Ford is currently the second biggest electric brand in the United States after Tesla, but it’s also the brand that has probably retreated the most from the industry’s rosy electrification plans. Now Ford is out with news that it’s killing its three-row electric SUV, delaying one of its EVs, and doing something totally different.
The theme of today’s Morning Dump is: If you want to make God laugh, tell him your plans.
New data about hybrid and EV owners is out, and it shows that charging infrastructure might be a bigger deal than we all think. Mazda is trying to move upmarket, and it’s sort of working, but at a huge cost to the automaker. Stellantis CEO Carlos Tavares is coming back from summer holiday to try and fix North America, the solution to and cause of most of his company’s problems.
Let’s dump.
The Ford Three-Row EV Is Dead, The EV Truck Is Delayed, But It’s Ok
Ford’s electrification plans were supposed to include a Tesla-fighting F-150 Lightning replacement due to be seen next year and put into production in 2026, as well as a three-row electric crossover/SUV-type thing due out soon after.
The truck is still coming, albeit later, but the three-row electric SUV is dead. Gone. Ford says it’s taking a $400 million dollar hit as it walks away from making that specific vehicle. What’s going to happen instead? Ford says its next big three-row vehicle will now be a hybrid, although it doesn’t clarify if it’ll be a PHEV or regular hybrid, or both. [Ed Note: Please be a range-extended EV. -DT].
This is extremely logical, both from an expenditure basis and a product basis. Right now the market for electric three-row vehicles from non-Tesla automakers is questionable at current prices. The Kia EV9 is supposedly the best thing since the Taco Bell French Toast Chalupa, though I’ve yet to drive it and confirm. How are sales? It just went on the market so they seem fine, but the $60-70k price for these vehicles is a lot and Kia seems to be tossing $7,500 on the hood to get them moving. And look how expensive the ID.Buzz is going to be.
Ford seems to have made the decision that it would be forced to either heavily discount its vehicles at a loss (as it does with most of its electric vehicles) or keep prices high and depress volume. As the man said: When life hands you lemons sometimes you just say screw the lemons and bail. Or, as Ford put it:
The electric vehicle market is rapidly evolving as Chinese competitors leverage advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences to expand their global market share.
In addition, today’s electric vehicle consumers are more cost-conscious than early adopters, looking to electric vehicles as a practical way to save money on fuel and maintenance, as well as time by charging at home. This, coupled with scores of new electric vehicle choices hitting the market over the next 12 months and rising compliance requirements, has amplified pricing pressures. These dynamics underscore the necessity of a globally competitive cost structure while being selective about customer and product segments to ensure profitable growth and capital efficiency.
“We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Ford vice chair and chief financial officer. “With pricing and margin compression, we’ve made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”
And it’s not as if Ford has abandoned its electrification plants, it’s just adjusting them. Ford’s next big electric vehicle will now be an EV van due out in 2026 followed both by the delayed truck (T3) mentioned above and a smaller, more affordable truck from the company’s skunkworks team in California.
Again, this is all obviously sensible. The two biggest barriers to electrification are probably cost and infrastructure. Ford has tried to solve the infrastructure problem by partnering with Tesla on NACS charging standards. The cost thing is tougher and Ford clearly thinks it’s better off making money with hybrids in the interim, like Toyota is, while it waits for its input costs to come down sufficiently to be able to offer more affordable vehicles.
Charging Matters
Here’s a chart from S&P Global Mobility that shows what vehicle owners bought next after purchasing a gas, electric, or hybrid vehicle.
I love this chart because it breaks down BEVs (battery electric vehicles, i.e. electric cars), hybrids, and non-Tesla BEVs.
That most gas-owning customers went back to gas-powered cars isn’t a surprise, though it’s nice to see that hybrids are taking a bigger chunk of the pie and some people are considering BEVs. Hybrid owners tend to be more open to an EV and are otherwise split between getting another hybrid or a gas-powered car next.
BEV owners are way more likely to get another BEV, which is great news until you pull Tesla out of it and see about half either get a gas-powered vehicle or a hybrid. What gives? From S&P:
Hybrids can be viewed as the mid-point between a gas and electric powertrain, yet only 15% of hybrid owners choose a BEV for their next purchase. Instead, they are split evenly on remaining with another hybrid (41%) or moving back to a gas powertrain (41%). The lack of movement to BEVs could persist due to continued struggles in building a prevalent charging infrastructure along with a slowdown in EV demand.
