The strike against Ford (F) -) may be over, but the company's electric vehicle woes are far from solved. The entire auto industry, grappling with steadily softening EV demand over cost and existential infrastructure challenges, is beginning to pull back its efforts to grow the sector.
Tesla (TSLA) -), of course, is dealing with falling sales figures and gross margins amid an ongoing price war whose aim is to entice customers to go electric. General Motors (GM) -), still locked in the throes of the auto strike, canceled an earlier plan with Honda (HNDAF) -) to develop an affordable EV, citing the results of "extensive studies."
GM additionally ditched a target it once had to make 400,000 EVs by mid-2024 and went on to push back the production of its coming EV lineup.
Related: Ford stock wobbles as company puts a dollar figure on UAW auto strikes
The production delay, according to CEO Mary Barra, will “make the trucks more efficient and less expensive to produce, and therefore more profitable."
In a similar move, Ford said Thursday that it was postponing around $12 billion in planned EV investments, including the construction of a new battery plant. The company's electric unit, called Model e, lost $1.3 billion for the quarter, a loss of about $36,000 per vehicle delivered.
At the same time, the company warned that, once its tentative agreement with the UAW is ratified, its vehicles will run $850 to $900 more expensive than before. And with EV profitability low, an especially sobering fact considering how weak EV demand is currently, Ford, according to Former CEO Mark Fields, needs to keep its internal combustion engine (ICE) business alive and well in order to keep funding electric losses.
"The auto industry, it's all about getting scale economies and pennies count," Fields told CNBC. "The ICE business really funds the EV business. You've got to keep that golden goose keep producing for them."
Ford's attempt to make up the extra $900 per vehicle in cost due to the new contract, Fields warned, could wind its way into product decisions, including whether Ford chooses to move production outside of the U.S.
Electrification, he said, is coming. But it's not right around the bend.
The best way forward for automakers right now, he said, involves the approach Ford and Toyota (TM) -) are taking: meet consumers where they are with hybrid and plug-in hybrid vehicles.
Related: Toyota has an important warning for electric vehicle enthusiasts
Hybrids, Fields said, are the best way to transition the industry to an all-electric future. With customers not feeling an urgent desire to move to all-electric, and manufacturers not feeling the growth that would excuse the enormous losses EV production is causing, mass EV adoption might just take a bit longer than people like Elon Musk would like.
This impression is in line with a similar sentiment shared this week by Toyota Chairman Akio Toyoda, who, citing softening EV demand and mounting losses, said that people are "finally seeing reality" when it comes to EVs.
"Over time, you're going to see the industry propulsion systems shift to full battery electric," Fields said. "The issue is, what's the timeframe for that? There's a lot of excitement around the early adopters, now you're getting to the tough part of mass adoption."
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