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Ford Motor Company is reportedly shelving its investment plan for producing electric vehicles as the demand it is seeing right now is lower than expected. The automaker previously said it would shell out $12 billion as investments in EVs, but the plan has changed.
Ford Motor observed that while the sales of electric vehicles are growing not only for its brand but for other carmakers too, the pace of the growth is not what the company is expecting. As a result, it decided to put off the hefty investments, which may proceed later.
The Company Explains Its Decision and Revealed Plans
The Dearborn, Michigan-headquartered automaker, said it postponed its multi-billion investments to expand EV production. The initial plan was to increase the company’s manufacturing capacity. However, based on its observations, buyers have become more cautious about spending, which has also affected the demand for electric vehicles, as per CNBC.
It further explained that the consumers’ reluctance to pay extra for EVs has mainly pushed Ford Motor to put its $12 billion investment on hold. It said that the buyers’ changed attitude when it comes to spending has indeed complicated its ambitious plans to boost the production of vehicles.
“We are not moving away from our second generation EV products,” Ford Motor’s chief financial officer, John Lawler, told the media on Thursday, Oct. 26. “We are, though, looking at the pace of capacity that we’re putting in place. We are going to push out some of that investment.”
He added, “The customer is going to decide what the volumes are. Ford is able to balance production of gas, hybrid and electric vehicles to match the speed of EV adoption in a way that others can’t.”
The New Focus After Temporarily Dropping the EV Plans
According to TechCrunch, the company’s chief executive officer, Jim Farley, said that its top priority has also shifted as they will halt the investment. They are now focusing on measures to reduce the price of electric vehicles to keep up with the “moving target” in the EV market - which Tesla has already achieved.
“Tesla actually gave us a huge gift with the laser focus on cost and scaling the Model Y,” the CEO said during the recent third-quarter earnings call. “They set the standard and we are now making real progress on our second and third-cycle EVs that are in the midst of being developed today.”
Photo by: Andrew Miller/Unsplash
