Identical to Ford’s “Edsel” model in the Fifties, Trump administration economist Steve Moore cautioned that electric vehicles (EVs) may be the auto market’s “next big flop.”
“Henry Ford’s son was named Edsel, and this was going to be the great automotive, all of the executives said, ‘That is the automotive everybody’s going to wish to buy.’ Ford made 500,000 of those recent sedan cars, but guess what?” Moore said on “Varney & Co.” Monday. “No one bothered to ask consumers whether or not they wanted the automotive.”
“And in fact, the Edsel was one in all the great flops of all time,” the economist continued. “I’m here to let you know, if these trends proceed, we’re going to see the EV market turn out to be the next big flop because automotive buyers don’t want them.”
Moore’s comments come as the EV push at Ford and General Motors hit a speed bump that’s cutting into the automakers’ profits and causing them to reevaluate their electric plans amid a price competition and provide chain challenges.
Ford noted in its earnings report released last week that its EV unit posted a quarterly loss before interest and taxes (EBIT) of $1.33 billion – an acceleration after a lack of $1.08 billion in the prior quarter. It added that it’s cutting production of its Mustang Mach-E while scaling back about $12 billion in planned investments in the EV segment, including delaying its second battery plant in Kentucky.
General Motors saw its quarterly profit reduced by about $1.5 billion because of upper costs and the impact of selling more EVs, though it doesn’t break out losses from its EV unit in the same way Ford does.
GM CFO Paul Jacobson said that it could abandon an interim goal of constructing 400,000 EVs from 2022 through mid-2024, as an alternative specializing in a goal of “attending to 1 million EVs of production by the end of 2025 alongside hitting our margin targets.”
“Given the huge losses that these firms like Ford are suffering due to the EV mania, I saw a statistic this morning that Ford is losing something like between $40,000 and $60,000 per automotive,” Moore reacted. “It’s been a nasty bet.”
The economist further argued that auto industry-wide bailouts may be likely amid firms’ EV losses.
“The federal government can also be already offering all of those sweeteners to get people to purchase electric vehicles. You get a $7,500, mainly, check from the government each time you purchase an EV. Let’s not forget that we’re subsidizing the battery firms, all of this stuff,” Moore noted.
“The taxpayers are paying for this stuff,” he added. “And yet the most amazing thing is, even with all these sweeteners, Americans are still saying, I don’t want them.”
Chatting with automotive dealers around the country, Moore reported that their lots “are stuffed with EVs” and only 10% of clients purchase EVs off the lot today.
“I feel the automotive firms would be smart going to hybrids where you may have gas and an electric battery,” the economist and adviser suggested. “But the automotive firms aren’t making those cars. And the reason they aren’t making them is because the government has increasingly mandate[d] that every one cars be EVs.”
FOX Business’ Eric Revell contributed to this report.