EV Policy on Collision Course with Reality

April 08, 2024

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by Jesse Allen (American Ag Network) The ethanol industry says the Biden Administration’s push for an all-electric vehicle fleet is on a collision course with reality. The Renewable Fuels Association says at some point tax policies, infrastructure shortcomings, and tough new auto emission standards to force a switch to all EVs will hit a roadblock.

Troy Bredenkamp with the Renewable Fuels Association says “The infrastructure’s not there, and the consumers…there’s been a definite pullback from a consumer perspective, on them purchasing electric, especially all-battery electric vehicles.”

Recent media coverage cites reports by automakers and retailers of slowing EV sales, and a very limited number of new charging stations built, with just seven in the last two years, a tiny fraction of the 2030 goal of half a million.

Bredenkamp argues the best solution is to combine technologies and for the administration to let America’s farmers help power the future. He says, “I think at some point they’re going to have a realization that the ‘sweet point’ here is a plug-in hybrid concept. And that’s where we want to make sure that those plug-in hybrids turn into flex fuel vehicle plug-in hybrids because we think that would be the best of both worlds.”

But Bredenkamp says environmentalists want a total end to fossil fuels, even if no-tailpipe-vehicles have upstream emissions from electric generation. The danger, of course, is ‘regulatory whiplash’ if there’s a change in administrations next year. He says, “If it is the Trump Administration moving forward, they’re going to be pulling back, quite aggressively, on what the Biden Administration’s put forward.”

Starting with tailpipe emissions and other all-electric vehicle incentives. READ MORE

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Ford cuts battery orders as EV losses top $100,000 per car The move is part a retrenchment of Ford’s EV strategy, which includes reducing spending by $12 billion on batteries ... (Detroit News)
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Excerpt from Auto Spies: Ford Motor Co. has initiated a significant change in its electric vehicle (EV) strategy by cutting battery orders from suppliers. This move comes as the company faces substantial losses exceeding $100,000 per EV sold, signaling a challenging period for the automotive giant amidst waning demand for its electric offerings.

The decision to reduce battery orders is a strategic response to the financial strain caused by the underperformance of Ford's EV lineup. With losses mounting, the company is reevaluating its approach to the EV market, focusing on reducing costs and optimizing its operational strategy. This shift in strategy is not only a reflection of Ford's internal challenges but also an indication of broader market dynamics, where consumer preferences and economic conditions are in flux.

Suppliers in South Korea and China, key players in the global battery supply chain, are grappling with the consequences of Ford's decision. The reduction in orders has left them with unsold inventory, posing potential financial risks and operational challenges. This situation underscores the interconnectedness of the automotive industry and the ripple effect that strategic decisions by major players can have on the broader supply chain.

As Ford navigates this challenging period, the company's ability to adapt to changing market conditions and consumer preferences will be critical. The success of its revised EV strategy will not only impact its financial performance but also shape its position in the rapidly evolving automotive landscape. READ MORE

Excerpt from Teslarati: The reductions come as a larger effort from the company to scale back its EV program in favor of gas and hybrid vehicles, beginning with the company announcing in October that it would be postponing a roughly $12 billion EV investment. In April, Ford announced plans to delay the launch of a three-row EV as well as a next-generation electric pickup—despite the fact that EV sales reached an all-time high for the company.

The company also paused all shipments of its F-150 Lightning in February, instead focusing on getting gas versions of the truck to dealerships. The automaker also cut its F-150 Lightning workforce by about two-thirds, offering affected workers the option to be reassigned to a different location or to voluntarily accept a retirement package. Ford later resumed deliveries of the electric pickup in April, along with offering price cuts of $2,000 or more on many of the truck’s configurations. READ MORE

Excerpt from National Review:

Back in November, Ford announced that it was scaling back the size of a planned EV battery plant in Michigan because of lower than expected demand. It was said at the time that the plant would account for 1,700 new jobs rather than earlier estimates of 2,500. The green industrial revolution continues.

The New York Times:

The plant was originally planned to produce 35 gigawatt-hours’ worth of batteries annually, which Ford estimated was enough to equip about 400,000 vehicles. Now, the plant will produce 20 gigawatt hours annually, enough for roughly 230,000 vehicles, or a 42.8 percent cut.

When central planning misses, it misses.

CNBC (February 6, 2024)

Ford Chief Financial Officer John Lawler said in addition to reassessing its vertically integrated system of producing its own batteries via joint venture operations, rather than sourcing from a third-party supplier, the company is further looking into adjusting installed production capacity to match demand and potentially delaying next-generation EVs to “to ensure they meet our criteria for profitability, given the new market reality.”

The company’s EV business, known as Model e, lost $4.7 billion last year, including $1.57 billion during the fourth quarter of 2023, offset by profits in the company’s fleet and traditional internal combustion engine units. Both businesses earned more than $7 billion each last year.

Lawler said Tuesday that the unit will have to stand on its own “sooner rather than later.”

And if regulators get their way it will have to. In some markets automakers will be fined if conventional cars amount to more than a certain percentage of auto sales. This may already be about to start causing trouble in the U.K., as I noted here.

Unanswered question: If the number of conventional cars carmakers can sell is capped, how are they going to find the money to invest in a massively lossmaking EV business?

Unnecessary to answer unanswered question: Are taxpayers going to be asked to “invest” yet more in EVs?

Back to CNBC:

As Ford pulls back and reevaluates the EV business, it intends to lean in on sales of hybrid vehicles, specifically trucks. The company expects its hybrid sales to increase 40% this year. It sold 133,743 hybrid vehicles in the U.S. in 2023.

Hybrids, again. There’s a message there. I could be being unfair, but this may be a message that some would like to see downplayed.

...

That’s off message.

Back to May 10:

The move is part a retrenchment of Ford’s EV strategy, which includes reducing spending by $12 billion on battery-powered models, delaying new EVs, cutting prices, and postponing and shrinking planned battery plants. Ford has forecast EV losses of up to $5.5 billion this year and Chief Executive Officer Jim Farley recently said its EV unit, Model e, “is the main drag on the whole company right now.”

…As EV prices have plunged and demand has slackened, Ford’s losses per EV exceeded $100,000 in the first quarter, more than double the deficit from last year, one of the people said.

Bloomberg Intelligence estimates the losses Ford expects to sustain in its EV unit this year will come close to wiping out the profits it earns from its Ford Blue division, which makes traditional internal combustion engine vehicles like the Bronco SUV and gas-electric hybrids such as the Maverick truck.

To repeat the question mentioned just above, what happens when sales of conventional cars are capped?

The writers of the report note that a backlog of unsold battery inventory is piling up in South Korea, China and elsewhere. This is hitting prices for metals such as lithium. And that, in turn, is “stalling investment decisions on new projects and, in some cases, leading to mine closures.”

A closed mine can, I imagine, be reopened fairly easily. But if new mine projects are postponed (mines take a while to open), that raises the possibility of a nasty squeeze on some metal prices once buyers of new cars in the EU, UK and parts of the U.S. can no longer buy new conventional cars (2035), finally forcing more of them to buy EVs. That, in turn will push up the price of EVs. READ MORE