This seems right to me. Tesla, as S&P points out, has super high brand loyalty so it’s not a surprise that electric car owners either go back to Tesla or get convinced to buy one by a friend. The company’s CEO aside, Tesla has a lot going for it. Specifically, Tesla has the best charging network and a Tesla owner is probably a lot less concerned about charging infrastructure.
Mazda’s Very Expensive Gamble
Mazda is trying to move upmarket. Why? Mazda has long been the slightly nicer economy car, even if the difference was mostly in better design. The cars look good and, by and large, drive to match the appearance. A move slightly upmarket means, ideally, more profits.
When I drove the new CX-70 the implication was that this is an upscale brand that can compete with Lexus. It’s working, maybe, as the brand has seen strong sales in 2024. But at what cost?
As Hans Griemel points out, the cost to Mazda is huge:
Deliveries improved 13 percent to 242,352 for the first seven months, oupacing the industry and putting it on track to reach record volume of 450,000 vehicles in 2024.
But spiralling incentives to move all that metal almost wiped out Mazda’s operating profit in the quarter. U.S. incentives per vehicle nearly doubled in the April-June period from the previous year and have jumped almost fourfold since the July-September quarter of 2022, Mazda said.
In the April-June period, Mazda spent ¥35.1 billion ($218.3 million) on incentives, easily erasing a modest ¥3.3 billion ($20.5 million) addition to operating profit from volume and mix.
With the yen remaining mostly down relative to the dollar, other than a little blip, it’s something that Mazda can afford to do for now. The company will get its big year, but what follows? I’m not sure, but the new Mazda CX-50 Hybrid is going to get a RAV4 drivetrain and that might help.
Carlos Tavares Reportedly Cut His Vacation Short Because North America Is Such A Mess
Stellantis CEO Carlos Tavares, pictured above, was apparently doing what most Europeans do in August: not work. Unfortunately, the company’s North American operations (i.e. the parts of the company that actually make money) are a mess.
What’s a CEO to do? From Reuters:
CEO Carlos Tavares has started a three-day visit in Detroit, where he will seek to develop a strategy to fix the European automaker’s struggling North American operations and reassure employees and investors, two people familiar with the plans said.
The strategy is likely to be developed by the end of this week, said one of the sources, who asked not to be identified.
While Tavares typically visits the North American operations every four to six weeks, the CEO’s visit this week during his summer break is meant to send a clear signal, the two sources said.
“He wanted to make clear he was handling it personally,” one of the sources said. “North American operations are basically funding the rest of the group.”
Good luck, Carlos, maybe stop by New York and say “hello” if you get a chance.
What I’m Listening To While Writing TMD
I’m still somehow in California, a state that’s untouchable like Eliot Ness, so let’s enjoy “California Love” from 2Pac ft Dr. Dre.
The Big Question
Is Ford doing it right or doing it wrong?
The fact that Ford hasn’t put the PowerBoost in the Expedition and/or Navigator is genuinely puzzling. They need to beat gm to the punch on good* hybrid full-sizes.
*the hybrid Tahoe and its kin weren’t good.
I’m not sure Mazda needs to be putting incentives in its cars. They’re an excellent product on their own, priced reasonably, and are genuinely premium. They need to stop letting car review outlets lump them into comparisons with the mass-market non-luxury brands, where they tend to get dinged for various things because they’re not in the same class as the cars they’re up against. Put a CX-90 (for example) up against an Aviator or any of the RWD-based European luxury vehicles, and it compares well and comes out to be quite a bargain, as well as a far better product and purchase than the faux/intro-lux brands like acura, buick, and infiniti that are also trying to jostle into the same space.
