Ford announced the withdrawal of its full-year financial forecast due to the impact of the recent labor strike and ongoing challenges in the EV sector. Most consumers are reluctant to pay higher prices for electric cars compared to traditional or hybrid vehicles. Ford also postponed its planned $12 billion investment in expanding electric vehicle production capacity but remains committed to its goal of advancing its electric vehicle business.

TrendForce’s Insights:

1. Slower Market Demand Spurs Automakers to Rethink EV Strategies

The United Auto Workers (UAW) union initiated a six-week strike in Detroit starting on September 15, 2023, motivated by demands for improved compensation and benefits. The strike came to an end when consensus was reached with Ford, Stellantis, and GM (General Motors), resulting in the signing of a new contract.

According to predictions from Deutsche Bank, this new agreement will add an estimated $6.2 to $7.2 billion in costs for each of the three major automakers. This cost increase is nearly equivalent to the expense of building an electric vehicle platform. Compounded by the impact of slowing demand for global new energy vehicles (BEV and PHEV), with growth rates decreasing from 54% in 2022 to 30% in 2023, Ford announced the suspension of its $12 billion electric vehicle investment plan. This plan includes its partnership with SK On for a battery factory and a partly reduction in production capacity for the Mustang Mach-E.

2. Automakers Must Adopt More Practical EV Development Strategies to Address Price and Range Concerns

The slowdown in electric vehicle market demand stems from the issues of high vehicle prices and range anxiety, which affect consumer willingness to make a purchase. Addressing these two problems requires increasing battery energy density to achieve comparable driving range to conventional vehicles and constructing an adequate charging infrastructure. However, achieving these goals will take time and effort.

With range anxiety still unresolved and the goal of banning fossil fuel vehicles unchanged, automakers positioned between policy and the market face transition risks. At this juncture, choosing to independently develop electric vehicle platforms might add financial burden and risk, with the associated costs reflected in vehicle prices, potentially eroding competitiveness. A more practical approach would involve considering alternative development strategies, such as exploring platform outsourcing to reduce manufacturing costs.

Automakers or Tier 1 suppliers with proprietary electric vehicle platforms have the option to lease their platform production capacity to companies that are currently unable or unwilling to independently develop their own platforms. This strategy can increase production efficiency for lessees, allowing them to commission the production of all or some of their electric vehicle models from the lessor, ultimately reducing manufacturing costs and accelerating the release of new vehicle models.

By doing so, companies can maintain their market share in the electric vehicle race while waiting for the right opportunity to reevaluate the potential for developing their own electric vehicle platforms. In summary, as the demand for electric vehicles slows down, automakers will face tighter financial constraints, making it crucial for them to explore how to collaboratively leverage existing resources to create electric vehicles that align with market demands.

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• [News] Ford Shifts EV Investment Focus Amidst Fierce Price Competition

(Photo credit: Ford’s Facebook)

TrendForce anticipates that by 2026, the global tally of public charging stations will soar to 16 million, marking an impressive threefold increase from 2023 figures. As this unfolds, the global ownership of NEVs—which includes both PHEVs and BEVs—will surge to 96 million. This sets the vehicle-to-charger ratio at 6:1, a significant drop from the 10:1 ratio observed in 2021. Notably, major players like China are paving the way; having set ambitious goals to achieve a vehicle-to-charger ratio of 2:1 by 2030, China is unquestionably a driving force in the global push to reduce this ratio.

Europe is steaming ahead with its net-zero blueprint, targeting the construction of a whopping 17 million charging stations by 2030. America, though, presents a contrasting picture. With a little over 200,000 charging stations currently, the Biden administration aspires to hit the 500,000 mark by 2026. Unfortunately, this will coincide with a projected NEV count of 15 million, exacerbating the vehicle-to-charger ratio to 32:1 Around the same period, Europe and China are projected to sport more modest ratios of approximately 9:1 and 4:1, respectively. Using Europe’s ratio as a yardstick, the US charging infrastructure ambition may need to be bolstered by at least three to four times.

NEV owners globally grapple with a maze of charging standards. Prominent among these are the US standard CCS1 (Combo), the European standard CCS2 (Combo), Japan’s CHAdeMO, China’s GB/T, and Tesla’s NACS standard. Europe and China offer a simpler scenario for their citizens by adhering to a single domestic standard. In contrast, the US is a battleground, with both CCS1 and NACS standards vying for dominance. While adapters provide a temporary bridge between the two, the rapid rise of NACS kindles apprehension among CCS1 aficionados about their future stake.

A diverse array of charging standards across the globe means charging equipment manufacturers must adopt flexible product strategies to cater to different market specifications. Spotlighting Taiwanese firms: Hotron Precision’s charging cables, Longwell’s and SINBOS’s integrated charging systems are all laying tracks across GB/T, CCS1, and CCS2 standards. A feather in the cap for Hotron Precision is its induction into Tesla’s supply chain, while Longwell and SINBON primarily cater to North American charging enterprises. Riding the wave, following proclamations by giants like Ford, GM, and Volvo favoring the NACS standard in North America, charging station behemoths like Zerova and LITEON have thrown their hats into the NACS ring.

From 2025, the landscape will shift dramatically as countries step on the gas to phase out gasoline-fueled vehicles. While the ramp-up of charging station infrastructure still lags, auto giants are bracing themselves to spearhead the charging station market boom. Case in point: Titans like GM, Mercedes-Benz, BMW, HONDA, Hyundai-Kia, and Stellantis are joining forces to spin off dedicated charging infrastructure companies. Furthermore, TrendForce offers a nugget of advice for Taiwanese manufacturers: to stay ahead of the curve and serve North American clientele more effectively, consider setting up shop locally. With Pegatron and Delta Electronics already marking their territory in Texas, the focus for Taiwanese firms should be on nimbleness and adaptability, ensuring they remain unshackled by a single standard.