In this articleTSLASTLAGMFFollow your favorite stocksCREATE FREE ACCOUNTFrederic J. Brown | Afp | Getty ImagesDETROIT – The U.S. automotive industry has entered a new phase for all-electric vehicles: realism. The industry was euphoric about the EV segment in the early 2020s, but consumer demand never took off as much as expected and, as it fizzled, automakers monitored and planned how to react. Now, they’re pivoting, as companies have wasted billions of dollars in capital, Detroit automakers are refocusing on large gas-guzzling trucks and SUVs, and many have admitted that policies, not consumers, were driving the charge for EVs.”We have to make the investments to get to … the regulatory environment they set. We’ve seen a complete change in that. One way, 180 degrees. One way, 180 degrees back. That’s the world CEOs of automakers are living in,” GM CEO and Chair Mary Barra said earlier this month during The New York Times’ DealBook conference.How automakers like GM that invested heavily in EVs will respond over the next year will be telling for the future of the vehicles in the U.S., according to industry insiders and experts. Barra said “it’s too early to tell” what true demand for EVs is following the end of up to $7,500 in federal incentives in September to purchase an electric vehicle. She said the industry will likely find its natural demand over the next six months.In the meantime, GM continues to reassess its EV plans after disclosing a $1.6 billion impact from its pullback in those investments, with more write-downs expected in the future. Ford Motor last week said it expects to record about $19.5 billion in special items related to a restructuring of its business priorities and a pullback in its all-electric vehicle investments.”We evaluated the market, and we made the call. We’re following customers to where the market is, not where people thought it was going to be,” Ford CEO Jim Farley told CNBC last week.U.S. EV sales peaked in September, ahead of the federal incentives ending, at 10.3% of the new vehicle market, according to Cox Automotive. That demand plummeted to preliminary estimates of 5.2% during the fourth quarter.”The long-term direction toward electrification remains clear: The future is electric. However, the timeline is being recalibrated,” said Stephanie Valdez Streaty, Cox director of industry insights. “In the near term, automakers will continue to adjust their strategies and significantly expand hybrid offerings to meet consumers where they are today.”Most industry experts, including those at consulting firm PwC, don’t believe it’s the end days for EVs, but rather that expectations are more realistic now. PwC expects the EV industry to pick up toward the end of this decade, with EVs forecast to make up 19% of the U.S. industry by 2030.”As several of the U.S. [automakers] have announced, there’s some level of charges, and we got out in front of the customer demand and likely the infrastructure that’s otherwise available here in the U.S.,” C.J. Finn, U.S. automotive industry leader for PwC, told CNBC.’What is the normal state of EVs?’That projected EV market share doesn’t justify the billions of dollars companies have spent on the research, development and production of the vehicles, so automakers are significantly altering their plans to allow customers more choice of all-electric vehicles, hybrids and traditional internal combustion engines.”If you think back a few years ago, it was like, ‘If you’re not all-in on EV, you’re going to eventually go out of business. Your terminal value is zero,'” KPMG partner and U.S. automotive leader Lenny LaRocca told CNBC. “Now I think that multi-propulsion technology approach is what’s panning out to work out well. We used to call it the ‘mosaic of powertrains.'”A NYC charging station seen in the Yorkville neighborhood of New York City.Adam Jeffery | CNBCThe changes have taken different forms for companies that have already heavily invested in EVs.GM, which was by far leading in such investments in the U.S., will continue to offer its current models but has little to no plans of expanding in the future, according to Barra. Instead, it will use some of its planned capacity for increased production of large trucks and SUVs. The automaker also has said it plans to offer plug-in hybrid vehicles in the years ahead, but it hasn’t disclosed many other details.Ford has said it will refocus investments on hybrid vehicles, including plug-in models rather than pure EVs; cancel a next generation of large all-electric trucks in exchange for smaller, more affordable EVs; and rebalance its investments in core products such as trucks and SUVs.And Stellantis is deprioritizing EVs, including for its coveted Jeep brand, as it attempts to revive its U.S. sales. “All of us are waiting to see what the demand is, how it’s going to continue to shake out,” Jeep CEO Bob Broderdorf told CN …
