Weekend Aug 24, 2024
Ford Announcement
On Wednesday of this week, Ford publicly said it would scrap plans for a large, electric SUV with 3 rows of seating. Mark Truby alluded to that during our interview last month. Ford went on to say it expected to take a whopping 1.9 billion dollar charge due to the soft EV market. Earlier in the year, Ford had said it was going to delay this big SUV until 2027, now it is off the table.
Ford President and CEO Jim Farley had this to say about Ford's adjusted electrification plans: "We are committed to innovating in America, creating jobs and delivering incredible new electric and hybrid vehicles that make a real difference in CO2 reduction,” said Farley in a Ford media release. “We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths.”
Going further, the Blue Oval carmaker said it would cut capital spending on electric vehicles from 40% to 30%. Yours truly is willing to bet that number goes down even more in the future.
Ford Chief Financial Officer John Lawler said: “Based on where the market is and where the customer is, we will pivot and adjust and make those tough decisions.” Ford has said publicly that electric vehicles for 2024 were on pace to lose roughly 5 billion dollars. I am sure execs hope the action taken this week will pare down that loss in the near future. CFO Lawler also said: “This is really about us being nimble and listening to responses from our customers,” he said in a media briefing. “We looked where the segment was evolving, the amount of competition, the customer needs, and then, the size of the battery that needs to go in a pure EV, the cost structure, the pricing, we could not put together a vehicle that met our requirements to be profitable in the first 12 months of launch.”
Changes will likely continue to come from Ford and all the automakers that bet heavily that America would adapt to electric vehicles quickly. Also, this week, General Motors announced it is laying off 1,000 employees, mostly in the United States, in the “software and services” division. The rumor mill is that the layoffs are actually coming from the Ultium division, the GM arm that handles electric vehicles. That would not surprise me, none of these automakers want to admit they jumped into EVs way too hard and way too fast.
What is crystal clear at this point is there will be a lot more changes, write-offs, and layoffs related to electric vehicles in the near future.
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