Sometimes, when I look back at the commitments many so-called "legacy" automakers made to go fully electric and software-powered one day, it feels like all of them thought: "How hard can it be, right?" As we saw this week, the answer is "very hard."
And one day, we may all look back on 2024 as the most chaotic year of the transition to a cleaner and hopefully better future for the car industry.
For this Friday edition of Critical Materials, our morning roundup of news about the EV transition and technology, I want to look back at some wins and losses from several of the big players and parse out what it means for what's next.
Plus: Volvo makes a big bet on the EX90, and BYD solidifies its plans for Mexico. Let's go.
30%: Progress Is Not Always Linear
Let's face it: this was not a great week for several big, legacy automakers trying to figure out what's next. We'll start with Ford, since that was the big one.
A few years ago, Ford decided to separate out its sales and financial results into three divisions: EVs, traditional gas vehicles and its commercial operation. At least one goal was to "unlock Tesla-like value," to drive up the stock price by showing investors—who care about the future—that it was progressing like a big tech company.
It hasn't worked. Instead, the continual losses of the electric Model e division kind of made Ford a punching bag. Every quarter and at least once a year, the headlines and investors gripe about the billions in losses and mounting costs around going electric, even if that is to be expected for ramping up an entirely new supply chain and manufacturing ecosystem.
It turns out the investors care about their future, but also want their money right now.
Those losses, and the newfound belief that battery costs won't ever make big electric SUVs and trucks truly viable, meant a strategy shift this week: Ford is canceling a three-row electric SUV, pushing back a new electric truck and focusing on hybrids instead.
As my colleague Kevin Williams pointed out, this means that besides a new electric commercial van, Ford won't have any new EV models until 2027.
That's three years away; three years ago, I'd wager most of the vehicles we write about on InsideEVs didn't exist yet.
There are two ways to read Ford's news this week. The generous read is that Ford is doing what it can to keep investors happy, as any publicly traded company must; that the truly telling move is that Ford isn't slowing down on battery plant investments; and that it may well be right about hybrids being a better solution for bigger vehicles.
But if you want to go glass-half-empty, then we could look at this week as the one where Ford began its transition to just being a gas-powered truck company someday—one that could never make EVs work in volume and will be a kind of John Deere-type company in the subsequent decades. Give Ford an excuse, in other words, and it will take the easy way out.
Market realities are one thing, sure. But so far, Ford's path to EV profits seems dismal. It needs a reset, and pushing those products back to the latter half of this decade—where it may even have to compete with China's automakers in America—is a huge gamble.
Then we have Volkswagen, the original "pivot to EVs" automaker. The long-awaited ID. Buzz is finally coming to America after a development cycle that makes a new Tesla look punctual, and the price and specs just do not feel competitive. And after "indefinitely postponing" the ID.7 sedan for America, Volkswagen has in the pipeline... what, exactly? More mainstream-looking EV models coming, we think, but again, not until the latter part of this decade. And then it may have tougher competition than ever.
Ford, thankfully, is not VW, which only has around 4% market share in the U.S., still lacks a strong brand identity here and just doesn't have that compelling of a lineup beyond the ID.4 (which, admittedly, is better than ever) and the GTI and Golf R. We are getting to a point where it's worth asking if the U.S. market needs the VW brand at all; it had better have an answer to that before the day comes when it has to go up against BYD and the like on our shores.
Next up is General Motors, which is actually in the midst of a pretty good year for EV releases and sales. But it still laid off 1,000 software and services employees this week in an effort to "streamline" operations and, based on all we've heard, reduce bloat and bureaucracy. Again, the generous read is that under its new software leadership, GM is taking steps to focus on power-hitter hires and be the best in the game; the less generous read is that it still hasn't figured out its software game. And 1,000 software engineers say they were "thrown onto the curb like useless trash." It's just very unfortunate.
You can't expect car companies to make unprofitable products forever, and sure, they're all reckoning with rapidly changing buyer tastes—people want plug-in hybrids now, actually!—in a capital-investive environment that takes years of planning and development.
Yet it does feel like many of them should've figured this out by now. And it's only fair to begin wondering if they ever can, or if the plan is to just pivot back to gas cars like they've always done.
