Ford hits the brakes on $12 billion in EV spending in KY

[ChasingCoral]

Ford hits the brakes on $12 billion in EV spending because EVs are too expensive
Customers don’t want to spend extra on Ford’s EVs.

www.theverge.com

Ford is postponing $12 billion in EV factory building, including a planned battery factory in Kentucky. The reasons given were an unwillingness by customers to pay extra for its electric vehicles. You see, they’re too expensive, and now Ford’s massive transformation into an EV company is now going to take a lot longer than before.
Ford’s EV business continues to lose money, around $1.3 billion this past quarter in adjusted earnings. So far this year, Ford has lost $3.1 billion on its EV spending and has said it’s going to lose a total of $4 billion for the year.

The Kentucky plant, a “mega campus” that builds lithium ion batteries for electric cars, will be put on hold. But its Blue Oval City project in Tennessee was still moving forward.
Ford’s not alone in all this, of course. General Motors is pushing back production of its new slate of electric trucks and SUVs. Tesla CEO Elon Musk spent a large chuck of his last earnings call moaning about interest rates. It’s rough out there right now.

Customers would probably agree. Most of the early adopters have, well, adopted, and the next tier of possible customers has enough sticker shock to keep their wallets closed. Ford has tried to address this with new releases like the F-150 Lightning Flash, a mid-priced trim of its electric truck. The company says that the customers will decide how many EVs it makes — and right now, that means tapping the brakes on big projects.

It’s not all bad news. Ford reached a tentative agreement with the United Auto Workers last night, being the first of the Big Three US automakers to get a deal. Sure, the strike cost it around $1.3 billion, and the company pulled its guidance for 2023 — meaning its not confident it can hit the targets it laid out earlier in the year.

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[ChasingCoral]

Here's another take on the same story:
https://www.wdrb.com/news/business/...cle_40ff1e9e-7449-11ee-b0e2-f7ec41a405ef.html

LOUISVILLE, Ky. (WDRB) — Ford Motor Co. is delaying start of production at one of its two side-by-side electric vehicle battery plants in Hardin County, Kentucky, Ford executives told Wall Street analysts on Thursday.

The company is stretching out $12 billion of planned EV investments, including the delayed Kentucky plant, amid uncertainty about demand for EVs.

The dual plants in Glendale, Ky. are each projected to employ 2,500 workers. BlueOval SK, Ford's joint venture with Korean partner SK On, has begun hiring for the first plant, which is still on track to start production in 2025.

The second plant, known as Kentucky 2, was originally scheduled to come online in 2026, but now Ford and SK On have no projected start of work at the second plant.

"Demand for electric vehicles continues to increase in the U.S. but not at levels anticipated. To meet demand and ensure our success, BlueOval SK Battery Park in Kentucky will postpone production at its second plant, known as Kentucky 2," said Ursula Madden, BlueOval SK external affairs director, in an emailed statement.

Madden said BlueOval SK will continue building Kentucky 2 "to ensure the construction site is safe."

"Our ultimate goals have not changed, but the time to reach those goals has been revised," Madden said.

The announcement does not affect the BlueOval SK plant underway in Stanton, Tenn. Like its Kentucky counterpart, the Tennessee plant remains on track to start production in 2025.

Ford CEO Jim Farley said on the company’s earnings call that Ford is still committed to electric vehicles and will make significant progress with its second- and third-generation EVs that will come to the market in the next several years.

The company currently sells three all-electric models, which it calls the "first generation" of its EV business. Those are the Mustang Mach-E, F-150 Lightning pickup and E-Transit work van.

With the future generations of EVs, "We have a totally different approach," that will improve sales and profits, Farley said.

Ford recently backed off its previously communicated targets for EVs, saying it is unsure when it will reach a goal of producing 2 million EVs annually.

 

[BMT1071]

The second article is much more objective than the first. The Verge seems like they are spinning the situation to fit an agenda.

 

[Logal727]

The second article is much more objective than the first. The Verge seems like they are spinning the situation to fit an agenda.

I just think it's written from a non-auto industry perspective and more from a tech one, The Verge, if it has an agenda would be similar to Ford's in wanting to build more EVs, so them having an agenda against Ford doesn't track. Their EIC is a big fan of the Ford Lightning fwiw.

 

[llinthicum1]

Couple this with the LFP battery factory in Michigan which is on hold. In a way, this may not be as bad as it sounds. A slow down will allow Ford to continue to design / develop new EVs while the next generation of batteries are coming online. Hopefully, manufacturing costs can be lowered. Ford and other OEMs will have to continue their EV plans; albeit, a little slower, in order to compete with Tesla.

