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Ford slows its push toward electric vehicles

by SuperiorInvest

Ford Motor on Thursday delayed production of at least two new electric cars and said it would shift to making more hybrids. Their decision was the latest sign that big automakers have been forced to rethink their strategy for electric vehicles because sales of those models are slowing.

The shift by Ford and automakers such as General Motors and Mercedes-Benz, which have also delayed their electric car plans, has largely been driven by the companies' difficulties in making and selling enough electric cars and doing so profitably. .

Sales of these types of vehicles continue to grow, but the pace has slowed markedly in recent months as automakers have eliminated many early adopters who were willing to spend more than $50,000 on a new powered car. by batteries. Because they are still learning how to make cars and their batteries at a lower cost, companies have not been able to release more affordable models.

“A lot of companies jumped in too quickly with electric vehicles that were too expensive and there wasn't as much of a market for them as they thought,” said Sam Abuelsamid, principal transportation and mobility analyst at research firm Guidehouse Insights. “That has made it much more difficult to sell those vehicles.”

Some consumers are also reluctant to buy electric models because they can't charge the vehicles at home or worry that there won't be enough public chargers available when they want to travel more than a couple hundred miles.

Many car buyers interested in electric vehicles appear to be choosing hybrid cars, which can cost only a few hundred dollars more than comparable gasoline models and, in some cases, offer much better fuel economy. It's also easier for consumers to get used to these cars because they don't need to be plugged in and operate like conventional models.

Andy Goodrich, a retired software engineer in Ann Arbor, Michigan, was considering purchasing a Tesla Model 3 or a Rivian sport utility vehicle, but was worried about finding charging stations. In the end, he chose a plug-in hybrid Toyota RAV4 Prime, which can go about 40 miles on electric power alone before switching to a gasoline engine.

“I drive most of the time locally, so I can go a week or more without using gas,” Goodrich, 72, said. “I charge in my garage overnight and I'm ready for the day. If I have to go to Grand Rapids or something, then the gas engine will take me there.”

Ford said Thursday that it hoped to offer a hybrid version of every model it sold by the end of the decade. It already makes hybrid versions of two trucks (the Maverick and the F-150) and its Escape crossover.

The company said it now plans to start manufacturing a large electric SUV at its Oakville, Ont., plant in 2027, two years later than planned. A plant Ford is building in Tennessee will begin manufacturing an electric pickup truck in 2026, a year later than originally planned.

“We are committed to scaling a profitable electric vehicle business, using capital wisely and bringing the right gasoline, hybrid and fully electric vehicles to market at the right time,” Ford CEO Jim Farley said in a statement. release.

Ford has created a small team in Irvine, California, far from the company's headquarters in Dearborn, Michigan, to develop components that can be used to produce lower-cost electric vehicles. That group is led by a former Tesla executive, Alan Clarke.

“We are also adjusting our capital, focusing more on smaller electric vehicle products,” Farley said on a conference call in February. Ford's electric vehicle business lost $4.7 billion before interest and taxes in 2023. By contrast, the division that makes hybrid and gasoline vehicles for consumers made a profit of $7.5 billion.

The slowdown in sales is also hurting the leading US electric model maker, Tesla. This week it reported an unexpected 8.5 percent drop in sales of its electric cars in the first three months of the year.

On Wednesday, Ford said its electric vehicle sales had grown 86 percent in the quarter, to 20,223 vehicles, but the total was well below the level the company once hoped to reach and came after it cut some prices. .

The company sold more than 7,700 F-150 Lightning pickup trucks, its flagship electric model, in the three months. Last summer, Ford expected to be able to produce about 150,000 Lightning trucks a year. The company recently reduced Lightning production from two to one shift per day.

Two years ago, Ford, GM, Volkswagen and other automakers planned to introduce dozens of new electric cars and trucks, hoping consumers would quickly transition to electric vehicles from gasoline-powered vehicles.

But starting in the second half of 2023, electricity sales growth slowed significantly, forcing manufacturers to scale back their ambitions. Ford and GM have also slowed work at factories that are supposed to supply battery packs for their new electric models.

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