Ford Loses Rs 83 Lakh for Every Electric Car Sold: Report - Latest Global News

Ford Loses Rs 83 Lakh for Every Electric Car Sold: Report

American automobile giant Ford faces significant losses in its electric vehicle (EV) business. The company reportedly incurred a loss of Rs 83 lakh ($100,000) for every electric vehicle built in the first quarter of the year. This loss is primarily due to the significant discounts the company offers on its electric vehicles in order to sell them. According to reports, the total projected loss for the EV unit in 2024 is $5.5 billion. This loss corresponds to the expected profit from Ford’s ICE vehicle division.

Ford cuts battery orders

The company will now reportedly scale back its electric vehicle efforts to mitigate these losses. The only saving grace the company is considering is its new entry-level electric vehicle, priced at around $25,000. In addition, the company is also reducing orders from high-voltage battery suppliers including SK On, LG Energy Solution and CATL.

Ford F-150 Lightning

Additionally, Ford has scaled back its plans for a lithium iron phosphate (LFP) battery cell plant in Michigan. It is reducing its investments from $3.5 billion to around $2.2 billion. Overall, Ford wants to reduce spending on battery-powered vehicles by $12 billion.

Falling demand for electric vehicles

This decision to cut battery orders is in response to lower than expected demand for electric vehicles in the United States. To meet this low demand, the company has also postponed the launch of its all-electric pickup truck “Project T3.”

Other major car manufacturers are also suffering from this

Tesla Cybertruck

Enthusiasm for electric vehicles is waning worldwide. In addition to Ford, other automakers such as General Motors, Mercedes-Benz, Volkswagen, Jaguar Land Rover and Aston Martin are also reducing their electric vehicle plans. Even Tesla, which dominates U.S. electric vehicle sales with an estimated 55% share in 2023, expects slower growth, according to CEO Elon Musk.

Indian car manufacturers are also skeptical about electric vehicles

XUV400 Pro
XUV400 Pro

In addition to international car manufacturers, car manufacturers in India are also skeptical about a purely electric future. Some automakers like Tata and Mahindra have stepped up their electric vehicle efforts, but many others are still lagging behind. This slowing demand for electric vehicles has also been noticed in India.

In April 2024, electric vehicle sales from many automakers were declining. According to the reports, Tata Motors sold a total of 4,893 electric vehicles, which is 2,222 units less than in March this year. Additionally, Mahindra electric vehicle sales fell 8.8 percent month-on-month.

Hybrids seem to be the new hype

City hybrid 1

In addition to Ford, numerous other manufacturers are now shifting their focus to hybrid vehicles. Ford is reportedly increasing production and sales of hybrid vehicles. GM also plans to introduce plug-in hybrid electric cars.

In India, too, it has been reported that car manufacturers such as Hyundai, Kia, Toyota and possibly Volkswagen are planning to increasingly switch to powerful hybrid vehicles. Recently, Kia India has also expressed its interest in introducing powerful hybrid vehicles in the country.

The brand has revealed that it could introduce a range of high-performance hybrid petrol cars in the near future. With these new hybrids, the company aims to replace conventional diesel vehicles in the Indian market.

2024 Hyundai Creta
2024 Hyundai Creta

In addition, Kia’s sister brand Hyundai is also planning to introduce powerful hybrid versions of its popular models. Recently, Euisun Chung, CEO of Hyundai Motor Group, addressed employees in India.

He explained the central role that hybrids will play alongside electric vehicles in the company’s future portfolio. According to the reports, popular models like Creta, Verna, Venue and Tucson will be the first to feature powerful hybrid powertrains. These powerful hybrid variants will replace the diesel variants of these cars.

The Indian government plans to reduce GST on powerful hybrid vehicles

Recently, Union Minister for Road Transport and Highways Nitin Gadkari also expressed his thoughts on powerful hybrid vehicles. He has stated that powerful hybrid vehicles are currently unfairly taxed in India. To help promote strong hybrid vehicles in India, he has suggested to the Indian Finance Minister to reduce the GST on strong hybrid vehicles from 48 percent to 12 percent.

