#Ford Is Already Making More EVs Than It Can Sell – Review Geek

Customers’ new pricing expectations have slowed EV adoption.

Due to pricing pressure and slowing demand, Ford’s goal of producing 600,000 electric vehicles each year has been delayed. The automaker initially hoped to reach this landmark by the end of 2023, but it’s now shooting for the end of 2024. Ford also expects to lose $4.5 billion on EVs this year, up from the $3 billion estimate it shared just a few months ago.

According to a report from Business Insider, Ford dealers are turning away EV deliveries because of slowed demand. Ford’s EV production has effectively outpaced demand, which is a bit shocking. As you may remember, automakers like Ford couldn’t keep up with EV demand in 2021 and 2022!

The problem partially stems from Tesla’s dramatic price cuts, which have triggered a price war within the electric vehicle industry. Ford was the first carmaker to rival Tesla’s price cuts, a move that has made its EVs even less profitable while simultaneously shifting customers’ expectations.

Tesla and the automotive industry as a whole should see this as a warning sign. Pricing is one of the biggest obstacles to EV adoption, but ironically, aggressive price cuts may reduce the perceived value of electric vehicles.

Customers expect EVs to get even cheaper, which puts a damper on EV adoption and reduces automakers’ ability to reach a high production volume (manufacturing at scale is the easiest path to cutting prices and achieving profitability). It also forces automakers to deal with an awkward situation—a cheap and boring EV will still be more expensive than a gas vehicle, but it will lack the luxury features that encourage customers to pay extra.

Ford CEO Jim Farley describes this as “commoditization” and warns that automakers could “lose [their] pricing premium” through unrealistic price cuts. Of course, from a customer’s perspective, this isn’t such a bad thing. Electric cars are cheaper than they were last year, and an aggressive price war may accelerate the EV market’s slow descent into ubiquity (though many brands will become losers in the process).

And automakers like Ford simply aren’t in the same position as Tesla, which is on track to produce 2 million EVs this year. Tesla is the most popular EV brand by an extremely wide margin, and unlike its rivals, it already produces EVs at a shockingly high capacity. Tesla isn’t afraid of a price war because it knows it can weather the storm.

Luckily for Ford, the demand for electric vehicles is still increasing, just not at the previously expected rate. The carmaker now hopes to reach an annual production goal of 600,000 EVs by the end of 2024, which seems realistic given the current circumstance.

Source: Ford via Business Insider