% return on battery-powered models, before interest and taxes, in three-and-a-half years. However, the company’s Chief Executive Officer, Jim Farley, is considering other ways to achieve this margin. It remains to be seen how Ford will achieve its target, but the company is expected to announce more concrete plans in the coming months.

The success of electric vehicles is still uncertain, especially in the face of the COVID-19 pandemic, which has affected production capabilities across the entire automotive industry. Despite this, car manufacturers like Ford Motor Co. are continuing to invest in EVs and working hard to address the issues they are facing in the market. The challenges that Ford is facing in the electric car market are considerable, but the company has taken steps to address these challenges, such as slashing prices to compete with market leader Tesla. Only time will tell if these changes will be enough to keep Ford at the forefront of the electric car market.