The automotive industry is experiencing a shift in its electric vehicle (EV) ambitions. Ford Motor Co. has decided to abandon production of a fully electric sport-utility vehicle (SUV), citing lower-than-expected demand. This decision comes with a $1.9 billion write-down for the company as it adjusts its strategy. Instead of focusing on fully electric models, Ford will now prioritize hybrid gas-electric versions of its three-row SUVs, including the Explorer and Expedition. The company also delayed the launch of its new electric pickup truck by a year, pushing it to 2027, and significantly reduced its EV-related capital expenditures.
This change in direction has also impacted Magna International Inc., a major auto-parts supplier that was preparing to manufacture battery trays, seats, and other parts for Ford’s scrapped electric SUV.
Ford is not alone in its reassessment of EV plans. General Motors Co. announced a delay in the launch of a new Buick electric vehicle and the opening of its EV truck factory. GM’s CEO, Mary Barra, explained that the company is holding back on investments to avoid overshooting the market demand.
Stellantis NV also revealed a delay in planned investments for reopening an assembly plant in Belvidere, Illinois, a move met with frustration from United Auto Workers members. While Stellantis committed to building a new EV battery plant, investing in Belvidere to build new mid-size trucks, and establishing a parts distribution center, the delay has prompted grievances from the UAW, who may even consider a nationwide strike. Stellantis has not yet disclosed a new timeline for reopening the Belvidere factory.
The recent actions by these automakers raise questions about the trajectory of the EV market. While the U.S. Department of Energy has committed funds to support the transition to electric vehicles, the industry’s response suggests a more cautious approach to scaling up EV production.
The financial implications of these shifts are also evident. While Ford saw a modest gain in stock value on Thursday, other automakers and parts suppliers experienced losses. General Motors, Stellantis, and Magna International all saw their share prices decline as investors react to the news.
The future of the EV market remains uncertain, but the recent decisions by major automakers highlight the need for continued adaptation and a careful assessment of market demand to ensure sustainable growth in this burgeoning sector.
