Consumers in the We have the memory of a goldfish.
When gas prices rise, they look for more fuel-efficient transportation. But when they’re down, they rush out to buy the biggest truck possible. Just take a look at Ford F-Series sales data from the last decade juxtaposed with average monthly gasoline prices.
Image credits: Tim De Chant/TechCrunch+
See? Goldfish.
It turns out that American automakers look like their customer base. A few years ago, they were optimistic about electric vehicles. But now, after only a couple of years of serious investing, they are starting to get scared.
Ford and GM, in particular, have said they are only responding to the needs of their customers. And maybe they are! Some consumers remain wary because EV charging still sucks. Others have been scared off by the high prices. (Both are arguably self-inflicted wounds: Traditional automakers have refused to consider charging for a key part of the ownership experience, and Ford and GM have continually raised EV prices in a way that’s out of step. with the market).
This customer responsiveness can be an advantage in normal times, allowing companies to adjust their product lines to meet the ups and downs of the market. However, in times of transition, when the future changes, it can be a terrible way to run a business.
Traditional automakers have long said their profitable model lines would be a strength as the market transitions to electric vehicles. All three companies have announced that they will invest billions in developing electric vehicles and manufacturing the batteries that power them, and the plan appears to be working well.
Over the past decade, automakers have flocked to crossovers, SUVs and pickup trucks, the three segments that are the most profitable. American automakers have gone further than most. Ford even went so far as to stop producing mass-market cars, focusing instead on crossovers, SUVs, and trucks, with the occasional Mustang coupe thrown in for branding purposes.
How did it go? Pretty good, actually. Ford reported $1.2 billion in third-quarter profits, which isn’t bad considering the headwinds caused by the UAW strike. GM fared better, raking in $3.1 billion in the same quarter. Stellantis usually doesn’t announce its quarterly earnings until November, but it had a spectacular first half of the year, posting profits of $12.1 billion.
So why did Ford and GM decide to put the brakes on their electric vehicle plans?
