Ford’s losses keep rising as the EV share of auto sales declines
"Democrats hail electric vehicles as the “future,” but their autotopia keeps getting deferred. Ford and Stellantis this week joined a conga line of auto makers rolling back EV investments amid flagging consumer demand. Has the government ever subsidized a product that loses this much money?
Ford announced Wednesday that it will cancel production of an electric SUV and delay an electric pickup truck. As a result, it expects to take a $1.9 billion write-down. Believe it or not, this may be less costly than producing EVs that Americans don’t want. Ford lost an astonishing $44,000 on each EV it sold in the second quarter and expects to lose $5 billion on them this year.
Stellantis this week said it would delay investments to retool its shuttered plant in Belvidere, Ill., for EV production. The stated reason: “it is critical that the business case for all investments is aligned with market conditions and our ability to accommodate a wide range of consumer demands.” Imagine that—catering to consumer, rather than government, demands.
Auto makers’ problem is that California and the Biden Administration are forcing them to make increasing numbers of EVs that are piling up on dealer lots. Companies are slashing prices to sell them, resulting in hefty losses. Meantime, Americans are balking at paying more for gas-powered cars, making it harder for the car makers to use those profits to subsidize EVs.
Such losses and cross-business subsidies aren’t financially sustainable even with generous government subsidies. The Biden Administration last year awarded Ford’s joint battery venture a $9.2 billion low-cost loan for three giant electric vehicle battery factories and last month announced a $335 million grant for Stellantis to convert the Belvidere plant to build EVs.
Inflation Reduction Act tax credits can offset the cost of battery production by 30%. The law also dangles $7,500 for consumers to buy EVs, on top of thousands of dollars in subsidies by many states. Yet the EV share of auto sales is declining. One ironic reason may be that climate mandates and regulation have increased electricity prices relative to gasoline.
Anderson Economic Group estimates that mid-sized EVs cost between $12.61 and $16.11 to fuel per 100 miles, compared to $10.71 for gas-powered models. For pickups, the cost differential is larger. CEO Patrick Anderson tells us that market signals at least a year ago were telling Ford not to spend billions on building a big electric SUV.
None of this matters to the Biden Administration, which is hell-bent on forcing an EV into every American garage whether it’s wanted or not. This spring it ramped up greenhouse gas emissions standards, which will require companies to produce nearly four electric trucks for each gas-powered model by 2032. The alternative? Buy regulatory credits from the likes of Tesla. Such credit sales have accounted for half of Tesla’s profit this year.
Kamala Harris in 2019 supported banning the sale of new gas-powered cars in 2035. When auto makers bleed red ink trying to comply with the government mandates, will she force taxpayers to rescue them?"
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.