Ford slows its push into electric vehicles

Ford Motor on Thursday delayed production of at least two new electric cars and said it would shift to producing more hybrids. His decision was the latest sign that big automakers are being forced to rethink their electric vehicle strategy because sales of these models are slowing.

The shift by Ford and automakers such as General Motors and Mercedes-Benz, which have also pushed back their plans for electric cars, was largely prompted by the companies' difficulties producing and selling enough electric cars and do it profitably.

Sales of such vehicles are still growing, but the pace has slowed dramatically in recent months as automakers weed out many early adopters who were willing to spend more than $50,000 for a new battery-powered car. Because they are still learning how to produce cars and their batteries more cheaply, companies have not been able to launch 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 analyst for transportation and mobility at research firm Guidehouse Insights. “That made it much harder to sell those vehicles.”

Some consumers are also reluctant to buy electric models because they can't charge vehicles at home or are concerned that there aren't enough public chargers available when they want to travel more than a couple of 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-only models and in some cases offer much better fuel economy. These cars are also easier for consumers to get used to because they don't need to be plugged in and are powered like conventional models.

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

“I do most of my traveling locally, so I can go a week or more without using gas,” said Mr. Goodrich, 72. “I load it into my garage overnight and am ready for the day. If I have to go to Grand Rapids or something, then the gas engine gets me there.

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

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

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

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 low-cost electric vehicles. That group is led by a former Tesla executive, Alan Clarke.

“We are also adjusting our capital, focusing more on smaller electrical 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 gasoline and hybrid vehicles for consumers made a profit of $7.5 billion .

The slowdown in sales also affects the main manufacturer of electric models in the United States, Tesla. This week it reported an unexpected 8.5% drop in sales of its electric cars in the first three months of the year.

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

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

Two years ago, Ford, GM, Volkswagen and other automakers were planning to introduce dozens of new electric cars and trucks, expecting consumers to make a rapid transition from gasoline vehicles to electric vehicles.

But as of the second half of 2023, growth in electrical product sales has declined significantly, forcing manufacturers to scale back their ambitions. Ford and GM have also slowed work at factories expected to supply battery packs for their new electric models.

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