Mazda has been trying to move upmarket since, when?—soon after they abandoned Amati? The problem for them is their brand isn’t a premium one and, though they might be able to stretch a bit higher pricing than their competitors, they’re spending more money to do so and selling lower volumes. The near-premium brand is one of the most corpse-strewn segments out there. They can build a premium equivalent car, but they can’t charge those prices with that name as so much of what makes a brand is perception and that’s not something that’s easy or commonly possible to improve upon before the company making the attempt bleeds out. Perception, though, is why premium brands can build down into that segment even if the quality is relatively crap for that premium brand. If someone is paying more, they usually want the name they think impresses people or they’ll save their money and go with the very likely more reliable non-premium brand. The few of us willing to spend a little more for a little better car and who don’t care about what the name says to neighbors just don’t exist in large enough numbers buying cars with enough frequency. On top of that, Mazda is primarily competing in the boring daily car space, which is more price sensitive and conservative in terms of going with the safest reliable choice (so if the consumer is not going for the cheaper option, then they’re going Toyota or Honda, whether it’s still accurate to call them the most reliable or not). Of course, on the low end, they can’t compete on volume with their lower brand recognition, even assuming more competitive pricing with the volume players. I don’t have a good answer, as what they’re attempting to do is still their best move of the very limited options they have. Usually, these things end with the company slowly being pulled into the maelstrom or being absorbed by a bigger brand (that probably has no idea what to do with it, either, beyond temporarily pillaging it or kicking it to another company who thinks they know what to do with it).
As disappointed as I was by my Mazda3 and can’t understand their weird obsession with POS rotary engines, I do hope they can prove me wrong as they’re a welcome player in the market (even if I won’t buy one, which is part of the problem, as I’m the kind of person who is their kind of buyer).
Mazda’s upmarket push generally started softly in 2013-2014ish when they were finally free of Ford, and debuted their own self-developed products.
The luxury push for Mazda itself started within the last couple of years or so, when they started offering the CX-5 with painted cladding instead of matte black. I don’t remember if that was before or after they started offering their short-lived Signature trim (which was great and makes more sense than the myriad of trim names they have now), but that’s probably their first “shot across the bow” in the category.
I’ve been hearing them say it since earlier than that. My 3 was an ’06 and that came out as possibly their second push to being more premium.
Perhaps. I personally hold that it’s when they dropped the “Zoom-zoom” marketing and started using “Touring” and “Grand Touring” trim names versus the I and S trims like I had on my numerous GG-model Mazda6s.
My wife’s first CX-5 was a 2016 Grand Touring, and there was nothing in its class that came close to its overall material quality, fit and finish, while still offering nice gadgetry for the price. Heck just the infotainment controller between the seats felt better than an MMI controller in a contemporary audi or the COMAND controller in a contemporary Mercedes.
They don’t really have a choice if they want to survive. They don’t have the economies of scale to build Toyota-like margins and don’t have the cash for constant incentives like some of their competitors.
It might be hard, and it might not work, but Mazda’s survival hinges on the success of this upmarket move. Unless, of course, they get bought out/aggressively partner with a larger OEM.
Yeah, maybe my post was too long resulting in skimming it, but that’s what I wrote.
“We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Ford vice chair and chief financial officer”
can someone explain how this adds value for the CONSUMER?
After driving a power boost f150 and talking to my boss who has been driving his for 2 years, I’d be first in line for an expedition max power boost. I love my max and it would be improved to near perfection for a big 3 row with the power boost option.
“[Ed Note: Please be a range-extended EV. -DT].”
Or they could keep licensing Toyota’s eCVT and not risk messing up for little to no benefit
I wonder if Toyota is having trouble scaling the eCVT up to larger vehicles. People were surprised the Tundra hybrid didn’t use it and seem to be generally unimpressed with what they did deliver in that case.
People actually thought that?!
There are enough downsides to the eCVT setup in something like a full-size truck or something that does a lot of towing to where it isn’t really ideal. The main issue being battery capacity, you could very easily find yourself in a situation (mainly with a trailer) where you deplete the HV battery when climbing elevation and simply cannot make enough power to maintain highway speeds. EREV kind of “fixes” this issue by having a large enough battery to have a large buffer that you won’t encounter this… and even then you still can once the battery degrades or you eat through that buffer, like the dreaded “Propulsion Power Reduced” message when climbing a mountain in a Gen 1 Volt with low SoC, which is why they added a manual Mountain Mode that you have to turn on before you get to the mountain to continuously run the engine to keep the battery charged up
Yep, very plausible. It seems like you should be able to size the system so the engine can keep up with the needs of the eCVT under harsh conditions, but maybe there are practical considerations that prevent it.
The engine doesn’t really need to keep up with the needs of the eCVT, the HV battery powers MG1 (or was it MG2, I always get them confused) that determines your gear ratio for driving the wheels. A depleted HV pack can’t provide enough power to spin MG1 backwards with enough force to vary the gear ratio enough, and MG2 isn’t getting enough power to help with propulsion. On the GM Hybrids from over a decade ago, they had a built in 4 speed auto it would switch to in order to help prevent this (at least from my understanding, it’s an extremely complex transmission)
Right, but in an eCVT the engine can simultaneously provide propulsion and charge the battery. It seems like you should be able to balance those so the battery doesn’t go so flat that the transmission stops working properly.
