Ford considers scrapping its Lightning electric pickup

Ford Motor Co. is considering scrapping the electric version of the Ford F-150, the Wall Street Journal reports.

“In October, the first month since the end of the federal EV tax credit, Ford’s overall EV sales in the U.S. fell 24% from a year earlier,” the WSJ explained. “Ford dealers sold 66,000 gas-powered F-Series pickups, up a tick from a year earlier, and just 1,500 Lightnings, the fewest of any model.” Note that Ford was expecting to sell 150,000 Lightnings per year, so the current pace puts them barely above 10% of their goal.

While the article first cites the expiration of the tax credit at the end of September as a reason for falling sales, the real reason for the shift, which the article only hints at, is that the fuel economy credits supporting EVs and the EPA’s GHG regulations effectively mandating more eV production are now gone. My colleagues, former Texas state Rep. Jason Isaac and Trevor Lewis, and I have estimated that these regulations created an indirect incentive worth tens of thousands of dollars per EV, far more than the impact of the $7,500 consumer tax credit (see our 2023 paper here and our recent update here).

Now comes some evidence that we were pretty close to the mark. Ford would not be considering canceling the F-150 Lightning entirely if they were just going to have to raise the price by $8-10k to offset the loss of the tax credit. They fear they’ll need to raise the price so much that they won’t be able to sell hardly any of them, and with the regulatory mandates gone, they don’t need to go on losing billions every year selling the trucks at a loss.

It’s quite remarkable to see the continuing effects of what we believe is the most impactful energy policy decision of the year. The speed at which the market is correcting to the removal of massive policy distortions is amazing, and gasoline car buyers can rejoice that they will no longer have to pay higher prices on their vehicle to subsidize EVs to the tune of tens of thousands of dollars per vehicle.

Automakers will now have to bow to physical reality since they can’t rely on the federal government to subsidize further follies like electric pickups. Ford CEO Jim Farley laid it out quite simply:

“Ford’s Farley has conceded that, when it comes to EVs, Americans want smaller, affordable models like those sold by Chinese automakers in markets outside the U.S., and not big, pricey trucks,” the WSJ continues. “The company is now racing to build a compact $30,000 EV pickup.”

As my colleague Mark P. Mills would say, put this one in the “no duh” category.

This is simple physics. EVs make the most sense for small commuter vehicles in the cities. You can drive and EV to work every day and charge it at home at night with little reduction in convenience, good fuel savings, and the fun factor of having a zippy car on the freeway. My neighbors in Austin all have Teslas for this purpose, while also owning SUVs to haul their entire families around.

Big trucks that are used to haul loads in more rural areas are the worst-use case for EVs. The heavier the car, the more impact of the low-power-to weight ratio of batteries compared to gasoline, which means you need more battery capacity to drive the same distance. And F-150 users don’t usually have defined commutes, sometimes driving over 100 miles a day to different jobsites. This is why Tesla and the Chinese made sedans first and why Tesla is only now dipping into trucks after 15+ years of experience building EVs (and with little success so far).

Ford’s attempt to focus their EV marketing on a truck first was destined to fail, but they had no choice under the old regulatory regime. They were not going to improve their fuel economy numbers as much by replacing already fuel-efficient small vehicles with EVs, and they don’t sell enough of those vehicles anyway. They needed to replace their gasoline pickups, their least fuel-efficient and best-selling vehicles, with an EV model to have any hope of meetings the standards.

Now that the federal government has taken its hand off the scale, expect to see U.S. automakers roll out more commuter EVs and many more hybrid vehicle options. As battery technology gradually improves, these vehicles will make more sense for more people. Meanwhile, the upward pressure on gasoline vehicle prices, needed to subsidize money-losing EVs, will ease considerably. U.S. car buyers will benefit all the way around.