Toyota Innova Hycross
Toyota Innova Hycross

If this reduction in GST on powerful hybrid vehicles is implemented, it would significantly reduce the prices of these cars in India. We have shared the calculations on how this could bring down the price of the top-spec Toyota Innova Hycross from Rs 35.5 lakh to Rs 30. You can read more about it here.

Why is the demand for electric vehicles declining?

If you are one of those people who are wondering why the demand for electric vehicles is declining in India and globally, we would like to tell you the following reasons.

Market saturation of early adopters

The initial surge in electric vehicle (EV) adoption was largely driven by tech enthusiasts and environmentally conscious consumers. However, with this demographic segment largely tapped, the number of early adopters willing to purchase electric vehicles has plateaued. This has now led to a slowdown in overall demand for electric vehicles.

Practicality concerns when driving on the highway

Despite advances in electric vehicle technology, there are still practical concerns among potential buyers about long-distance highway travel. The reasons for this include range anxiety and limited charging infrastructure on motorways.

Additionally, longer charging times discourage many consumers from choosing electric vehicles as their primary mode of transportation. This is particularly a problem for frequent long-distance travelers.

Underdeveloped charging infrastructure

In countries like ours, India, the expansion of charging infrastructure for electric vehicles is progressing very slowly. The lack of widespread and accessible charging stations, particularly in rural and suburban areas, affects the convenience and feasibility of owning an electric vehicle for a significant portion of the population.

Shailesh Chandra, Managing Director of Tata Motors, with Nexon.EV, produced in Sanand

Concerns about resale value

For Indian car buyers, resale value plays a big role. As electric vehicle technology advances rapidly, consumers fear that their vehicles could quickly lose value. This then leads to a reluctance to invest in these vehicles.

High battery costs

Despite gradual reductions in battery costs over the years, the upfront cost of purchasing an electric vehicle remains relatively high compared to traditional internal combustion engine vehicles.

In addition, for many buyers, the prospect of replacing expensive batteries after a certain lifespan is a driving factor. Indian buyers, who are cost-conscious consumers, cannot embrace electric vehicles.

Urban-Centric Utility

Because they are suitable for short distances, electric vehicles are particularly suitable for urban commuting. Because they are easy to charge in residential areas, they are also suitable for urban buyers. However, people living in rural areas do not have access to such amenities, which is why electric vehicles are not adopted by people living in rural areas.

Costly fast charging solutions

While fast chargers offer faster charging times, their installation and use is of utmost importance. According to many people, this expense diminishes the cost-saving advantage of electric vehicles, especially when compared to the relatively inexpensive option of home charging.

Escalating home charging costs

Another reason for the declining demand for electric vehicles is the cost of charging electric vehicles at home. These costs have increased significantly and have narrowed the price difference between electric vehicles and traditional gasoline vehicles. This increase in charging costs reduces the main incentive for EV adoption. This also makes them less economically attractive for consumers.

Charging the Nexon EV V2L

Rising electricity prices

This is one of the biggest problems with electric vehicle adoption. With inflation rates rising, rising electricity prices have also caused people to question the financial viability of owning electric vehicles. Electricity costs rise every year and at some point it will no longer make sense to buy an electric vehicle.

Environmental realities

Although electric vehicles are perceived as environmentally friendly alternatives to internal combustion engine vehicles, there is great skepticism about their actual environmental impact. There are concerns about the environmental costs of battery production and resource extraction.

In addition, the energy-intensive manufacturing processes contribute to more environmental damage than internal combustion engine vehicles. If you would like to learn more about the studies on the environmental aspect of electric vehicles, click here.

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The post Ford loses Rs 83 lakh for every electric car sold: Report appeared first on Cartoq.

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