Electric Vehicle Market Forecasts
Jim Farley, the head of Ford Company, expressed concern about the future of the electric vehicle market in the USA. He noted that this market may turn out to be significantly smaller than previously expected. Currently, electric cars account for 10 to 12 percent of the American automotive market, but the situation could change dramatically.
Impact of Tax Incentive Cancellation
The cancellation of the federal tax incentive for electric vehicles has significantly impacted the industry. Without the $7,500 incentive, Farley fears that demand for electric vehicles in the USA could drop sharply, and sales could be halved. This underscores how important this credit was for the country’s transition to electric vehicles.
During the “Ford Pro Accelerate” event in Detroit, Farley stated that electric vehicles might soon constitute only 5 percent of the total US automotive market, matching the 2022 level and significantly below the expected 10-12 percent this month. Such a forecast points to a more modest future for electrification than many experts had anticipated.
Industry Development Prospects
I believe it will be a viable industry, but it will be smaller, much smaller than we thought, especially considering the changes in tailpipe emission policy and the cancellation of the $7,500 consumer incentive. We will find out in a month. I wouldn’t be surprised if US electric vehicle sales drop to 5%.
According to Farley, the Ford Model e team is constantly analyzing the demand for electrified vehicles. The manufacturer will also have to adjust plans and decide how to utilize excess capacity for electric vehicle production and its battery plants.
Adaptation to New Conditions
We will fill them, but it will be additional stress because we had a four-year predictable policy. Now the policy has changed. All of us will have to adapt, and I believe it will be beneficial for the country, but it will be another challenge.
During the same event, Farley also acknowledged that Ford’s customers are not interested in expensive electric vehicles. Therefore, the automaker needs to create cheaper electric models, but after the cancellation of the tax credit, this will become much more difficult.
Customers are not interested in $75,000 electric vehicles. They find them interesting. They are fast, efficient, you don’t need to refuel, but they are expensive.
These changes in policy and market conditions could lead to a revision of strategies not only for Ford but also for other automakers. The increasing costs of developing affordable models and the need to compete in a smaller market may cause structural changes in the industry, which will affect the pace of transportation electrification in the coming years.