Delayed Start: Is Ford late to the race with new EV plan?

April 14, 2021

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2 min read

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What's going on here?

Ford announces a plan to go all-electric for new cars sold in Europe and the UK by 2030.

What does this mean?

Ford plans to transition to fully electric vehicles by 2030. This will be broken up into several targets. Every passenger car model will have an electric or plug-in hybrid option by 2026. Commercial vehicles sold by Ford are on a longer timescale, with only 2/3 of these vehicle types expected to be fully electric by 2030. This is part of their projected £22bn investment in electric technology globally by 2025. Included is an investment of £720m pounds to convert a state-of-the-art factory in Cologne, Germany with the intention to start shipping out the first EVs (Electric Vehicles) by 2023. As part of a global alliance with Volkswagen, Ford will use their technology platform to develop the planned EVs.

What's the big picture effect?

Ford’s announcement comes in the wake of several other automakers moving in the same direction: Jaguar plans an entire line-up of E-models by 2030, Volkswagen’s Bentley Motors announced an expected fully electric range by 2030, and BMW predicts half of its sales will be fully electric by 2030. In addition to this trend, government legislation has provided further impetus for the move. For example, Britain’s ban on the sale of vehicles emitting pollutants by 2030. With 40% of the market share for the sale of petrol-powered commercial vehicles, Ford cannot afford to delay anymore. No doubt Tesla’s skyrocketing share price is probably an irritant for traditional car manufacturers, most of whom are confident they can do a better job at producing EVs. After successful restructuring, and returning profitability at the end of 2020, Ford hopes to make huge gains in this market.

However, despite the positive trends towards environmentally friendlier forms of transport, it is not clear that the rate of progress in the UK’s infrastructure will be able to accommodate the expected rise in demand for electricity. The National Infrastructure Commission has challenged the feasibility of the proposition that developments in renewable energy can cover this demand increase. It is also not yet clear how the government will cover the shortfall in taxes to cover the projected infrastructure spending. The projected EV sales for the year 2021 could cost the treasury £200m pounds in lost fuel and vehicle taxes (EVs avoid showroom tax which is based on CO2 emissions).

Ultimately, Ford’s entry into the race currently leaves the company middle of the pack, with a fairly ambitious plan, a clear timetable and a willingness to quickly recover any lost ground. The real hurdle for Ford, and other EV manufacturers, lies in the development of infrastructure to accommodate the expected rise in EV adoption. 

Report written by Andri Boda

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