I’m not a hybrid engineer though so maybe I’m unintentionally proposing a perpetual motion machine or something. 🙂
I think so, but AFAIK you end up with severely reduced propulsion power when doing this. I’m not saying it’s impossible to make an eCVT work in this truck scenario, but you’d probably have to do it like Toyota’s Prime vehicles and provide a large (most likely plug-in) battery with a large bottom buffer and a powerful enough MG2 to provide the vast majority of propulsion power in all situations.
The lack of an eCVT in the Tundra would definitely suggest there’s some fundamental problem with that architecture, so you’re probably right.
The Tundra has a twin turbo V6 with maximum torque at 2400 rpm, and not a naturally aspirated Atkinson cycle. If the engine is already making 583 lb-ft, do you really need the electric motors to add to that? That is also high enough that they would need a new heavy duty eCVT and not just use the same one from a different vehicle.
You do realize that 583 number is for the hybrid, right? It makes that much torque precisely because it’s getting assist from electric motors. It’s just not being done with an eCVT, which is the reason for this whole discussion thread.
You are right the non-hybrid makes 479 lb-ft, but my point still is that this is much less electric assist compared to the Prius.
The size of the electric motor generator is also a factor. The 2024 Prius prime has a 150 hp engine and a 161 hp electric motor generator.
3 companies in and one CEO finally admits “North America drives the profits”?
Wow, maybe they’ll actually invest….. wait, no, they won’t. No one ever does and then wonders why there’s money issues.
Daimler, Fiat, and Peugeot-Fiat have all been happy to cash Ram and Jeep’s checks when things were good, but it seems like all of the automaker formerly known as Chrysler’s European owners have had no clue how to keep the North American business sustainable
It’d be easy if they kept the ones who were working in North America employed and listened to them.
That’s Carlos Tavares? It looks like Jon Lovitz. Yeah yeah, that’s the ticket.
Peugeot is essentially doing exactly what Daimler did (they even used the same terminology, “Merger of Equals”, again) – except this time, people have noticed.
Build something affordable, and build it so it will last beyond the factory warranty. Nobody wants to spend $50k+ only to have constant recall and warranty work.
And out-of-warranty work. Not that I’m bitter or anything. 😉
A couple years ago, the three row SUV EV would have been a great bet. I still think the Cybertruck should have been a larger SUV and not a truck-thing. Kinda the same with the Lightning. A 3-row SUV has the price room for margin, and would have appealed to early adopter buyers (maybe even more than the Mach-e?).
But that time has passed. EV sales are still increasing, but to increase at the rate they once were, they need to get cheaper. Did they do the right thing? Do we need another giant full size SUV? Even a PHEV full size SUV isn’t going to be very efficient. Put that investment into an affordable SUV smaller than the Escape. Price it under $30k. Basically, follow what Volvo was trying to do with the EX30.
instead, Ford is following margins. Which might be necessary. As is, I’m not convinced the charging infrastructure gets better without more cars, and more cars aren’t happening without smaller price tags. We kinda need the big multi-billion dollar company to suck up some losses and build what the market needs.
Tavares is breaking his vacation to rush to North America? Couldn’t have anything to do with Sean Fain very publically busting Stellantis’ balls at the DNC on Monday night, could it? Nah, surely not.
FTFY. The guy is giving de Nysschen a run for his money as my least favorite car company CEO of all time (TIL I have a least favorite car company CEO).
And it’s the same stupid mistake. He’s overpricing basically good products from Jeep and Ram just like Cadillac did with their cars, and it’s not going to work out any better for them. Maybe worse because neither Jeep nor Ram have any history as a luxury marque.
And if North America is their cash cow, why did they push out Kuniskis and promote Tavares? I’m not entirely convinced Kuniskis was the right guy for the job in the electrification age, but he did some damn good stuff at Dodge with minimal resources so I have a lot more confidence he’d pull off a big turnaround than Tavares.
