Economist cautions of EV market resembling Ford's "Edsel" disaster
Date
10/31/2023 4:21:03 AM
(MENAFN) Steve Moore, an economist with ties to the Trump administration, has sounded a cautionary note, drawing parallels between the electric vehicle (EV) market and the ill-fated Ford "Edsel" model of the 1950s. Moore, in an appearance on "Varney & Co." on Monday, compared the high expectations for EVs to the once-promising prospects of the Edsel, a car that ultimately became one of the most notorious flops in automotive history. Moore pointed out that Ford, influenced by optimistic executives, produced a significant number of the new Edsel sedans without seeking consumer input, only to discover that the market had little interest in the vehicle.
Highlighting the risk of history repeating itself, Moore cautioned that the EV market might follow a similar trajectory, asserting that car buyers are not enthusiastic about electric vehicles. His comments come at a time when major automakers such as Ford and General Motors are grappling with challenges affecting their electric vehicle ventures, impacting their profits and leading to a reassessment of their EV strategies. In particular, Moore's comparison underscores the potential pitfalls of the industry's rapid embrace of electric vehicles without fully considering consumer preferences.
Ford's recent earnings report revealed a notable setback for its EV unit, with a quarterly loss before interest and taxes (EBIT) of USD1.33 billion, representing an acceleration of losses from the previous quarter. This comes as Ford announced a reduction in production of its Mustang Mach-E and a scaling back of planned investments in the EV segment, including a delay in the construction of its second battery plant in Kentucky. General Motors has also faced challenges, with higher costs and the impact of selling more EVs reducing its quarterly profit by approximately USD1.5 billion. Both automakers are reevaluating their EV strategies in response to these difficulties, with GM revising its production goals and shifting its focus on hitting margin targets.
As Moore raises concerns about the sustainability of the EV market, he cites significant financial losses suffered by companies like Ford, estimating that they may be losing between USD40,000 and USD60,000 per electric car. The experiences of major automakers in the EV sector are prompting a reconsideration of the industry's trajectory, with lessons from history serving as a reminder of the risks associated with market shifts driven by supply chain and consumer dynamics
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