Another electric car company contraction

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Ford Motor Company made a $3 Billion dollar investment in a Marshall Michigan (pop just under 7000) plant (Near Battle Creek MI) to build batteries for electric cars.
While at the same time closing the $5.8 billion Blue Oval SK battery plant in Glendale, Kentucky. 1600 workers were laid off. (population 1900)
The Kentucky plant was to supply batteries for the F150 Lightening to be built in the Blue Oval City plant in Heywood County, Tennessee.

HOWEVER - the Federal Government stopped issuing incentives! The elimination of the $7,500 credit for new EVs and the $4,000 credit for used EVs, which ended September 30, 2025, significantly reduced EV demand and disrupted Ford’s long-term EV battery strategies.
Without incentives, a battery powered vehicle is more expensive than gasoline powered. The mass market moves based on dollars. With the wealthier buyer choosing battery power at times because they can.

The solution for Ford was to pivot! The Tennessee plant will produce gas powered trucks for model year 2029

Meanwhile, Lucid Motors just announced the layoff of 1500 workers or 18% of the work force in the Casa Grande, Arizona assembly plant. (Pop of Casa Grande is 69,000)

When the Government steps in to the business arena, more times than not it is a failure. The state of CA has a mandate for 2035 for 100% of new vehicles sold to have zero emissions. (ZEV) ZEV regulations are technology-forcing policies, incentivizing automakers to develop vehicles with longer electric ranges and lower emissions This is actually a tiered thing making it's way to 100% by model year 2035. Plus as always there are loop holes and exceptions. Which is a reason Ford split the company into two pieces several years ago. There is Ford Motor Company and Blue Oval. Blue Oval builds vehicles with electric power in some variation. My question in all of this legislation is what are the results?? Will we really get that much more significant cleaner air in the US?

Ford is sitting on $23 Billion in cash and cash equivalent accounts. (Which is slightly more than GM has) From the outside one might suggest, expand the North American market to other models that were built in the past. The problem is the Government. With a mandate to build a different power train in a short period of time, this becomes very expensive. Ford dropped $5.8 billion in Kentucky and ended up with nothing. When the Federal Government ended incentives in 2025, that market segment radically changed. Or fell off a cliff.

The current administration has paved the way for lower cost gasoline vehicles to be built. The unknown is what happens after 2028.
It is rather easy to write legislation. Execution become where the rubber meets the road.
And whatever happens, it is you and me that ultimately pays the bill. EVEN if you never buy a new vehicle again, the market changes radically when Uncle Sam steps into the marketplace. It might leave you breathless.

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[Administrator]

I thought things were looking really good for hybrids until we stopped pursuing them. The midsize MKZ was up to almost 50 miles per gallon - wasn't it? That was a pretty comfortable and luxurious car. If we didn't stop, where might we be now? I bet it wouldn't have been all that long before we saw full-size luxury cars getting 100mph with hybrid setups... That would have been fascinating - and the automotive industry wouldn't have had to be turned upside-down.

 

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Follow the money -

Hybrids and electric cars slowed because the US Government incentives ended.
This type of powertrain is more expensive than a gasoline powered car.
For the more wealthy buyer this is not much of a consideration. For others or buyers seeking a lower cost of mode of transportation, they are buying based on price not power train choices.

Remove the Government assistance and many buyers buy something else.
And the Government assistance is NOT sustainable.

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[oktowncar]

. That would have been fascinating - and the automotive industry wouldn't have had to be turned upside-down.

Thanks to the Banking Industry handing out subprime loans that eventually failed AND then the government over reach with their Climate agenda. The Automotive Industry and Housing Markets have been turned upside down for a long time now leaving us all on the hook for more bailouts

 

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Thanks to the Banking Industry handing out subprime loans that eventually failed AND then the government overreach with their Climate agenda. The Automotive Industry and Housing Markets have been turned upside down for a long time now leaving us all on the hook for more bailouts

Since we are going off topic and I am employed in the mortgage banking world ..............

The current housing situation is the way it is because of multiple factors.
1) The Dodd- Frank law that was passed after the financial crisis of 2008 greatly restricted home buyers that are buying a primary residence.
Current home ownership is 65% versus 70% back then. Know that each 1% = 1.3 million homes. Meaning there are more than 6.5 million less home owners now. Because of this there are a lot of renters. And the landlords seeing opportunity and have less restriction on buying/financing, buy more homes to rent. Plus, apartment complexes have been on a 3 to 6 year building spree as of late. Again to meet the renter demand.
2) Supply and demand. The supply was significantly reduced in the housing downturn. Millions of homes nationwide were leveled during and after the Real Estate downturn occurred. Demand came back especially with the great money dump from the Biden admin. However that created higher costs because there was so much more money chasing fewer goods. ((Production/supply had stopped during COVID) That money is nearly gone and we have the inflation hang over of wanting goods without that COVID money. The price of goods has not and likely will not come down to pre-COVID levels. (Inflation)
3) The home affordability is easing just a touch in 2026. However it isn't a thing that resolves itself swiftly. Income is creeping higher and the overall price of housing has been stagnant this year.
4) Because of limits in the Dodd-Frank laws, Real Estate lenders will have a difficult time defaulting or needing a bail out. That could happen but lenders are severely restricted from taking risks. Banks of all types have to have a far greater liquid asset reserve. This has downsides that the consumer pays.

As far as the Automotive industry, there are some limits to automobile financing as well because of Dodd-Frank. This industry moves a lot faster than Real Estate. In addition, auto makers have to invest billions to generate a product before a sale is made. Real Estate Developers/Home builders only have to buy land. Usually with cash. The material can be purchased later when a home sale is made. Making the return on money different in the two industries.
This is why Ford is sitting on $23 Billion dollars in cash and cash equivalents! And it is invested on a strategy of building vehicles that the market clearly wants. (a lot less riskier) GM has $27 Billion nest egg of cash and cash assets as a comparison.

Auto bail outs are not something that is going to happen any time soon, unless the marketplace changes faster than normal. Change always happens in the marketplace. But change in a compressed amount of time in the marketplace is the pit fall that can bring down any company. Government can have a big (unfair) hand at making change occur in a short period of time. Which costs a lot of money.

So, we get back to Lucid. A very small company building a limited product that was propped up by the US Federal Government. The prop was kicked away and the company is sliding. NO matter how great their product may be, Lucid needs the Government to throw money at the industry niche.
But the Federal Government has an unfair marketplace presence. They can wield both the carrot and the stick.
Pass laws that restrict
Throw money at the situation
Both interfere with the marketplace, such that the marketplace behaves differently.

In my opinion, because there is that kind of interference, Ford is and has not taken very many market risks since 2010.

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