Ford GM ‘discards’ investment in electric vehicles, ‘4-fold increase’ in hybrid gasoline vehicle production
American automaker Ford GM postponed its investment in electric vehicles and announced increased production and sales of hybrid and gasoline vehicles.
Ford Chief Financial Officer John Lawler wrote in an investor note on the 26th that the company will “defer some of its planned multibillion-dollar investments in new electric vehicle (EV) and battery production capacity,” citing “tremendous downward pressure” on prices. Reuters reported that he repeated this.
“We will slow the growth of loss-making electric vehicles, shift investments to Ford’s commercial vehicle division, and increase sales of gasoline-electric hybrids over the next five years,” Ford CEO Jim Farley said in July’s second-quarter earnings briefing. We plan to quadruple it,” he told Reuters.
“Ford’s growing concerns about cooling demand for EVs follow rival General Motors’ decision earlier this week to postpone a $4 billion electric truck plant in Michigan,” Reuters said.
On the 25th, GM announced that it was “abolishing” the joint development of an inexpensive electric vehicle (EV) with Honda Motor Company.
Reuters described the 'decision to scrap' as "GM's strategic shift to slow the launch of several EV models to focus on profitability while grappling with rising costs from the United Auto Workers strike, which surged to $200 million per week this month." revealed.
Major U.S. automakers have already withdrawn their profit forecasts for 2023.
“After extensive research and analysis, we have mutually decided to discontinue the program,” GM and Honda said in a joint statement. “Each company is committed to economic viability in the EV market.”
Honda said, “There is no change in our plan to sell only electric vehicles until 2040.”
“The two companies pointed to projects they are still working on together to acknowledge the end of their EV plans,” GM said, citing a joint statement.
Immediately after the withdrawal of the EV business was announced on the 25th, GM's stock price was almost flat at $28.52 in pre-market trading, Honda closed 0.8% higher in Tokyo before the decision was announced, and LG Ensol's stock price fell.
GM and Honda agreed in April last year to produce millions of electric vehicles starting in 2027 by developing a series of low-cost electric vehicles based on a new joint platform.
In January of last year, LG Ensol announced the construction of a $6.5 billion plant in Michigan in collaboration with GM, and in January of this year, GM announced its ‘cancellation’.
LG Ensol's operating profit in the third quarter was 40.1% compared to the same period last year (KRW 521.9 billion). An increase of 58.7% compared to the previous quarter (KRW 460.6 billion) was announced, but this was due to the US Inflation Reduction Act (IRA) tax credit of KRW 215.5 billion, which was first reflected in operating profit. Excluding this, operating profit was KRW 515.7 billion and operating profit ratio was KRW 515.7 billion. It is 6.3%.
LG Ensol, which focused on increasing its stock price, surged 94% compared to the previous quarter in the third quarter due to the stable expansion and operation of new production lines, which is expected to be reflected in a subsequent decline in its stock price.
Korean securities firms began downwardly adjusting LG Ensol's stock price on the 26th after the stock price plummeted.
Korea Investment & Securities lowered LG Ensol's target stock price from 850,000 won to 610,000 won, Shinhan Investment & Securities lowered it from 650,000 won to 550,000 won, NH Investment & Securities lowered it from 595,000 won to 550,000 won, and Hana Securities lowered it from 750,000 won to 650,000 won. Adjusted.