Shillong, October 27: Automaker Ford has halted its planned $12 billion investments in electric cars, which included a battery factory in Kentucky, USA.
As per IANS, the decision stems from the belief that consumers are not yet willing to pay a premium for an electric vehicle (EV) over traditional gas or hybrid cars.
During the third-quarter earnings call, CEO Jim Farley and CFO John Lawler acknowledged that while electric vehicle sales have shown growth, the market is not yet prepared to incur additional costs for EVs. Ford’s electric vehicle division continues to operate at a loss, with approximately $1.3 billion in adjusted earnings loss for the September quarter.
This year alone, the automaker has suffered a $3.1 billion deficit due to its electric vehicle investments and is projected to lose a total of $4 billion by year-end.
John Lawler stated, “In total, we have deferred approximately $12 billion of electric vehicle spending, encompassing capital expenditures, direct investments, and expenses.” He also emphasized that the success of their electric vehicle transition will depend on their second and third-generation products, which will focus on cost optimization based on lessons from their initial market offerings.
In the electric vehicle industry, producing a great product is no longer sufficient; cost competitiveness is vital. Ford acknowledged Tesla’s contribution in setting the standard for cost control and scaling in the electric vehicle market.
Despite these challenges, Ford reported a net income of $1.2 billion in the third quarter, a significant improvement compared to the $827 million loss in the same quarter the previous year. It’s worth noting that General Motors is also reportedly delaying production of new electric trucks and SUVs.