EVs face tough times as prices cut

Ford, the American automaker major, has announced that it will cut back on its production of electric vehicles (EVs) and will now launch its new electric pickup van in 2027 and not in 2026 as planned. It has decided to stop the production of its three-row SUV. The reason: no pickup in sales of EVs.

People are not willing to pay a higher price for the electric vehicles. Ford will now focus on hybrids, electric-ethanol versions. There is also the fact that Tesla, the pioneer of EVs, is cutting down the price and so have the Chinese EV-makers. It is a tough field.

Two trends clearly emerge. Electric vehicles are seen as the future because of the greenhouse gas emissions of fossil fuel-run cars and trucks and the serious threat they pose through climate change. But the economic feasibility of the EVs, making them affordable, remains a challenge. It is felt that most American families are not sure whether the EV is the best bet for a long ride because the battery recharge facilities are not in place in sufficient numbers. Ford is working with Chinese companies on the battery manufacture technology, but it is likely to take time to turn into a stable base.

Ford is not alone In struggling with the economics of EVs. The other major American automaker, General Motors (GM), also finds itself facing the same cost and price dilemma. The car-makers are hesitating to roll out more EV models because they are not sure of the demand.

It will not be very long when governments would be forced to announce policies banning production of vehicles which run on fossil fuels because of the growing climate change crisis, and the automakers will have no choice but to make EVs. But this is not going to be easy. The use of cars, not just in America, has grown hugely across the world, and they cannot be taken off the roads so easily. Realist policy-makers reckon that the transition from the Internal Combustion Engine (ICE) model to the EV is going to be spread over decades, a time-frame of at least half-century. In the meanwhile, hybrids will dominate the market. And it is perhaps the ideal transition model.

Transport is indeed a significant contributor to the carbon emissions. And it would appear that transiting to a greener source would be the best way of cutting down on the carbon footprint. But it is in the transport sector that the transition to electricity will be the most difficult because it depends on the battery setup.

The manufacture of batteries on a huge scale is required to keep the world on wheels as it were, which is a humongous challenge. The quantity of batteries required to be manufactured and the network of battery recharging will be in mind-boggling numbers. Strategists of the future of transport have to do a lot of homework. There is also the challenge of behavioural change because people will have to learn to use public transport more than ever and reduce the private ownership of cars. And these are not easy targets by any stretch of imagination.

It is also recognised that the batteries depend on the rare material, lithium, which only a few countries have in plenty. For example, China and Chile. So, there will be tough competition for access to the rare mineral.

One of the speculations is that the revived race to the moon is the desire and hope to mine the moon for rare minerals. But the prospect of mining on the moon remains a project of a distant future. This does not mean that it is the end of the story for the EVs. It is more likely that EVs will take their place among vehicles using different technologies like ICE.