EV Suppliers Beware: OEMs Are Pulling Back

Resistance to America’s transformation into a majority electric-vehicle market has moved from the practical to the rhetorical to the corporate.

In the last few days alone, at least two major automakers have done more than just signal hesitance to continue a torrid pace of investment for making all-electric vehicles and batteries. They aren’t pulling an about-face—but they are drawing lines and clearly indicating they’re willing to sit things out for a while until both the politics and the markets for EVs sort themselves out.

CEOs of suppliers to both the EV “revolution” in automobiles and to its “old-fashioned” past of internal-combustion vehicles should take note.

The latest industrial blows to the EV transformation have come from Ford and General Motors.

GM CEO Mary Barra told CNBC this week that her company now has skinned back its previous plans to have production capacity in place by the end of the year to build one million EVs annually. And she said how quickly GM approaches that mark now will depend on consumer acceptance of EVs, which for the industry has a whole has been slowing down.

Also, Ford just said it now will scrap its previous plans to spend $1.3 billion turning the site of its Oakville, Ontario, assembly plant into a hub for making electric vehicles. In fact, instead, Ford is planning to use the plant to expand production of its very hydrocarbon-powered Super Duty pickup line, with an investment of $2.3 billion.

Ford says the plant will be able to roughly make 100,000 Super Duty trucks a year starting in 2026. Its decision on Oakville plant utilization follows the company’s earlier-announced delay in plans to build two three-row electric crossover vehicles there, something the company now has pushed back to 2027 from 2025.

The new plan will add about 1,800 jobs at Oakville—400 more than the EV plans would have, Ford said. While the company said the next generation of Super Duty would include “multi-energy technology,” officials declined to say whether that would be hybrid, fully electric or something else.

Either way, GM’s and Ford’s moves underscore for both Canadian and American autoworkers, and their unions, how fraught it has become for them for their employers to tie their futures to electric vehicles. On average, electric-vehicle production requires about 30 percent less labor across the supply chain than making ICE vehicles demands, in large part because EVs don’t have the requisite heavy transmissions and engines that gasoline- and diesel-powered vehicles do.

So while the Canadian union and the United Auto Workers union in the U.S. have been delivering big financial new contracts for their members lately, that bounty threatens to be offset by a dwindling in overall employment in the EV era. Ford’s move to expand production of an ICE vehicle, along with the required higher employment level, is an example of that.

And while President Joe Biden has been promoting his administration’s disbursement of tens of billions of dollars of federal subsidies for EV purchases and construction of EV plants, former president Donald Trump has been harping on the overall harm that the EV transformation will do to the industry and employment.

Ending Biden’s EV mandates, Trump said in his nomination-acceptance speech at the Republican convention in Milwaukee on Thursday evening, would save “the U.S. auto industry from complete obliteration.”