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- Ford needs more time to hit its EV production targets as demand changes.
- Tesla's price war has made it harder to make money on EVs.
- Trouble at Ford is a sign of a larger EV plateau to come.
The EV price war is forcing Ford to adjust its electric vehicle timeline.
The Dearborn, Michigan-based car company Thursday extended its self-imposed deadline to hit annual electric vehicle production of 600,000 by a year. Instead of hitting that goal by the end of this year, Ford is now targeting the end of 2024.
It's confirmation of recent signs that Ford's original EV ambitions outpaced demand. Ford dealers earlier in July told Insider they were beginning to turn away allocations of the electric Mustang Mach-E after customer interest in the vehicle fell off.
Dealers who spoke with Insider cited high prices as one of the main reasons EVs have been a harder sell in recent months. Ford confirmed during its earning report Thursday that EV pricing is one of the biggest hurdles to meeting their original EV production goals.
"The pricing pressure has dramatically increased in just the last 60 days," Ford CEO Jim Farley said on a Thursday conference call with analysts. "While EV adoption is still growing, the paradigm has shifted."
An ongoing price war in the electric vehicle market has closed the gap between gas-powered and EV prices. The upcharge for an EV over an internal-combustion engine dropped nearly $5,000 in the first half of the year, Farley said.
"We expect the EV market to remain volatile until the winners and losers shake out," he said.
Ford was the first to hit back in Tesla's EV price war
Ford first slashed Mach-E prices at the end of January, following Tesla's first round of sweeping price cuts at the start of the year. Farley and other Ford executives have said this was a necessary move to keep up with Tesla, which largely controls the EV market at the moment.
Still, Farley recently issued a warning to Musk on this strategy, highlighting the importance of keeping designs and vehicles fresh.
"The product gets commoditized and then you lose your pricing premium. That's a really dangerous thing," Farley told reporters at a dinner earlier this year.
Tesla's price war has created a headache for the entire industry, forcing car companies to follow suit at the same time they're trying to get these currently unprofitable vehicles on the road en masse.
The EV market is hitting a plateau
In addition to extending the deadline for 600,000 annual production of electric vehicles to 2024, Ford tabled its ambitions to hit 2 million in EV production by the end of 2026 and told investors it expects to lose even more money on EVs this year.
Ford said it expects to lose $4.5 billion on EVs this year, up from a previous estimate of $3 billion.
These changes at Ford are the latest sign that the EV market is hitting a plateau that will impact Ford's competitors as well. Tesla's price cuts are a response to bloated inventory as fewer early adopters are snapping up their vehicles. Ford rival GM also has very low electric-vehicle sales numbers.
EV sales hit a high of nearly 6% in the US last year, nearing a level that analysts predict will usher in a plateau for growth.
"There seems to be this natural resistance somewhere between 7% and 10% of market share in a given state," said analyst Karl Brauer, citing a recent iSeeCars study that found the states with the biggest EV sales were also the slowest growing. "That seems to be the cap, and then it gets much harder to grow it further."