Plus, I have to think Dodge was wildly profitable under Kuniskis. What has Tavares done? *checks notes* Nissan North America…yeah, no points for that one…got in a fight with Ghosn at Renault…I mean, who doesn’t have beef with Ghosn at this point…apparently he had some success making PSA profitable, but mostly through cost cutting…shocked not shocked that didn’t work out in the long run. Now he’s let Stellantis North America wither on the vine while he tries to sell wildly unreliable European cars here. The only thing this guy seems to be good at is layoffs. Maybe he should have been CFO instead of CEO.
I give Tavares credit for putting out good product at PSA, while also turning a profit. A lot of PSA cars of the past decade were well-reviewed and well-liked, especially when compared to the Renault/Nissan group.
That is why his utter failure to move the needle in North America is so disappointing. I get that FCA had basically ceased development of any brands not named Jeep, and it takes at least three years to develop model refreshes, and five years to develop new models. So any incoming leader would be way behind the 8-ball in terms of product.
But Tavares has done a horrible job of communicating that reality in North America. Stellantis has cancelled many vehicles without providing any replacements. People now only see the empty spots in the model lineups, with scant indication of what may be coming. I know automakers have a tradition of waiting until a car is nearly production-ready before doing a big glitzy unveiling & press junket. But Stellantis can’t afford to play those old games right now.
At the very least, Tavares could have come out and said a version what I said above: “We are working hard on exciting new vehicles to fill-out our lineups. Here is a sneak peek of every car we are working on.” Give people reassurance that the car company is actually, you know, working on cars.
Bah, why do that when you can pick fights with your suppliers and the governments in the countries where you build your cars?
I’m realizing now I completely omitted that part from his biography. 🙂
Oh, there’s that too! FCA had notoriously terrible supplier relations under Sergio, he was always trying to squeeze blood from a stone. So, it’s a great strategy for the new leader to come in and make supplier relations even worse!
At least Sergio made significant investments into US manufacturing & logistics; but Tavares said, “Why do those things here when we can do them cheaply and badly elsewhere?!”
I’d like Tavares’ next gig to be GTFO.
Ford is probably doing the right thing. This whole idea to make the same stuff(Big heavy SUV/Trucks that are overpriced) but with batteries was a stupid idea. GM is guilty of this as well. Bungling hybrids for years up until this point hasn’t helped either. Hopefully they can focus and get their quality issues fixed and make some great hybrids now.
As for Carlos, I’m going to keep piling on this guy because he truly sucks. The epitome of what’s wrong with a lot of business these days. Just extracting as much money as he can with no plan for the long term. If he actually does have a long term plan then he’s doing a terrible job at showing it. Him showing up in some offices to meet for a few days and think he’s going to have some ultimate plan to fix the very thing he broke is pretty laughable as well. What’s he going to do? Completely farm out the rest of engineering for some other country like he’s evidently been doing in chunks up until now? Not pay suppliers again? Wouldn’t be shocked to hear him say he’s created a task force to get to the bottom of why he killed models with no replacements. Why he jacked pricing up tens of thousands on just about everything they sell. He’s a walking and talking example of the meme of him shooting Chrysler and asking why Chrysler did this to themselves.
On the first bit, and oddly, the second bit….. Can you imagine of Ford put their energy into the Ramcharger method? They would have a hybrid that could pull the gates off of hell, 27 mpg, and…. I mean, I am a little mad that Ram is making it. ANYONE BUT THEM would get it right the first go-round….
Yeah, I agree with you there. I really want the Ramcharger to be good but I know they won’t be allowed to do it right.
A Ramcharger would be basically the perfect vehicle for me right now but since it’s unveiling there has been zero news.
I’m afraid it’s just going to be quietly killed or delayed for several years
Edit: Actually the perfect vehicle for me would be a REV minivan with stow-n-go seats and a towing capacity/payload to pull a 30′ Airstream
Did you just imply that Ford could get something right the first go-round? Because it sure seems like every new model launch is pretty dang rough. But yeah, Ram will totally mess it up.
Ack. You got me on that one. Touché.
Ford can’t launch a vehicle. That is their “thing”, and people just expect it. If Ford were to launch a vehicle and it went well, then people wouldn’t know what to think. Ford simply can’t take that risk…the world is already too topsy-turvy as it is!
You’d think that after getting the government to let them move all their manufacturing to Mexico, they would just shut up and pocket the money. But no, now they’re going to whine about how expensive their US engineering workforce is until they get a tax break to outsource that too.
