Ford announced this week that it is cutting production of its flagship F-150 Lightning electric pickup by half, from two shifts to just one shift per day, at its Dearborn plant in Michigan. The move comes amid signs of slowing demand for electric vehicles (EVs) as consumers grapple with higher interest rates and a potential recession.
Background
The F-150 Lightning was unveiled in 2021 as Ford’s first all-electric version of America’s bestselling vehicle for the last 45 years. Hailed as a game-changer for convincing traditional truck owners to go electric, over 200,000 reservations poured in ahead of production.
President Biden even visited Ford’s electric vehicle plant in May 2022 to drive the new Lightning and tout his administration’s efforts to rapidly scale up EV adoption. Federal tax credits of up to $7,500 per vehicle were aimed at making EVs more affordable.
| F-150 Lightning Key Facts | |
|---|---|
| Base MSRP | $41,769 |
| Available Range | 240 miles (standard) – 320 miles (extended) |
| Available Towing | Up to 10,000 lbs |
| Available Payload | Up to 2,235 lbs |
| Available Power | 580 HP (standard), 775 HP (extended) |
With gas prices soaring over $5 per gallon in mid-2022, demand for EV trucks seemed poised to take off. But chronic supply chain issues coupled with rising material costs forced Ford to increase Lightning pricing by thousands of dollars. Now, economic headwinds appear to be dampening consumer appetite.
Production Cut Details
Citing weaker than expected demand, Ford announced it is removing the second shift of F-150 Lightning production at its Rouge Electric Vehicle Center. That effectively cuts output capacity in half, from over 150,000 vehicles annually down to around 80,000. The plant was already idled for a week in September 2022 as sales slowed.
Around 1,400 employees will be impacted by the loss of the second shift. Ford states that it hopes to place those affected workers in open positions elsewhere, avoiding layoffs.
Other automakers pursuing electric pickups have already delayed production plans. Rivian pushed back its smaller R1T truck this fall as supply issues mounted. Tesla’s Cybertruck has seen its launch window continually shift further into the future.
Reasons For Slowing EV Sales Growth
After reaching 607,000 EVs sold in 2022, industry forecasts projected over 800,000 would be sold in 2023. But those rosy predictions failed to materialize as several economic trends aligned:
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Affordability Issues – Rising mortgage rates and inflation are squeezing household budgets. And EVs carry higher sticker prices on average versus gas models. Even with federal tax credits, the increased monthly payments put many potential buyers off.
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Tax Credit Uncertainty – Confusion around which vehicles still qualify for full federal tax credits seems to be dampening consumer incentive to go electric. And some states are rolling back additional incentives.
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Limited Inventory – Inventory shortages persist, especially for the newest EV models. This reduces options and availability for interested shoppers.
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Gas Prices Falling – After peaking above $5 per gallon in mid-2022, the national average for gasoline has fallen back near $3 per gallon. This reduces the fuel savings benefit potential EV buyers consider.
Industry Reaction
Ford’s cutback is the latest sign of trouble for the auto industry’s ambitious electric dreams. Earlier this month at CES 2023, Fiat Chrysler CEO Carlos Tavares warned of an impending “bloodbath” from brutal price wars as too many EVs chase stagnating demand.
Industry leader Tesla recently slashed prices across its lineup by up to 20% to spur more sales. But analysts worry the discounting trend risks profit margins. EV startups struggling to scale in a difficult funding environment are particularly vulnerable.
While still committed to electrification, traditional automakers may need to temper expectations and shore up their finances in the near-term if consumer headwinds persist. More gas-powered vehicles may fill assembly lines instead of rapidly switching full capacity over to electric models.
Outlook For Ford and the F-150 Lightning
Despite slowing electric truck demand, Ford aims to ramp up other key products like the Bronco SUV and Ranger pickup at its Michigan Assembly Plant – adding 900 new jobs there. The automaker may be anticipating stronger consumer appetite for affordable gas models if economic uncertainty continues.
While Ford is pushing the launch of key EVs like the electric Transit van to late 2023, the Lightning remains vital to the company’s electrification strategy and leading America’s EV pickup market. Significant pent-up demand from earlier 200,000+ reservations still waits pending inventory availability improvements.
Once supply chain kinks smooth out, better equipped manufacturing facilities come fully online, and predicted battery cost declines kick in over the next 2-3 years, analysts expect the economics of electric trucks will only get better. Ford is playing the long game, even as near-term headwinds buffet the auto industry.
Final Thoughts
Ford’s slashing of F-150 Lightning production underscores growing pains for the accelerating electric vehicle revolution. As legacy automakers with deep expertise in gas vehicles navigate their transition to electrons, fits and starts in scaling new technology are understandable.
While the Biden administration’s ambitious national EV adoption targets may need revising, global forces driving vehicle electrification remain strong. Ford is working diligently to reshape itself around this new paradigm. Their flagship Lightning likely represents just the first chapter in what promises to be an electric epic remaking personal transportation over the coming decades.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
