Can Ford Manage Government Subsidies and UAW Strikes?

13 October, 2023 - 4:35 pm (49 days ago)
1 min read

In a recent move that aims to stimulate electric vehicle (EV) sales, the federal government is offering up to $7,500 directly at the point of purchase, eliminating the need for buyers to wait for tax returns. However, this incentive primarily favors manufacturers with a larger share of EVs in their portfolio. Ford, a company still entrenched in gasoline vehicles, might find itself in an unfavorable position, with over 90% of its vehicles ineligible for the new incentive.

Recent data highlights Ford’s predicament. Of the 156,614 vehicles Ford sold last month, only a fraction were its flagship EVs – 3,454 Mustang Mach-Es and 1,918 Ford F-150 Lightnings. With Ford’s projection to produce substantially fewer EV units than anticipated this year, the company’s strategy to hinge its future on an EV demand surge in the U.S. is now under scrutiny.

Image Source: ford.com

UAW Strikes – A Bigger Concern?

Compounding Ford’s challenges, the United Auto Workers (UAW) union, discontented with the concessions from American car companies, has initiated a strike at Ford’s most lucrative plant in Kentucky. This strike not only threatens sales of Ford’s gasoline-powered vehicles, which make up a staggering 95% of its sales, but also jeopardizes the company’s transition to EVs.

Ford envisions EVs dominating sales by the end of the decade. Yet, multiple concerns, like range anxiety and infrastructure challenges, cast a shadow on this forecast. Nonetheless, even with these concerns, there’s potential for substantial EV sales in the U.S, given Ford’s iconic Mustang and F-150 EV variants.

The UAW’s primary concern lies in the reduction of the workforce in EV plants. They seek job security, which might further dent Ford’s EV profitability.

Ford’s challenges are multi-faceted. On one side, there’s a federal incentive that doesn’t work in their favor, and on the other, a significant labor union strike that undermines both their present and future strategies. Ford’s aggressive push into the EV market is now met with both external and internal hurdles, making the company’s path forward increasingly complex.

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Bilgesu Erdem

tech and internet savvy, cat lover.

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