What Will Ford Do if All-Electric Vehicles Don’t Pan Out as Expected?

By Brett Foote - August 2, 2023

There are certainly signs that all-electric vehicles are losing favor with shoppers, but it seems like Ford has contingency plans in place.

For years now, we’ve been told that all-electric vehicles are the future, but this isn’t just lip service – rather, automakers (and the government) are quite literally putting their money where their mouths are, and Ford is no exception. Instead, The Blue Oval remains squarely at the front of the pack in that regard, investing $50 billion in its total electrification mission, with much of that going toward the construction of multiple EV and battery plants, as well as the conversion of several existing facilities for that same purpose. However, given a recent spike in EV inventory, it’s worth wondering – what will Ford do it the buying public doesn’t flock to all-electric, as expected?

From the start, things looked promising – both the Mustang Mach-E and F-150 Lightning – not to mention the commercial-focused E-Transit – debuted to high demand as early adopters looked to secure their all-electric rides for one of a few reasons. Some just wanted the latest and coolest piece of technology out there, while others were simply looking to flip their rides and make a profit while the market was hot. But then, suddenly, the supply and demand curve evened out.

The first sign of trouble in the water came from the fact that we saw both the Mach-E and F-150 Lightning receive rare factory incentives recently, which corresponded with price cuts for both models. In all fairness, both have seen multiple price increases since their launch, and even the Lightning’s heavy, nearly $10,000 chop wasn’t enough to bring it back in line with its original pricing. However, Ford cited the fact that it has ramped up production and improved inventory levels for both models, along with a reduction in raw materials costs as the reasons for this drop.

Then, new data emerged from Cox Automotive that revealed EV inventory across the entire industry has skyrocketed – reaching a 103 days’ supply at the end of June, with the F-150 Lightning sitting at an 88 days’ supply and the Mach-E at 116 days. EV pricing also declined 20 percent year-over-year to $53,438, while incentive spending was higher than ICE vehicles at 7.1 percent of average transaction pricing versus 4.2 percent – signs of trouble, for certain.

However, Ford isn’t worried – or at least it isn’t going to admit as such, as Darren Palmer, Ford’s vice president, Electric Vehicle Programs, Ford Model e, explained to The Detroit Bureau recently. “It’s a little premature to be concerned about a pile-up,” Palmer said. “We’re just loading up our dealers. Until now, every Mach-E (and Lightning) was backordered and people had to wait months for them. Now, we’ll have more, and have better deals. We’re in Moore’s Chasm in the adoption curve. There were the early adopters at the beginning. Now we’re moving into the mainstream. But that may take a little time to get going. We think this is a little valley. But customers who have them love them.”

These comments could very well prove true – after all, hot new vehicles do tend to face these types of challenges until automakers can build enough to meet demand, at which point they become readily available, often at or below sticker price. However, all-electric vehicles are a bit different given the fact that they currently have some great benefits to provide customers, but also some notable drawbacks. Studies have historically found that most are worried about range and charging times, not to mention the higher cost of EVs, which is what’s preventing them from buying one.

So what if everyone who wants an EV now has one, and demand is set to taper off dramatically moving forward, or at least until battery technology advances to the point where it’s as convenient as gas in terms of “refueling?” Well, Ford is clearly thinking about this, as we’ve seen in recent weeks during its ongoing contract negotiations with the United Auto Workers (UAW) union. According to Bloomberg, Ford has asked for one thing, specifically, in those contract talks thus far – production flexibility.

This desire stems from current uncertainties surrounding all-electric vehicles – in fact, FoMoCo is reportedly putting contingencies like this in place in the event that demand for EVs fails to meet current projections. If approved, Ford would be able to move workers from, say, EV plants to ICE facilities, which would obviously be a good thing for both sides as opposed to layoffs.

The last clue comes to us from the automaker’s Q2 earnings call last week, in which we learned that it lost roughly $1.1 billion in its Model e unit, versus gains of nearly $5 billion from the Ford Pro and Blue divisions combined. It was then that Ford announced that it was delaying its plan to build two million EVs this year to 2024, directly due to falling demand. The automaker is losing a whopping $32k on every EV it sells – on average – but this was reportedly all part of its plan, with the expectation that second-generation models like the Project T3 pickup entering production starting in 2026 will bring Model e out of the red.

So, that leaves one question – what will Ford do if EVs ultimately don’t pan out as expected? It could instead opt to produce more hybrid batteries, given the popularity of those types of vehicles right now, using its EV plants in that manner until battery technology advances and all-electric vehicles are as popular as these entities hope they will become, which makes the most sense. Otherwise, the company is looking at a potentially huge – and very expensive – problem.

Photos: Ford