“Unfortunately, we’re just not good enough to make this car. So we’re making sure we aren’t going to get good enough, either.”
3 days to fix 3 huge companies (Dodge, Ram, Jeep) (I’m choosing to ignore Chrysler, because I think they are too). That doesn’t seem like enough to time do anything but have lunch with all the major players. By the time you’ve spoken to them all, your 3 days are up. So what, is his plan to tell each one “fix it”?
Got ’em!
Ford is probably making the right choice here. It’s tough to release a car into a market that basically doesn’t exist. It’s REALLY tough to release the 10th car into a market that basically doesn’t exist.
Something to consider, for all those development costs, is it possible that Ford also knows that they’ll never be able to source the batteries needed to propel enough 3-row SUVs? Because based on GM’s Ultium struggles, I’m getting the vibe that nobody has the resources to ramp up production in any meaningful way.
I think Ford, and GM, and everyone else that skipped the plug-in hybrids phase was doing it wrong, and now they’re starting to see. Also they blew their early start of ev credits on compliance cars and plug-ins, and now are just trying to sell $70k trucks. All the compliance and cheap options we had just 5 years ago are gone, except the Leaf, which, at least they have LFP now, but still that’s it.
Unless you do like Tesla and create the infrastructure yourselves, the world is not going to create it for you, and you can’t have electric cars work like gas cars unless there’s a Circle K/BP/Valera/Shell/Mobil EV DC Fast Charger on every corner like there is now for gas stations.
GM really dropped the ball when they had the Volt but that’s nothing new for GM, they keep figuring out ways to keep dropping it.
So now they’re all playing catch up to Toyota on hybrids, but still behind China on cheap EVs, they did it all backwards. Sadly if Elon would get out of their way I think Tesla would be almost ready with a cheaper EV option with their manufacturing streamlining and gigafactories, but no, Elon’s gotta Elon, and if you call him on it, he’ll Elon even harder.
Dang near the same point I was going to make. Good one.
Ford didn’t skip the plug-in hybrid phase, they just didn’t learn much from it. The C-Max and Fusion Energi cars were pretty competitive for the time. They actually still sell Lincoln PHEVs, but they’re not very good.
Oh man the Fusion energi I wanted to be as good as the Volt, it was roomier, an actual sedan, cool name, but range and power were lacking comparatively. The C-Max was a good effort but they didn’t stick with it.
They do still have the Escape PHEV which is pretty decent, fairly efficient, but it’s only FWD, and pricey. Same as the Maverick now it’s creeping up in price.
They thought EV technology was going to mature faster and be adopted quicker than it’s turning out. Got too excited by all the hype. It’s like this AI crap. Companies are going all in on the hype and slowly realizing that it isn’t as useful as they thought.
All of this is driven by anxiety about missing the next big thing. It’s amazing because if they stepped back and leaned a little more into some of the more tried and true business concepts and stopped trying to be the next tech golden boy they wouldn’t have to keep backpeddling.
Consumers have been saying that they aren’t ready with the current state of the tech, and everyone just keeps pushing on, it’s been bizarre and I roll my eyes every time some other manufacturer says “all electric by 2025, errrr 2030, errrr 2035, errr actually we’re doing PHEVs now.
The tech works perfectly well in China. American companies besides Tesla just haven’t been keeping up.
Works in China doesn’t mean Works in America.
Besides the direct national support in China directly affecting affordability they are geographically and culturally different. This leads to different consumer opinions on “works perfectly well”.
For example, Buick was very successful in China in the recent past, but not in the US. American consumer buying habits are very different.
Read the release from Ford again. They directly say they can’t compete with Chinese products.
If you read it carefully you’ll see that they say they can’t compete with the Chinese product cost structure. It’s a margin thing. The Chinese are using the same tech as is available here in the US. But it is working in China at the consumer level because the whole industry is heavily subsidized by the government from top to bottom which is driving cost down to make it affordable.
“The electric vehicle market is rapidly evolving as Chinese competitors leverage advantaged cost structures”
It’s all of the above: cost structure, it’s the focus on the short-term, and its the lack of competitive product.
Someone posted online recently: “While we scream at each other about EVs on Facebook, the Chinese are rapidly knocking at our door with world-class product at affordable prices.”
