The global transition to electric vehicles is beginning to unravel the way major changeovers often do: slowly at first, then all at once.
This week brought a cascade of signals that the EV era is entering a more uncertain, more contested phase. The European Commission backed away from what had been the world’s most aggressive timeline for phasing out internal-combustion engines, granting manufacturers and consumers more time to move off gasoline. A day earlier, Ford Motor Co. announced $19.5 billion in charges tied to the retreat from an electric strategy it vowed to go all in on eight years ago.
The pullback is no longer confined to a few laggards or skeptics. From relative newcomers to legacy giants, the signs of reckoning have been mounting for months.
Take Tesla Inc., the US company that did more than any other in the world to kick-start the EV uprising. The Elon Musk-led manufacturer was never going to keep up the meteoric rise pulled off at the beginning of the decade, but it’s no longer just slowing down — worldwide vehicle deliveries are poised to drop for the second year in a row. Musk’s interests have wandered from pursuing a $25,000 electric car to developing humanoid robots and driverless taxis.
China’s BYD Co. will become the new No. 1 purveyor of battery-electric cars in 2025, though it too is now having growing pains, with total sales falling each of the last three months. The company is still producing one plug-in hybrid with a gas engine under the hood for every battery-only EV, and its momentum is stalling in part because authorities in Beijing are increasingly scrutinising pricing practices.
Ford has had plenty of company in struggling to catch up with the electric leaders.
Its archrival General Motors Co. recently incurred $1.6 billion in charges tied to paring EV production capacity, and flagged more such moves may be in the offing. Stellantis NV has scrapped plans for a fully electric Ram pickup and revived gas-guzzling V-8 engines that it will have no trouble selling in a US market that has hollowed out fuel economy and emissions standards.
When Volkswagen AG — Europe’s carmaker that was once most motivated to chase Tesla — ends output of electric ID.3 hatchbacks this month in Dresden, it will be the first time in 88 years the carmaker will have ceased production at a German assembly plant. VW too has taken substantial financial blows, booking €4.7 billion ($5.5 billion) in charges tied to its subsidiary Porsche AG reversing from EVs.
For all the challenges the industry is having, the transition isn’t being abandoned.
“EVs remain our North Star,” GM Chief Executive Officer Mary Barra told investors recently, and she’s repeatedly stated batteries are fundamentally better than internal combustion engines.
Volvo Car AB, which had lobbied for the EU to keep in place its effective phase-out of ICE-powered cars by 2035, noted EVs are a segment of the car industry that is growing.
But the reality that policymakers in Brussels are bowing to this week is that EV sales aren’t growing at nearly the pace required to reach targets set for a decade from now.
The degree of relief the European Commission is granting is somewhat incremental, with tailpipe emissions still needing to drop 90 per cent by 2035, instead of the previous objective for a 100 per cent reduction. The commission also is conditioning its relief on carmakers compensating for additional pollution by using low-carbon or renewable fuels, or locally produced green steel.
“It’s probably a win for the consumer more than a win for the industry,” said Philippe Houchois, an automotive equities analyst at Jefferies. “For carmakers, if you have multiple powertrains, you have have more time to make the investments, but you have to spread your investment over multiple technologies.”
For Ford, the eye-popping charges the carmaker expects to record are linked to moves including the cancellation of a planned electric F-Series truck line, shifting production toward gas and hybrid vehicles and repurposing battery plants to produce energy storage systems instead of EVs.
“We’re seeing the same thing around the world,” Ford CEO Jim Farley told Bloomberg Television. “We need to give customers choice, and then use our manufacturing flexibility to go where the customers are.”>
