There is a bit of a disturbing trend in the automotive world right now. Several traditional car manufacturers are suddenly relaxed the electrification accelerator in response to a perceived slowdown in EV interest and sales.
Whether that slowdown is real or just growing pains, the result is the same: Automakers are responding. Major manufacturers are falling back on their once-aggressive timelines for full electrification, and what was supposed to be a largely electrified transportation landscape by the end of the decade is now looking more of the same.
To be clear, progress is still being made. E.V sales are generally upand the transition away from internal combustion and its associated carbon dioxide emissions happenjust with a little less momentum than once predicted.
Which automakers are stepping back EV goals?
Ford, the best-selling carmaker in the US, is one of the most recent and notable players to shift its electrification plans. The Blue Oval stated in 2021 that it will have an all-electric option for all its models by 2026 and an all-electric portfolio by 2030 – at least in Europe. An electric three-row SUV was due in 2025.
The deadline for that SUV moved to 2027 earlier this year, with Ford president and CEO Jim Farley noting that the firm is “committed to scaling a profitable EV business, using capital wisely and developing the right gas, hybrid and fully to market electric vehicles at the right time.
But at the end of August, plans changed again. That three-row SUV has been shelved indefinitely, delivery dates for a pair of electric trucks have slipped, and Ford cut its EV development budget by approximately $12 billion.
Mercedes-Benz also set some aggressive goals in 2021, including a plan to invest 40 billion euros ($44 billion) to ensure that by 2025 half of the company’s sales were electric vehicles.
Now just a year away from that milestone, the goal post has moved. The brand aims to be half electrified by 2030 – and only “where market conditions permit.” This is a major caveat. While the company didn’t provide any details on that target, less than 7 percent of its U.S. sales are EVs, by Edmunds. It’s hard to imagine that market meeting the company’s definition of fertile conditions.
Another German car giant, Volkswagen, recently softened its plans to build six battery factories around the world. Now the company says its three already-announced factories could be enough to meet demand through 2030.
“The expansion of the plants will depend on how the market for e-cars develops,” said Thomas Schmall, chief technology officer of VW Frankfurter Allgemeine Zeitung newspaper.
Volvo is also on the list of automakers that have made big EV promises in 2021. The firm has pledged to become an all-electric car company by 2030. It has since released several charming EVs and is trying to release a few more that have struggled on their way to market. This includes the interesting and affordable EX30 crossoverwhich is caught in the crossfire of the Chinese EV import tariffs and will not land in North America until 2025, and the large and luxury three-row EX90which is finally entering production after software-related delays.
CEO Jim Rowan doubled down on Volvo’s ambitious goal in May, saying the 2030 target was “a very achievable future.” However, in an investor call a few weeks later, he said: “Our plug-in hybrids and soft hybrids remain very strong and popular with our customers, and we will continue to invest in this range.”
So while Volvo hasn’t yet announced a formal easing of the goal, it certainly sounds like it’s coming.
Why are automakers slamming the brakes on EVs?
The main reason for the downsizing cited by manufacturers is the perception that people are a bit slower with EV uptake than expected.
This one is a bit hard to analyze, due to some conflicting numbers. On the one hand, you see US numbers like Ford EV sales last quarter up 61 percent compared to sales a year earlier, and BMW EV sales up nearly 25 percent. But the outlook for other brands is not so rosy. For example, Mercedes-Benz EV sales in the second quarter were down 25 percent from a year earlier, while Volkswagen’s EV sales were basically flat.
Overall, but second-quarter 2024 U.S. EV sales rose more than 11 percent compared to sales the year before, and up 23 percent over the previous quarter, per Cox Motor. According to New AutoMotive’s Global Electric Vehicle Trackerthe US market outpaced the global EV market, which rose 19 percent over the first quarter.
With the perception that EVs are too big a leap for American consumers, hybrids – especially those of the plug-in variety – is again seen by manufacturers as a gateway to full electrification.
Whether it’s a valid decarbonisation strategy is debatable. Hybrids add even more complexity and weight to an already complex internal combustion engine. The promise, of course, is increased efficiency. But the International Council for Clean Transport found that since most people don’t plug in their PHEVs, their overall emissions are significantly higher than the EPA estimates would imply — upwards of 67 percent worse.
For Ford, at least, a renewed focus on cost is the main driver of its recent EV scale-up. It makes sense: In the early 2020s, when many brands issued their bold EV-only sentiments, there was an expectation that battery costs would drop significantly as manufacturing scale increased.
Unfortunately, that didn’t happen.
If there was one unifying misstep among automakers, policymakers, and general consumers, it was a willingness to believe that once EVs started hitting the market, they would basically sell themselves. Auto drivers have done nothing to temper those expectations; many of them themselves were swept up in the excitement.
Unfortunately, consumers, especially in the US, requires a little more convincing. It will be difficult as long as governments, both local and federal, continue to a terrible job to build out an accessible, reliable nationwide EV charging network. And while in the US, the Inflation Reduction EV Tax Credits Act help a little, the fact is that most EVs on the market still significantly more food than a comparable gas-powered car. As long as this is the case, EVs will continue to be a hard sell.
Since so many expected EV sales to skyrocket immediately, any slowdown could be seen as a failure. But here’s the thing: Slower-than-expected growth is still growth. More EVs are being sold than ever, even if sales aren’t increasing at exponential rates.
It took more than 20 years for leaded gasoline to be phased out in the U.S. market, and that shift was nothing compared to what’s involved here. Automakers scaling back aggressive timelines isn’t a sign that EVs were a failed experiment; it just means that sometimes consumer sentiment moves a little slower than technology.
