- Ford is postponing $12 billion in spending on EV manufacturing expansions, including a new battery plant.
- EV sales are lagging due to high sticker prices and increased interest rates on car loans.
- General Motors and Tesla are also delaying their EV initiatives.
- Political factors, such as partisan ownership of EVs and concerns about job loss, are impacting consumer perception of EVs.
- However, red states building more EV and battery plants could potentially change the landscape.
Ford announced that it is halting its plans to invest $12 billion in electric vehicle (EV) manufacturing expansions, including the construction of a new battery plant. This comes as consumer demand for EVs falls short of industry expectations. Dealerships are struggling to sell EVs as many consumers are unwilling to pay the higher average sticker price, especially with the recent increase in interest rates on car loans. According to the Wall Street Journal, EV sales only increased by 51% in the first nine months of this year compared to 69% during the same period in 2022.
Other automakers, such as General Motors (GM) and Tesla, are also putting the brakes on their EV initiatives. GM and Ford have abandoned their short-term goals for EV production quantity and are currently dealing with strikes from auto workers. GM has also delayed the opening of its second electric truck plant and canceled a joint venture with Honda that aimed to bring affordable EVs to the global market. Tesla’s Elon Musk is considering postponing the construction of a new Gigafactory in Mexico. Hertz, a major rental car company that mainly sources its EVs from Tesla, is also slowing down its fleet electrification plans.
There are political factors at play as well. EV ownership has become a partisan issue, with research company Strategic Vision finding that only two Republicans own EVs for every five Democratic EV owners. The support for EVs from President Biden has made them a target for his 2024 presidential opponents, such as Donald Trump and Mike Pence, who have amplified fears of job loss due to the transition to electric. Some critics, like Vivek Ramaswamy, believe that EV buyers have a psychological insecurity.
However, there could be potential for change as red states start building more EV and battery plants. Ford, for instance, still plans to open a $5.6 billion EV and battery manufacturing “campus” in Tennessee by 2025. This shift in manufacturing locations could help change the perception of EVs and create more job opportunities in those states.
In conclusion, the automotive industry is reevaluating its EV ambitions as consumer demand fails to meet expectations. Ford, GM, and Tesla are postponing their plans for EV expansions and construction of new plants. The hesitation is largely due to low sales and concerns about the higher cost of EVs. Political factors, such as partisan ownership and fears of job loss, are also impacting the perception of EVs. However, with red states investing in EV and battery manufacturing, there is a potential for change in the future.