Early adopters fueled the initial spike in electric vehicle (EV) sales, but the next wave of consumers — the more price-sensitive "early majority" — is proving to be more elusive.
- Mainstream shoppers aren't willing to pay a huge premium over conventional gas-powered vehicles, in part because they're still apprehensive about charging an electric car and they think better EVs are coming.
Why it matters: The EV transition will likely be longer and bumpier than many experts predicted — which explains why some automakers are hedging their bets, cutting prices and recalibrating their strategies.
What's happening: No automakers are doing an about-face on electrics, but many are acknowledging that they need to be flexible as they navigate the EV transition.
Driving the news: Ford Motor CEO James Farley has been the most candid about what's happening in the market and how it will affect the company's business.
- During the company's July 27 second quarter earnings call, Farley backed off earlier sales targets for fully electric models, and said Ford will quadruple its hybrid offerings.
- "We have the flexibility to offer customers a choice of [internal combustion engines], hybrids and full electrics in the years to come," he said.
Ford is delaying its goal of scaling production to 600,000 EVs annually, from the end of this year to 2024, Farley said.
- He also hedged on a previous target for producing 2 million EVs every year globally by 2026.
- "We maintain flexibility on when we reach 2 million total EV global capacity because we are balancing growth, profitability and returns."
- His cautious tone came even as Ford plans to triple production of its electric F-150 Lightning pickup after cutting prices by as much as $10,000.
Between the lines: Farley suggested gas vehicles will remain a source of growth for some time.
- Demand for gasoline and hybrid vehicles will be "durable, with the window of growth" for legacy trucks and SUVs "potentially longer and richer than most expected," he said.
The intrigue: In many ways, Farley is echoing the argument Toyota has been making for years.
What they're saying: "Toyota was right," Sam Abuelsamid, principal research analyst at Guidehouse Insights, tells Axios.
- "We need to have a lot more hybrids in the near term, which will have much more of an environmental impact than building so many EVs."
Yes, but: Even Toyota has waffled on electrification.
- Its first EV, the bZ4X, was underwhelming, but Toyota says it is accelerating its EV plans, with a larger, family-friendly electric SUV coming in 2025.
- Toyota also says it will introduce EVs with double the range of today's cars by 2026, thanks to a solid-state battery technology breakthrough.
Meanwhile, other companies are also reassessing their EV plans.
- GM says it remains committed to a full lineup of EVs, but manufacturing issues have delayed customer deliveries. It also scrapped plans for a $39,000 base version of its upcoming Chevrolet Silverado EV pickup.
- Mazda is dropping the slow-selling MX-30 EV from its lineup to concentrate on plug-in hybrids.
- German automakers have made bold commitments to electrification, but both Volkswagen and Mercedes have delayed or recalibrated their plans.
The bottom line: It's still early in the game for electric vehicles, and consumers are waiting for better prices and better technology.
- For automakers trying to read the market, that means a lot of hand-wringing.
Go deeper: Listen to the Axios Today podcast, where host Niala Boodhoo and Joann Muller share insights into why the next phase of EV expansion in the U.S. will be tough.