What I'm more concern about is that the UAW contract will add $800-$900 per vehicle!!!! This is for current gas vehicles!!! $800-$900 added to a product that most consumers can not afford now.

 

[Logal727]

Manufacturing is slowing down, but still seems like sales are increasing, just not as much as they would like. This may give the charging network time to build out as well.

 

[ChehRob]

Couple this with the LFP battery factory in Michigan which is on hold. In a way, this may not be as bad as it sounds. A slow down will allow Ford to continue to design / develop new EVs while the next generation of batteries are coming online. Hopefully, manufacturing costs can be lowered. Ford and other OEMs will have to continue their EV plans; albeit, a little slower, in order to compete with Tesla.

What I'm more concern about is that the UAW contract will add $800-$900 per vehicle!!!! This is for current gas vehicles!!! $800-$900 added to a product that most consumers can not afford now.

That implies many hours of additional work per vehicle. Perhaps you could provide details.

 

[Mirak]

Expanding production with current battery tech makes no sense unless the government wants to double the tax credit. Too many limitations and too expensive for the masses. This is going to be a long term slowdown - think 3-5 years at least.

 

[Maquis]

That implies many hours of additional work per vehicle. Perhaps you could provide details.

The new agreement calls for a 25% pay increase. That would imply that $800 - $900 is 25% of the current labor cost in a car. #math

 

[Vulnox]

I don't see an issue with them slowing down, the vehicles are expensive and they intend to raise the price of the Lightning again for 2024, which is just crazy. They need to take a step back and make sure all their EV ducks are in a row for the next gen EV and find a way to create a common platform like Hyundai/Kia did and it seemed GM was trying to, but GM has just gone full crazy by using that platform to make these overweight and overpriced rolling status symbols that were never going to have long term appeal.

If Ford could find a way to get a next gen BEV F-150 riding the same platform as an Expedition, like they do for the ICE vehicles, and get the F-150 introduced at the price point they started with on the Lightning while introducing better charging curves and other advancements, they could spread the cost between two very popular and lucrative market segments, like Rivian seems to be going for.

Then hopefully they can take a cut down version of that pack to make an Aviator and Explorer BEV, and so on. Use as much between the lines as possible to keep costs down.

Unfortunately, Ford has not been great about sticking to that, and it's tough at times when an F-150 redesign is almost never the same year as the Expedition redesign and so on. But if they slowed it down a bit and looked at how all of these products could share parts before they design them, they could not only cut costs but improve quality since they won't have ten different door handles and twenty different dash configurations just for one vehicle line (F-150).

 

[RickMachE]

Couple this with the LFP battery factory in Michigan which is on hold. In a way, this may not be as bad as it sounds. A slow down will allow Ford to continue to design / develop new EVs while the next generation of batteries are coming online. Hopefully, manufacturing costs can be lowered. Ford and other OEMs will have to continue their EV plans; albeit, a little slower, in order to compete with Tesla.

What I'm more concern about is that the UAW contract will add $800-$900 per vehicle!!!! This is for current gas vehicles!!! $800-$900 added to a product that most consumers can not afford now.

LFP plant had huge opposition due to China partnership. Locals not happy.

 

[MellowJohnny]

Supply and demand is tricky to figure out when there is no historical reference point. So Ford, GM, M-B, BMW etc all had to guess what demand for their cars would be. Problem was the end of the pandemic made it look like demand was very healthy. It was, but once we all got our cars there were no people left in line behind us.

So they adjust.

I feel like buyers who were on the fence decided to stay there after seeing the realities of the "non-Tesla" EV experience over the last two years. What I'm wondering is what it will take to get them off the fence next year or the year after? We here know the answer to that, but will they get the message when that happens?

A lot of people have decided against EVs (for now?), and I think it will be hard to get them back with "it's better now!" messages in 2-3 years.

 

[AKgrampy]

I wonder if dealers get to delay their investments? Return on investment was based on sales and it sure appears that is not goings to take place as quickly as anticipated.

 

[Ghost Ryder]

Problem is that we, the people, ran out of that sweet, sweet Covid cash. The same cash that caused the huge spike in inflation. Except when the cash ran out, the prices did not return to pre Covid levels. Now we’re stuck with higher prices but no extra cash to spend.
There is no way that we can sustain a avg 50k new car price. Higher for evs. It’s great for striking ford workers to get big pay raises but it was foolish to assume that that there would be no consequences.

 

[LincolnLuvr]

On the other hand, Hyundai is going full steam ahead with its EV plans. I feel like Ford will lose more market share by cutting back.

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