So what are the two exceptions I put in that headline? Well, Hyundai Motor Group (whose executives have claimed to us that their EVs are profitable) is now the no. 2 EV seller behind Tesla in the U.S. And BMW just outpaced Tesla's EV sales in Europe. True, both situations were "helped" by Tesla's lost sales momentum. Still, both are remarkable achievements.
One Honda executive is probably right: you can't force people into EVs. But in the next few years, we'll find out who's actually serious about making the technology of the future work, and who just expected customers to show up like they always have.
60%: Volvo Needs A Win With The EX90
That was a long time to charge up to 30% (Critical Materials is an old Nissan Leaf today) so I'll be quicker on these next two items. You'll read a full review of the new, electric Volvo EX90 from Deputy Editor Mack Hogan next week, but make no mistake: this is a big deal for the Geely-owned Swedish brand. From Automotive News, which begins with Volvo's sliding electric sales:
But Michael Cottone, Volvo Cars' U.S. boss, hopes to change that trajectory with a pair of next-generation crossovers that will bookend the brand's EV lineup and reach crucial new audiences.
At the top end is the new three-row EX90 flagship expected to glide into stores in late 2024. It will be followed by Volvo's most compact and least expensive model — the EX30 crossover — in the second half of next year.
"[The EX90] is the first car that we will have launched and developed outside of Europe in our company's almost 100-year history," Cottone said at an Aug. 21 media event in Southern California. "This car was designed for the U.S. market and then built in the U.S. market."
[...] Volvo dealer Matthew Haiken said the EX90 will resonate because it is an evolution of a familiar design. The new model has the DNA of the XC90, which Haiken said has become a classic like the Range Rover or Porsche 911.
"Most EVs look like computers on wheels," said Haiken, owner of Prestige Collection, which operates Volvo stores in East Hanover and Englewood, N.J. "The EX90 is the antithesis of the Tesla Model X."
After months of delays due to software issues (here we go again) Volvo officials say they will be careful here to allocate EX90 volume to the right places that can meet demand: "California, the Northwest and the Mid-Atlantic region."
Also, did you know the XC90 is still Volvo's bestselling model and accounts for almost one-third of its volume? I did not. That's also why Volvo is bringing back the XC90 as a heavily refreshed plug-in hybrid; I'm wondering if that was always in the cards, or if it's hedging its bets in case the EX90 doesn't take off.
90%: Do Not Think For A Second That BYD Isn't Serious About Mexico
And here, finally, is why complacency is not an option.
Mexico's federal government is under pressure from the U.S., its biggest trading partner and ours, not to give incentives to the Chinese automakers to set up factories there.
But nothing is stopping the local governments in Mexico from doing that, and Reuters reports that's coming right along:
Chinese electric vehicle maker BYD has narrowed its list of finalists for the location of a manufacturing plant in Mexico down to three states and is reviewing a range of proposed incentives from them, the firm's country head said on Wednesday.
Jorge Vallejo, BYD's Mexico director general, told Reuters the company was reviewing the latest proposals by the candidate states, which have offered "many benefits" including fiscal, land, management and preferential pricing incentives.
Mexico's northern Nuevo Leon state is an automotive hub, and the location of a proposed Tesla mega-factory. It will also be home to a new Volvo plant, the state's governor said this week.
BYD executives swear that they aren't eyeing the U.S. market and a Mexican factory would be focused on that country's market and the rest of Latin America. If you truly believe that, email me, because I have a bridge to sell you. Tariffs will only keep these automakers out of the U.S. for so long; they had better come up with a way to compete, and 2027 may be too late.
100%: Who Wins The Future, And How?
To his credit, I do think Ford CEO Jim Farley gets the threat to his company posed by China. "As CEO of a company that has had trouble competing with the Japanese and South Koreans," Farley said this earlier year, "we have to fix this problem. We have to address this." He's right, too—and I think he's probably right about huge expensive batteries not being the answer.
So how does Ford, or any of these companies here, fix that problem? What aren't they doing now that they should be?
Contact the author: patrick.george@insideevs.com
