As states and automakers nationwide promise to end gas-powered car sales in the next decade, it’s unclear if the public is on board. Many EV (electric vehicle) makers are having to pivot and adjust to the market. Demand, cost of production, supply chains, and profitability are all factors that will continue to affect the growth of this industry.
Most recently, GM announced a delay in their plans to produce electric trucks at the Orion Assembly plant in Michigan. The public’s decline in EV interest is an unexpected hurdle affecting many automakers in the United States, in addition to the current United Auto Workers strike.
GM’s Orion Assembly Plant Transformation
In 2022, GM announced that they would be spending $4 billion to convert their Oion Assembly plant into an electric truck factory by 2024. Recently, however, they decided to put a hold on producing two of their electric pickup trucks (Chevrolet Silverado EV and GMC Sierra EV) which will delay the need for the factory. Around 1,000 workers have been transferred to other facilities in the meantime, as GM doesn’t foresee the plant being used until late 2025.
So, why the delay? GM says it’s to “better manage its capital investment” in EVs. In other words, automakers have been investing lots of money into EV plans based on demand forecasts, which are not rising as fast as predicted. The public is just not buying electric vehicles as much as expected.
Tesla’s Price Reductions
Tesla is the biggest EV company in the world, producing millions of cars each year. They also had to pivot recently, which they did by slashing prices by as much as 20 percent. While price cuts can seem great to potential customers, they often signify something deeper going on at the company. Tesla’s third-quarter deliveries this year did not meet market expectations, showing a decline from the previous quarter. Price reductions could be a means to increase competitiveness since Tesla is not the only electric car maker anymore.
Ford’s Factory Plans and Price Reduction
Similarly to GM, Ford has decided to pause its plans for a $3.5 billion electric vehicle battery plant in Michigan. The company first wants to make sure it can compete in the market, and they are also in talks with the United Auto Workers about contracts. The union wants their workers to be able to work at this EV factory and make good wages, but Ford has decided to halt all spending on this new factory. Between the plea for better wages and the decline in EV interest, Ford is unsure if this factory will be profitable.
The type of battery they plan to produce is also noteworthy. Currently, American EV makers use LFP batteries from China, but Ford wants to begin mass production in the U.S. using Chinese technology. The U.S. government is considering new laws that would prevent this type of relationship with China, so this is just another obstacle that has likely influenced Ford’s decision.
Challenges Across the EV Industry
Electric car makers across the country are struggling to meet production quotas, sales quotas, and more. Between supply chain issues and the United Auto Workers strike, there are many obstacles standing in the way. Additionally, as with any new transportation technology, there are constant safety concerns. Many electric vehicle makers have faced recalls and NHTSA violations, including Tesla.
One safety concern is the weight of the car batteries. EV batteries are very heavy, meaning that in the case of an electric car or truck accident, there will be a much greater impact on the other vehicle or pedestrian involved. This is just one of many safety concerns, which is natural for new automotive technology but certainly needs to be addressed.
If we learn one thing from these pivots, it’s that the electric car industry is not predictable. Only time will tell if the demand for EVs is there and if the cost of mass production is achievable. With California and other states outlawing gas-powered cars by 2035, it’s up to these automakers, the government, and auto worker unions to work together. For now, most car companies are continuing to design and plan for new electric vehicle models, but will need to overcome these challenges. If safety concerns can be addressed, unions are happy, and batteries can be produced in the U.S., the future of cars will be electric.