October 30, 2023
MORNING RANT: The Electric Vehicle Transition Just Collapsed, and a Day of Reckoning Has Hit for Auto Manufacturers Who Bet Wrong on EVs
—Buck Throckmorton
EV Demand Graph.JPG
The wheels have fallen off the electric vehicle revolution. Consumers are assertively rejecting EVs, and traditional auto manufacturers who bet heavily on “the EV transition” are at a day of reckoning.
The past few weeks appear to be the “gradually, then suddenly” moment when the problems with the EV transition suddenly collapsed into total failure, and auto manufacturers not named Tesla have had to admit that they bet wrong on EVs as they seek to stop the financial bleeding.
Usual Disclaimer: Tesla is a successful manufacturer of a boutique product favored by status-seeking luxury car buyers who have access to other vehicles for hauling, towing, and long-distance driving, and who have access to overnight charging. It is a niche product of limited utility.
As auto manufacturers started looking at their third-quarter financial results, they finally had to acknowledge that their EV commitments are, ahem, unsustainable, and that they cannot continue to sink billions more capital into the failed notion that EVs will replace internal combustion (“ICE”) vehicles. Here are some of the stories that have just broken:
“Ford again warns on EV results, withdraws 2023 forecast” [Reuters – 10/27/2023]
Ford said its EV unit posted a higher-than-expected loss in earnings before interest and taxes of $1.3 billion.
Ford sold 20,952 electric vehicles in Q3 2023. The $1.3 billion loss in that quarter averages out to $62,000 per unit. That is catastrophically bad.
The company has forecast a full-year loss of $4.5 billion for the Ford Model e unit.
With Ford referring to its EV division as “Model e,” a commenter here once referred to it as the “Model e-dsel.” That’s funny, but Ford survived its Edsel debacle, it may not survive its EV misadventure.
The automaker said its EV business was experiencing "sharply compressed" prices and profitability, and said customers were not willing to pay a premium for EVs over comparable combustion and hybrid models.
Correct. Customers willing to pay a premium for a less-functional vehicle want a very exclusive hood ornament. Those customers purchase Teslas, not Ford e-dsels.
“Ford will postpone about $12 billion in EV investment as buyers become more cautious” [CNBC – 10/26/2023]
[Ford CFO John Lawler] said that Ford will postpone about $12 billion in planned spending on manufacturing capacity for EVs, including a planned second battery plant at a new campus in Kentucky.
Something is puzzling here, because Ford is saying that it is not yet killing off its massive “Blue Oval City” EV plant that is under construction near Memphis, but previous reports about Ford’s $12 billion EV commitment included the Memphis plant in that commitment. Perhaps Ford will re-purpose Blue Oval City for ICE vehicles if it actually gets built.
Reality has also hit at General Motors. It just announced that the manufacture of electric pickups at one of its plants was being pushed back to late 2025 due to ”evolving EV demand,” which is a polite way of saying consumers will not buy them.
“GM delays EV truck production by a year at Michigan plant” [Reuters – 10/17/2023]
General Motors said on Tuesday it will delay production of the electric pickup trucks at its Orion Township, Michigan, plant as it grapples with "evolving EV demand."
In addition, GM has just announced that several other new EVs that were about to hit the market are also on hold.
“GM Delays Launch Of Chevy Equinox EV, Silverado EV RST and GMC Sierra EV” [GM Authority – 10/24/2023]
The announcement that the launch of the Chevy Equinox EV, Chevy Silverado EV RST, and GMC Sierra EV Denali would be delayed was announced by GM CEO Mary Barra during GM’s Q3 earnings presentation.
Here is what General Motors’ CEO Mary Barra had to say about the delay in launching these new EVs, after which I will translate it from corporate word-salad into English.