Ford’s electric vehicle sales were on fire in the first half of 2024. However, this growth wasn't entirely organic. It was driven in part by insane lease deals and financing offers, which may prove unsustainable in the long term. In comparison, the sales of Super Duty trucks make Ford's EV sales seem like a mere drop in the bucket.
This kicks off the Friday edition of Critical Materials, your daily round-up of news and events shaping up the electric car industry. Also in today’s edition: Volvo stock surges as the company reports record operating profit thanks to rechargeable cars representing nearly half its sales in June and Mercedes-Benz appoints a new sales boss to fix its tanking EV sales.
30%: Ford Scraps EV Plans In Canada
It’s a pattern we’ve noticed among most legacy carmakers in the U.S., especially the Detroit 2.5. They over-promised and under-delivered. In all fairness, it wasn’t entirely their fault.
The shift to EVs has proven way more complicated than initially estimated. It’s no small feat to integrate cutting-edge software into cars, retool or build entirely new plants, source batteries and streamline production—all while misjudging the growth rate and demand for EVs.
As Ford bleeds money on its Model E electric vehicle business, it needs to make up for those losses elsewhere. That’s why the automaker is now investing $2.3 billion into its Oakville, Canada complex, transforming it into an assembly plant for Super Duty trucks instead of EVs.
Here’s what Ford CEO Jim Farley said in a statement:
Super Duty is a vital tool for businesses and people around the world and, even with our Kentucky Truck Plant and Ohio Assembly Plant running flat out, we can’t meet the demand. This move benefits our customers and supercharges our Ford Pro commercial business.
At the same time, we look forward to introducing three-row electric utility vehicles, leveraging our experience in three-row utility vehicles and our learnings as America’s No. 2 electric vehicle brand to deliver fantastic, profitable vehicles.
Unifor, the Canadian trade union for auto workers, welcomed Ford’s decision. The union argued that delaying the electric three-row SUV from 2025 to 2027 would have been disruptive for workers, risking hundreds of job losses. After the final Ford Edge was made there in May, production activities ended at the plant.
“The delay would have resulted in Unifor Local 707 members being laid off for more than three years,” Unifor said in a statement. “Working with our local unions and company executives, we came to an agreement that will not only see our members back to work sooner, it protects our members’ jobs well into the future,” Unifor National President Lana Payne said.
Initially, Ford planned to repurpose the Oakville complex into an EV and battery assembly plant. Ford had committed $1.3 billion for the EV-specific retooling and it was where the brand’s first three-row electric SUV dedicated for North America was supposed to get manufactured.
Ford told InsideEVs that’s no longer the case and the new location for the electric SUV is to be confirmed.
All said, affordable Ford EVs are in the pipeline under what Ford calls a "skunkworks" project. Additionally, massive battery investments are underway in West Tennessee, Kentucky and Michigan.
Even though there are delays at the moment, things may still improve for Ford’s EV plans in the coming years, especially when all the investments reap results.
60%: Volvo Reports Record Operating Profits
Volvo’s profits surged by 28% in the second quarter, reaching 8.2 billion Swedish kronor ($776 million). The company attributes this success to its “focus on pricing discipline, internal cost control and sustained growth in sales.”
The last part is certainly true. There's a steady increase in the global sales of Volvo’s robust line-up of plug-in vehicles. In June alone, the EX30, Volvo’s most affordable electric model, boosted the company’s overall EV sales by 41% and rechargeable cars now account for nearly half of its overall sales (48.1% to be precise).
Here’s what the Swedish automaker said in a statement:
The strong demand for the company’s electrified cars was demonstrated by the EX30 small SUV, which was among the top three best-selling EVs in Europe, while the XC60 plug-in hybrid continues to be the best-selling PHEV in Europe in recent months.
Gross margins on its EVs reached a new high of 20 per cent in the period, demonstrating that Volvo Cars continues to make the transition towards electrification profitably.
“During the year we increased our market share in Europe to the highest level ever and grew our share in the US as well, while managing our market position in China. I am pleased that we did so with pricing discipline,” CEO Jim Rowan said.
The Geely-owned brand seems to be in top shape. But in the U.S., things on the EV side could be better. So far this year, Volvo EV sales have averaged only 300 units per month. It’s become increasingly clear that without the EX30 and EX90, the company won’t be able to replicate its success in Europe here.
The Biden administration also imposed punitive tariffs on China-made EVs early this year. That means it’s unclear if Volvo will be able to deliver the EX30’s initial $35,000 price tag here in the U.S. as production for U.S.-market examples must move to Belgium.
90%: Mercedes Sales Boss Tasked With “Fixing” EV Business
Mercedes-Benz USA has appointed Bart Herring as the new vice president of sales and product, effective August 1.
Herring previously oversaw sales and product in Canada and he’ll now be tasked with reviving the automaker’s used-car and plug-in vehicle business. He takes over from Senol Bayrak, who will head sales operations for Mercedes-Benz cars in Germany from September onwards.
Here’s what Automotive News reported:
One of Herring's near-term challenges will be driving demand for Mercedes' electric vehicles.
In recent years, the automaker has pushed its high-priced, jelly bean-shaped EVs. But consumers have responded coolly, saddling Mercedes retailers with high inventory and floor plan expenses.
Mercedes' U.S. EV deliveries sank 36 percent to 5,448 in the second quarter. Sales plunged 57 percent for the EQS and 47 percent for the EQE, though the EQB nearly doubled.
Because U.S. buyers aren’t big fans of the German automaker’s soap-bar shaped cars, it will now continue selling polluting gas-powered cars for much longer than it previously wanted to. “We need flexibility for longer, until deep into the 2030s,” CEO Ola Källenius told Bloomberg a few weeks ago.
It has also ceded ground to rival BMW, whose EV sales reached near-record levels in the second quarter.
On the charging front however, the automaker is taking strides. Mercedes-Benz High Power Charging, the brand’s charging division, recently partnered with Starbucks to bring charging stations to more than 100 Starbucks locations across the U.S.
This is in line with the automakers charger expansion in locations where EV drivers have access to amenities such as retail and convenience stores, high-end lounges and wifi.
Even though there aren’t a ton of Mercedes EVs on the road, the chargers are open to all EVs, which is good for the industry and certainly good for the planet.
100%: Would You Still Buy An EV Without The Offers?
There were winners and losers in the EV business in the first half of the year. Ford, General Motors, BMW and many others saw substantial gains in EV sales. Tesla, Mercedes-Benz and some others slipped.
A lot of this growth came on the back of tax credits, incentives and insane lease offers and finance deals. But Republican presidential candidate Donald Trump has vowed to “end the EV mandate” if he’s elected come November. If the incentives are rolled back, how much would that influence your EV buying decisions? Leave your thoughts in the comments.