Companies do not actually have to be profitable in China because they can just refinance any losses into a low interest loan from the government. The lower crash test standards mean that the car can be much lighter and have a smaller battery, while not actually being able to go much faster than the 70 mph speed limit. Chinese consumers are also not giving any option as the rich and well connected are the only ones allowed to get a license plate for a new gas car. None of this is going to work in America.
It also didn’t help that they had politicians across the world telling them ‘the future is electric’ with ‘and you’re going to make it that way…or else’ more or less stated as subtext. The level investment required to make electric cars has been enormous – new platforms, the batteries, the electric motors, system level changes for efficiency throughout the car, factory upgrades…and that’s not even accounting for investments made in charging infrastructure by car companies. And while governments have used tax incentives to help with research and drive sales, it’s been a drop in the bucket compared to what the actual costs are.
I feel like if they weren’t pushed into diving head first into an electric future, they would have done the same thing the Japanese did – focused on incremental improvements in gas engines and adding more hybrids to the lineup while keeping electrics and the like as side projects that might one day be viable products.
That’s a really fair point, here in America it was a lot softer than Europe’s mandates, so kind of like California in the 90s car makes had to have some option or they wouldn’t have anything to sell.
True. PHEVs need to be plugged in to maximize benefit to the driver as well as the rest of us. Good news: CARB relaxed the clean car regs by encouraging more strong PHEVs. This starts with model year 2026 which is (checks notes) about one year away. Look for more PHEVs with a 50 mile range and a burley electric motor that moves the PHEV in nearly any “punch it!’ type driving situation.
French elitist doesn’t understand why folks in the heartland of America don’t like the changes he’s made to their pickup trucks. Of course they are better why else would they cost so much more.
Tavares is a Portuguese elitist.
Whoops! Appears I’m commenting with the same attentiveness and level of skill Tavares is using to run Stellantis.
Lol the only change he’s made to their pickup trucks is jacking up the price.
$400 Million is a heck of a tax write-off.
But whatever made them believe that a more expensive and heavier version of a large and expensive vehicle was going to be a great idea….
The math they used seems simple. Big SUV = large profit margin. EV is popular. Add those together and you have a solid profit margin on a popular vehicle. Seems reasonable to have believed three years ago. Hell GM might be wrong but they still believe it. We are still getting an EV Escalade.
I think it is important to remember the relative market shares of vehicles when we look at charts like this. Electric vehicles make up only 8% of the US new market (obviously way less in total). So if 60% of existing EV owners want another EV that is 7-8x the loyalty to the propulsion mode than the general public. Despite all the tiny little pain points. Likewise for hybrids. At a combined 10% of the market, a 41% ‘get another hybrid’ mark represents 4 times as likely as the general pop to keep with electrification.
People seem to miss the whole picture here all the time. IDK about you guys, but if trying a car makes you 4-8 times more likely to get the same propulsion mode car in the future? That is a rather strong endorsement overall.
Which really has been my experience. A lot of fear of the unknown from general pop, a HUGE fear of the unknown thrust into them by intentionally shady/misleading salespeople, and consistently good/happy experiences when trying it out for themselves. Esp for HEVs in the same frames as their ICE equivalents.
I also wonder how many “Bought a gas car after and electric” are two-car households with an in-town car and a road trip car.
That’s exactly how my family works. ioniq 5 for in county, Odyssey for road trips (which are frequent). If I had to replace my Odyssey gas or hybrid is my only option.
Anything that delays the rollout of another EV until it’s competitive on usability and price with ICE vehicles is a good thing in my eyes.
Another $70,000 vehicle offering 220 miles of range in winter isn’t going to convince anyone who isn’t already willing to accept those compromises in a competitor vehicle. To actually grow the share of EVs meaningfully is going to require real leaps in range per dollar.
Yep, just too expensive. Much like carbon capture 😉
Unless your position on EVs is “they’re too expensive so we should give up on researching ways to make them cheaper” then we agree.
Because all I’ve ever called for is more research into carbon capture.
Of course not. Unless we can just give up on BEVs and pivot toward fuel cell vehicles. And still fix carbon capture.
Is Ford doing it right or wrong? Yes.
I think pausing on expensive plans when you know you’ll have to sell at a loss is a good idea. I think they would be better off if they focused on making their profitable vehicles better and meeting the demand for supply constrained vehicles like the Maverick and the Lightning, but they probably won’t>
Stellantis:
If I read that correctly, American brands are the only profitable part of the company so Carlos is coming here to change things? That can only go well.
