Automakers cut programs and reassess future plans for EV production as consumer demand plummets
In recent months, some of the biggest car manufacturers have postponed their plans to produce more electric vehicle (EV) by 2030.
Ford Motor Co. (Ford) paused its $3.5 billion electric car plant in Marshall, Michigan. Both General Motors (GM) and Honda have also canceled a program to sell EVs for around $30,000. Ford has also postponed $12 billion in EV investment, citing market conditions.
Despite $1.7 billion of promised taxpayer incentives for its Michigan plant and site readiness, Ford claimed that it is not confident it can run the plant competitively.
A final decision has yet to be made about the plant which officials previously announced would create 2,500 jobs with an average wage of $45,136.
The Ford factory was slated to improve affordability and produce at least two million EVs globally by 2026 to help reach President Joe Biden’s target of 50 percent EV sales by 2030.
However, factors like higher labor costs, rising interest rates and inflation have left car makers with no choice but to cut programs and review future plans. According to automotive research company Kelley Blue Book, the average EV price in July was $53,469 — higher than the $48,334 for gas-powered vehicles. (Related: EV COLLAPSE: Electric vehicle manufacturer Lordstown Motors files for bankruptcy.)
John Mozena, an expert with decades of experience in the automotive and battery industries and the president of the Center for Economic Accountability, said that the current situation is a “great example” of central planning.
According to Mozena, it shows “what happens when government central economic planning runs face-first into the real world of consumers having inconvenient opinions and making actual decisions.”
Mozena added that it doesn’t matter how many EVs automakers build because the focus should be on “how many EVs consumers want to buy and drive.”
Since 1980, consumers have chosen gas and diesel-powered vehicles over electric cars because of factors like inadequate charging stations, range anxiety and a higher up-front cost compared to an internal combustion engine.
In the upper Midwest, Illinois leads the race to register EVs with nearly 80,000, while Minnesota has 41,417 and Michigan has 34,380.
Michigan is targeting to register two million EVs by 2030, while Minnesota and Illinois each target one million by the same year.
Automakers continue to misalign with consumer preferences
Mozena said automakers often get consumer preferences wrong even though they employ experts to predict what vehicles and features will be in demand with consumers.
Mozena also said it’s a big issue if the entire industry misaligns with consumer preferences because of “mandates from federal bureaucrats in D.C.”
Mozena warned that telling people to buy an expensive and inconvenient car because the government said so isn’t a good selling point on the dealership showroom floor. The government telling consumers to buy electric cars is no different from politicians and bureaucrats forcing compact fluorescent lightbulbs (CFLs) on shoppers.
The government had previously created laws, regulations and subsidies to force consumers into replacing old incandescent lightbulbs with new CFLs that didn’t look great, didn’t fit existing light fixtures, created big toxic waste risks and were overall not what consumers wanted. The shift to CFLs slowed down the transition to LED lights which offered similar or better environmental benefits and that consumers preferred more.
Mozena advised that the government must set a goal to reduce pollution and then let companies fix that problem.
However, the government is now making “very specific choices” and taking large risks with taxpayer dollars on specific technological solutions that don’t always end up making the most sense.
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