Exactly how well electric vehicles are doing is somewhat region-specific, with the global picture being largely positive for battery suppliers, manufacturers and car dealers alike.

For example, the situation in China and increasingly in the United Kingdom is somewhat different to the situation in the European Union and especially the United States.

With over 40 cars eligible for the UK’s Electric Car Grant, eight of which qualify for the top-band £3,750 discount, battery electric cars make up a quarter of the new car market and electric cars as a whole sell more than conventional petrol or diesel cars.

However, the situation in the United States is very different, with Ford willing to lose $19.5bn in order to pivot back towards hybrid and petrol-powered cars. Longtime rival General Motors has stated its intentions to do the same and lose $1.6bn in the process.

Why is this the case? Has the “operating reality” of EVs truly changed? And what does the future hold for EVs heading into the new year, as heavy restrictions loom for EVs?

Is Ford Abandoning Electric Vehicles?

The most notable company to take a significant step backwards from their previous approach to producing electric vehicles is Ford, the sixth-largest car manufacturer in the world and the second-largest in North America.

Ford has announced they are significantly changing their strategic approach, moving away from a wholesale electrification of their range in favour of focusing heavily on hybrid vehicles, “extended range” EVs, which use a small petrol engine to recharge batteries and much smaller, cheaper EVs.

This “strategic shift”, set to cost the company $19.5bn, will involve the cancellation of the Lightning EV version of their highly popular F-150 pickup truck, the cancellation of their entire announced range of EV models and the discontinuation of the T3, a follow-up to the F-150 EV.

Instead, Ford is going to focus on more affordable EVs, more in line with Ford of Europe’s range, such as the Puma Gen-E.

Why Are Ford Retreating From Its EV Plans?

There are three main reasons why Ford intends to move away from EVs as a major part of their sales future:

  • Regulatory changes are making the EV transition less urgent for car buyers and manufacturers.
  • The reduction of incentives has made EVs more appealing to buy.
  • The most famous large EV is a notorious failure.

Why Have Regulations Affected Ford’s EV Plans?

There is a correlation between the regulatory climate of incentives, targets and restrictions, and the popularity and sale of electric vehicles, and with more uncertainty comes a hesitance from manufacturers to commit to producing battery EVs and a reluctance from customers to invest in cars that might not receive the support they need.

In the USA, there has been a concerted shift away from EVs as a primary focus, with policies that incentivised producing more polluting, less economical vehicles by reducing the financial penalties in real terms for violating existing regulations.

In the EU and to a lesser extent the UK, there has been a similar watering down of regulations involving EVs. The UK will continue to allow hybrid EVs to be sold for five years after the expected cut-off date of 2030.

Meanwhile, the EU controversially cut their 100 per cent zero emissions mandate to 90 per cent, according to The Guardian. 

Both changes are attempts to protect domestic car industries, but both also run the risk of having the opposite effect and causing the industry to lose more ground to Chinese car manufacturers, who pivoted early to EVs and have reaped the rewards.

Do EVs Need Government Incentives To Sell?

One of the biggest and most tangible changes in the North American market is the end of a $7500 (£5500) tax subsidy on electric vehicles in the United States, according to Reuters.

Much like how the UK Electric Car Grant inspired a rise in EV sales, cutting the US EV subsidy has caused the already struggling market to fall further in the wake of a broader economic recession.

Whilst this will not affect every manufacturer and every customer, with Volvo outright stating that they will continue to prioritise EVs, others who have been struggling to catch up have taken it as a sign to get out of the market.

Did The Cybertruck Lead To Ford Retreating From EVs?

Whilst small EVs will always sell, particularly in states such as California, the market for larger EVs might have been affected by the sector’s most notorious failure.

The Tesla Cybertruck was unveiled in 2019, which led both GM and Ford to respond with the Chevrolet Silverado EV and Ford F-150 Lightning, respectively.

However, the big issue with the Cybertruck was that the need for a gigantic battery pack caused the price to skyrocket, which, alongside many technical flaws and bizarre design decisions, caused sales to drop precipitously.

Whilst the F-150 Lightning sold better, it was also far more expensive than its petrol-powered version and has struggled to scale up sales fast enough to offset its production costs.