Electric vehicle (EV) sales have increased in the last couple of years but EVs still make up a small fraction of cars and trucks on the road.
That disappoints automakers, as well as government policymakers who are pushing to phase out gasoline-powered vehicles. At government prodding, automakers have staked their financial futures on consumers embracing EVs.
When it reported second-quarter earnings last week, Ford predicted it would lose $4 billion on its EV division this year, double 2022’s losses. With that sober economic reality staring it in the face, Ford is slashing the number of EVs that will roll off its assembly line.
The company has lowered its sights from producing 600,000 EVs by the end of this year to turning out that number by the end of next year.
The problem, says Ford CEO John Lawler, is not just competition from Tesla and other automakers. Lawler says EVs are “too expensive” for most car buyers.
To underscore that point, Ford recently slashed the price of its top-trim version of the F-150 Lightning by nearly $10,000. In the used market, iSeeCars.com reported that used EV prices are "collapsing," falling nearly 30% in June.
According to a popular EV blog, the average cost of an EV in the U.S. is in the neighborhood of $64,000. At the low end is Chevy Bolt, at $27,495. Earlier this year GM announced it would eliminate the model – perhaps because of small profit margins – but recently gave the model a reprieve.
The most expensive Tesla model will set you back by more than $107,000. That compares to $48,000 for the average new car of any kind.
The price could be even higher
After doing a deeper dive into the number, FindMyElectric.com puts the average price of EVs in the U.S. at around $76,000. While some consumers can afford that, many more can’t.
If only a portion of the population can afford an electric car it could make it politically unpopular to phase out the internal combustion engine. And expensive.
The Energy Information Administration, a federal agency, reports EVs made up 14% of U.S. car sales in 2022. You could speculate that the people who bought EVs are fairly affluent.
Ford seems to be saying it’s concerned about the people who aren’t.