Ford SHOCKS Industry: EVs SCRAPPED for ICE Comeback!

In a move that has shaken the auto industry, Ford Motor Company has announced it will reduce its focus on electric vehicles (EVs) and return to producing internal combustion engine (ICE) vehicles. This pivot reflects the challenges the EV market is currently facing, particularly in terms of demand, production costs, and public charging infrastructure.

Ford’s decision is centered around its Oakville, Ontario, Canada factory, which was previously geared toward electric sports vehicles. The plant will now shift its production to gas-powered pickup trucks. This decision comes hot on the heels of a similar move by General Motors, which recently announced a reduction in its EV production forecast for 2024 by 50,000 units.

Arun Kumar, a partner and managing director in the automotive and industrial practice at AlixPartners, provided insight into the situation, saying, “After the pandemic, there was a huge exuberance around E.V.s, and I think a lot of the manufacturers thought that growth was going to continue. But the reality is that’s not the case, and it’s a smart move to make sure you’re not losing market share in internal combustion.”

The demand for EVs, which surged during the pandemic, is now cooling off. According to reports, the first quarter of 2024 saw 269,000 EVs sold, marking a 7.3% decrease from the previous quarter. This slowdown is attributed to several factors, including high-interest rates, economic uncertainty, and a shift in consumer preferences towards hybrid vehicles. Additionally, concerns over the availability and reliability of public charging stations have also dampened enthusiasm for EVs. Despite there being 188,600 charging ports across the U.S., this number pales in comparison to the estimated 134 million that would be required to completely replace gas-powered cars. Issues such as vandalism and copper theft at charging stations have further complicated matters, making EVs less attractive to potential buyers.

For workers at the Oakville plant, Ford’s decision is seen as a positive development. Lana Payne, president of Unifor, expressed relief at the news, stating, “We came to an agreement that will not only see our members back to work sooner, it protects our members’ jobs well into the future.” This shift ensures job security for many, as demand for Ford’s Super Duty Trucks—a model renowned for its profitability—continues to rise.

However, the implications of this move extend beyond just one factory or one company. The broader concern lies in the potential stalling of the transition to electric vehicles. While EVs can be more expensive upfront, they offer long-term savings with drivers spending 60% less on fuel annually. Additionally, various tax credits are available to help reduce the initial cost of purchasing an EV. Yet, the current trend suggests that a widespread transition to electric vehicles is still a long way off. According to Edmunds, only 6.8% of vehicles sold in May 2024 were electric. This slow adoption rate could jeopardize efforts to achieve net-zero car pollution by 2050, resulting in continued reliance on fossil fuels and more air pollution.

In response to the declining demand for EVs, the Biden-Harris administration has reaffirmed its commitment to accelerating electric vehicle production. Nearly $2 billion has been pledged to support EV manufacturers and their workers. In addition to federal efforts, states and companies are also exploring ways to boost EV adoption. Minnesota, for instance, has introduced a new rebate program for first-time EV buyers. Meanwhile, Hertz has made used electric vehicles available for purchase at prices as low as $19,500, aiming to make EV ownership more accessible.

There are also ongoing efforts to tackle the challenges associated with public charging infrastructure. A UK-based startup has developed a charging station capable of powering up 80% of an EV’s battery in just five minutes, potentially reducing the risk of vandalism and making EVs more convenient for everyday use. Ford is also playing a part in this by launching a new home charging station designed for maximum efficiency.

While Ford’s pivot back to ICE vehicles may seem like a step backward, it reflects the complex realities of the current automotive landscape. The transition to electric vehicles is fraught with challenges, and while progress is being made, it may take longer than initially anticipated for EVs to become the norm. As the industry grapples with these issues, the future of transportation remains uncertain, with both challenges and opportunities on the horizon.