Rather, the only thing keeping Stellantis afloat is the US, and it’s losing profitability. If they go down, the whole company is fucked.
Good on Tavares.
CEOs showing up for a couple days of meetings are always the solution to any corporate problem.
Totally. He definitely understands what factory line workers in the Midwest are going through!
And that demonstrated understanding will totally make customers want to buy Rams and Jeeps again.
While I appreciate the point here, I don’t think the struggles of line workers have much to do with the falling popularity of Stellantis US products. Those seem like relatively independent issues. And I REALLY don’t thing three days is anywhere near enough to solve these level issues, or even begin to do so. So its clearly a PR stunt for someone. I’m just not sure who that someone is.
Probably the Stellantis board members who, if they’re doing their jobs, are asking themselves why they keep paying this idiot to run the company into the ground.
Ford cutting it’s larger EV products for now is absolutely the correct move. While I’m sure there is some market for 3-Row SUVs, it WILL be small. Every brand can’t have one offering in that space and expect them to all sell well enough to be profitable. The efficiency math simply does not work in that space. vehicles of that size will need 100 kWh+ batteries to hit the magic 300 mi rated range figure that will compel people to buy them, and a battery that size is big money.
The cost to build a not-all-that competitive 3-row EV is far too large, and makes the price disparity between ICE/Hybrid/PHEVs and EVs even greater, the depreciation curve will be even more painful, and owners of these things are NOT going to want to sit at a charger for even 30 minutes with 2.2 3-9 year-olds in the back bickering.
To demonstrate the cost point, look at the ID.Buzz versus an Odyssey, Sienna, or Carnival. Fully optioned a Buzz is 70k, a Sienna Platinum is ~52, but mid 30s base, versus 60k base. The Buzz has a rated 235 mile range, realistically 200, even less in winter. Nobody will be road tripping the Buzz with their families, certainly not enjoyably at least. And that’s a minivan which generally is more space and fuel efficient than SUV/CUVs for their respective interior volumes. Ford is smart to see that with EV adoption slowing, the small, cheap, efficient realm is where to operate, not 70k SUVs.
According to The Detroit News, the actual one time charge-offs could be as high as $1.9 billion. That’s a lot of cheese to melt on a flip-flop of position. Makes one wonder if they know something that the gen pop doesn’t…
That they are inept as a company that is seeking to produce a 4 door Mustang?
Just wait for the four door Corvette.
Not to be too flippant, but my total sum of experience with major manufacturing companies (and that of my relatives who also have worked in it for decades) is that these companies have generally no idea what they are doing, and generally look for answers that already support their personal managerial predispositions, often looking for any excuse to drag their feet and not actually improve shit. My previous company… the only way they could botch the launch of their new massive product was to just to not follow through on their known investment costs (R&D was less than 10% of dividend payouts, let alone revenue), and well.. future is looking less rosy by the second.
Large companies are made up of people. Deeply flawed, neurotic people. The more successful companies tend to spend a lot of money on marketing and PR specialists who spend entire careers and enormous amounts of money convincing us that the people in the company know what they’re doing.
I think they know they will not sell enough vehicles to recoup that investment. And since it wasn’t ready to go, they had to deepen that hole further. So someone did some business math and pointed out that $1.9B now is less than the $2.4B they might lose later. Plus, write offs and stopping development changes the P&L reports, and looks like management is acting with purpose. That can improve stock price, which makes money easier to get a hold of tomorrow. And Ford stock had a rough go recently, so impressing stock holders is important to the brass right now.
I wonder how much of this is incompetence and how much is appeasing Wall Street. “Everyone is going all EV and so are we, look at Tesla’s stock prices!” “We’re a technology company, not a car company, anymore*! Just look at the tech stock valuations!” Investors rub their hands together, “Ooh, did you hear that? Those words are magic incantations! (Now if the just throw some mention of AI in there…)” Then things don’t pan out in terms of sales, but the whole industry that followed the same short term plan is in the same boat, so they can just blame “market forces beyond their control” or whatever and get a pass. Could a CEO have maintained their job if they had not followed the speeding car down the same dead end street as the rest? Toyota caught a ration of shit from almost everyone for sticking with hybrids vs BEVs until they all realized it was a brilliant move, but Toyota is in a much different position and isn’t in a country where myopia is the standard vision.
*See, also: Self-Driving Cars.
Does a single Wall Street analyst get measured on long-term success?