Key Takeaways
Despite pouring billions of investors’ dollars into electric vehicles and billions more from federal and state governments, EV sales growth is slowing.
Ford is cutting planned production of its electric F-150 in half for 2024, after losing $60,000 per electric vehicle sold.
General Motors is delaying its electric pickups after facing similar results.
As more consumers learn of the higher cost insurance, limited range, difficulties charging and high interest rates due in part to spending excesses from pushing net-zero energy policies, they have been reluctant to lay out large sums for electric vehicles.
The trend will hurt Biden’s goal to have half of all vehicles sold by 2030 be electric.
The Ford Motor Co. is cutting its planned 2024 production of its electric F-150 Lightning pick-up in half as electric vehicles sales have faltered. Growth in electric vehicle demand has been slower than expected due to high prices and high interest rates, despite automakers cutting prices, among other issues. The production cut is a major reversal for Ford after they ramped up plant capacity and production for the electric truck this year. Ford’s new production plans call for 1,600 F-150 Lightning pick-ups to be made a week at its main plant in Dearborn, Michigan—half the 3,200 it expected to produce per week in 2024. Ford has canceled or postponed $12 billion in electric vehicle investments after losing about $60,000 on every electric vehicle it has produced.
The gasoline-powered version of the F-150 pick-up truck has consistently been among the bestselling vehicles in North America since 1976. But, sales of the F-150 Lightning have only slowly increased in 2023 with a monthly record of 4,400 sales in November. Ford had hoped to have the capacity to make 600,000 battery-powered vehicles a year by the end of next year. As recently as September, Ford said it planned to make 150,000 electric F-150s a year — a rate of about 3,000 vehicles a week. It has also lowered production plans for its electric sport utility vehicle, the Mustang Mach-E. According to Ford’s chief financial officer, the company is being judicious about its production and was adjusting future capacity to better match market demand. Ford has four battery plants under construction in the United States, but is scaling back the size of one of those in Michigan.
Ford still expects 2024 production and sales of the Lightning to surpass 2023 levels. In the first 11 months of this year, Ford sold more than 20,000 of the Lightning pick-ups—an increase of more than 50 percent from the same period in 2022. The company’s sales of all electric models grew 16 percent, to more than 62,000 vehicles.
At the end of 2021, Ford had accepted reservations for more than 200,000 F-150 Lightning pick-ups. When the company introduced the Lightning pick-up, it indicated the truck would start at $40,000, but Ford raised prices soon after. The pickup now starts at $50,000 and the top-of-the-line version starts at $92,000.
Other EV Issues
While price is one problem for electric vehicles, charging is another. It is hard to find places to charge electric cars and trucks in many parts of the country, which is a severe problem for people who do not have a garage or driveway where they can install a personal charger. Where public chargers are available, there are often long lines or broken machines and chargers take too long to charge an electric vehicle compared to a gasoline tank refill. And public chargers also cost more to charge than home chargers, while drawing enormous amounts of power from a grid already stressed because of weather-driven and intermittent renewable energy that Biden is also pushing.
Range is another problem. Of the 22 electric vehicles tested by Consumer Reports (CR), nearly half fell short of their EPA-estimated ranges, which are much less than their gasoline or diesel counterparts when driven at highway speeds. CR’s engineers found the biggest difference in range with the Ford F-150 Lightning pickup truck: Its battery ran out after just 270 miles—a 50-mile difference from the EPA estimate. The range of electric vehicles falls further when towing or operating in very cold weather, making the utility of an EV pick-up questionable for many. A gasoline or diesel F-150 has a range that is twice that of the CR test.
Insurance rates are also higher for electric vehicles. According to data provided by The Zebra, an insurance comparison website, a Chevrolet Bolt EV costs $78 more per year to insure than a Hyundai Ioniq Blue, a hybrid. And a Tesla Model 3 Long Range costs $470 more per year to insure than an Audi A4 2.0T Premium, which is gasoline-powered. Because insurers do not have as much risk assessment data for electric vehicles as they do for other vehicles, they price uncertainty into their premiums. Compared with conventional cars, insurance companies are more likely to declare an electric vehicle a total loss after a crash because the cost of replacing a battery that has been damaged or compromised is about half the cost of the vehicle. Higher repair costs are also a cause for higher insurance premiums. On average, electric vehicles are in the repair shop for longer than a gasoline-powered vehicle due to supply chain issues or the need for more complicated electronic diagnostics by specialized technicians.
Other Automakers are also Cutting Back on EV Production
Other companies are pushing back plans for new models. G.M. had expected to produce 400,000 electric vehicles by the middle of 2024, but withdrew that goal in November, and is delaying some new electric models. G.M. is delaying electric versions of its Chevrolet Silverado and GMC Sierra pickups, and the Chevrolet Equinox sport-utility vehicle. Honda had planned to develop a small electric car with G.M. but canceled that effort this year. Rivian plans to produce 52,000 electric vehicles by the end of this year, a third of the 150,000 a year it is hoping its Illinois factory will eventually produce. Even Tesla has struggled with slower sales growth this year, forcing the company to cut prices of its two most popular models several times, pushing down its profit margin.
Conclusion
Traditional automakers have been spending tens of billions of dollars to develop an array of electric models and to tool up factories to produce them and their batteries as President Biden has pushed for electric vehicles to make up 50 percent of new car sales by 2030, supported by lucrative government subsidies and regulations. But, demand for electric vehicles has faltered as early adopters have received their electric vehicles and more prudent consumers are suffering from inflation and high interest rates, among other issues regarding electric vehicles such as vehicle range, availability of charging stations, and higher insurance rates. Ford, in particular, is halving its planned production of the F-150 Lightning pick-ups at its main factory in Michigan next year. Other automakers are also planning cuts. Those production cuts will slow President Biden’s transition to a net zero carbon dioxide America.
