Daily Reports
Ford's Electric Vehicle Setback: Financial Strains and Strategic Shifts
Ford Motor Company is facing significant challenges in its electric car division, with losses mounting to over $1 billion in the first quarter of 2024. The American automaker reported a staggering $130,000 loss per electric car sold, highlighting the difficulty of making electric vehicles profitable amidst falling prices and declining demand. Despite initial high hopes, Ford has decided to reduce its electric vehicle production and significantly cut back on battery orders, particularly from Chinese market leader CATL.
In a bid to recalibrate, Ford plans to cut spending on battery-powered models by $12 billion in its home market. The strategy includes building fewer battery factories and scaling down existing plans. These changes will also impact Ford's operations in Europe, where the company may extend the lifespan of internal combustion engines beyond 2030 if demand for plug-in hybrids remains strong. Ford CEO Jim Farley emphasized that the electric car division is currently the biggest drag on the company’s overall profitability.
The Bigger Picture: Global Industry Reactions and Public Initiatives
Ford is not the only manufacturer adjusting its strategy. Mercedes-Benz has similarly extended its timelines, planning to produce both electric and combustion engines into the 2030s. This trend reflects a broader hesitation among automakers to fully commit to electrification, often backed by influential lobbyists.
However, not all news is dour in the electric vehicle landscape. In France, the government’s social leasing program has been a resounding success, providing affordable electric vehicles to medium and low-income families. Vincent Fredon and his wife, examples of the program’s beneficiaries, highlighted the cost-effectiveness and convenience of this initiative. The French government has heavily subsidized the program, aiming for carbon neutrality by 2050 by making environmentally friendly transport accessible.
Inspired by France’s success, there are discussions in Spain to implement a similar program. Spanish NGOs and associations are urging the government to provide more affordable leasing options for electric vehicles to accelerate their adoption among the less wealthy. Such initiatives are crucial for combating climate change and could serve as models for other countries grappling with the transition to electric mobility.
- The French social leasing program has shown that targeted state support can significantly boost the adoption of electric vehicles. With subsidies of up to €13,000 per vehicle, the program makes it feasible for lower-income families to access green transportation.
- Spanish organizations such as T&E and Ecodes are advocating for a similar initiative, estimating that affordable leasing could replace tens of thousands of combustion vehicles with electric ones annually, thus cutting CO₂ emissions significantly. Various stakeholders agree that such programs can push the electric vehicle market share closer to the levels seen in leading countries like Portugal.
