EV ‘bloodbath’ warning as Ford cuts F-150 Lightning output

Price reductions for battery-powered models risk damaging carmakers’ financial health. Photo / Getty Images

Stellantis boss Carlos Tavares has warned carmakers cutting electric vehicle prices too fast risked a “bloodbath” in the industry, hours after Ford said it was reducing production of its battery-powered F-150 Lightning pick-up truck because of weaker sales.

Ford said on Friday it wanted to bring the vehicle’s production in line with customer demand, expecting “continued growth in global EV sales in 2024, though less than anticipated”.

The F-150 has for years been the best-selling motor vehicle in the US, and the launch of the Lightning model in 2022 was seen as an important moment in the evolution of EVs.

“We see a bright future for electric vehicles for specific consumers,” said Ford chief executive Jim Farley. But the group “has capacity available to scale production of gas-powered and hybrid F-150 trucks based on customer demand”.

Ford has scaled back plans for an EV battery plant, while General Motors and Tesla have paused some of their EV expansion efforts.

Rental group Hertz, which took Teslas on to its fleet in 2021, has begun selling 20,000 EVs, or one-third of its global electric fleet, to buy more petrol vehicles amid strong demand for internal combustion cars.

Tavares, whose company owns the Jeep and Ram brands that compete directly with Ford and GM, said that slowing EV demand globally was due to high prices, but warned companies against cutting them on vehicles where they already make very little money.

“If you go and cut pricing disregarding the reality of cost, it’s a race to the bottom and that will end up with a bloodbath,” he said. “That is exactly what I am trying to avoid.”

Stellantis is one of the biggest EV sellers in Europe through its Peugeot, Fiat, Opel and Citroën brands, and is embarking on an EV “offensive” in the US from this year.

Tavares singled out Tesla, which has cut prices multiple times over the past year to stimulate demand, igniting a price war with Ford, but has seen a slide in its profits at the same time.

“I know one company that has brutally cut pricing, and their profitability has brutally collapsed,” he said. “When you do that you are jumping in the red ocean, and when you do that things become very difficult in the future.”

Companies that consistently lost money “become potential targets for consolidation”, he said, adding he did not rule out further acquisitions by the group in the future. Stellantis was formed by the merger of Peugeot owner PSA — which itself bought lossmaking Opel and Vauxhall from General Motors — and Fiat Chrysler, a business created when the bankrupt Chrysler was sold to Italy’s Fiat.

Ford, which tinkered with the price of the F-150 Lightning several times last year, raising and then cutting it to reflect changing costs, slightly increased the price of the pick-up truck earlier in January.

EV sales continue to rise across the world, at slower rates than had been expected as mass market customers balk at higher prices compared with petrol alternatives.

The market share of EV sales in the UK and Europe fell last year, while US growth has slowed.

A record 1.2 million EVs were sold in the US in 2023, including 317,168 in the fourth quarter, according to data from Kelley Blue Book, a research company owned by data group Cox Automotive. EVs made up 7.6 per cent of the domestic car market last year, up from 5.9 per cent in 2022.

However, “while records were set, the oft-reported slowdown is real”, said Kelley Blue Book analysts. “The EV market in the US is still growing, but not growing as fast.”

Sales in the last three months of 2023 rose 40 per cent compared with the same period a year earlier, moderating from 52 per cent in the fourth quarter of 2022.

Written by: Steff Chávez and Peter Campbell

© Financial Times