Nov 22, 2023 - Energy & Environment

The message behind Ford's latest EV move

Illustration of a bald eagle clutching a lightning bolt in its talons. 

Illustration: Shoshana Gordon/Axios

An announcement by Ford tells a wider story about Detroit automakers' evolving posture on electric vehicle investments.

Catch up fast: Ford is proceeding with a Marshall, Michigan battery factory that was in limbo for a couple of months, it announced Tuesday.

  • But the company is scaling back the planned output of lithium iron phosphate (LFP) batteries by over 40%.
  • Their investment in the plant, which will use some tech from Chinese battery giant CATL, is still around $2 billion. That's real money, but lower than initially planned.

The big picture: "While we remain bullish on our long-term strategy for electric vehicles, we are re-timing and resizing some investments," Ford said in a statement.

  • A spokesperson told reporters that EV demand growth "isn't at the rate that we and others had expected."

Why it matters: While overall EV sales are climbing, Detroit's recent decisions suggest the market for their cars isn't as robust as projected.

  • And the economics of competing with Tesla in the market are challenging.

Zoom in: Via the WSJ, "EV sales this year rose 49% through October, compared to 69% from the same period last year, according to data from research firm Motor Intelligence."

Catch up fast: General Motors last month abandoned its target to produce a cumulative 400,000 EVs from 2022 through the first half of 2024.

  • CEO Mary Barra said they're "taking immediate steps to enhance the profitability of our EV portfolio and adjust to slowing near-term growth."
  • Ford itself last month said it would "push out" the timeline on around $12 billion of its wider EV investments.

What we're watching: Q4 EV sales numbers to look for signs of a wider slowdown or whether, as Princeton's Jesse Jenkins recently wrote, bad "vibes" aren't actually surfacing in the data.

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