Auto execs are coming clean: EVs aren’t working

The car company says it isn’t backing off its next-gen EVs, but it is pausing some big factory projects, including a plant in Kentucky.

Ford is postponing $12 billion in EV factory building, including a planned battery factory in Kentucky. The reasons given were an unwillingness by customers to pay extra for its electric vehicles. You see, they’re too expensive, and now Ford’s massive transformation into an EV company is now going to take a lot longer than before.

Ford’s EV business continues to lose money, around $1.3 billion this past quarter in adjusted earnings. So far this year, Ford has lost $3.1 billion on its EV spending and has said it’s going to lose a total of $4 billion for the year.

The Kentucky plant, a “mega campus” that builds lithium ion batteries for electric cars, would be put on hold

The Kentucky plant, a “mega campus” that builds lithium ion batteries for electric cars, will be put on hold. But its Blue Oval City project in Tennessee was still moving forward.

Ford’s not alone in all this, of course. General Motors is pushing back production of its new slate of electric trucks and SUVs. Tesla CEO Elon Musk spent a large chuck of his last earnings call moaning about interest rates. It’s rough out there right now.

Customers would probably agree. Most of the early adopters have, well, adopted, and the next tier of possible customers has enough sticker shock to keep their wallets closed.

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Honda Motor and General Motors are scrapping a plan to jointly develop affordable electric vehicles (EVs), the companies said on Wednesday, just a year after they agreed to work together in a $5 billion effort to try to beat Tesla (TSLA.O) in sales.

The decision underscores GM’s strategic shift to slow the launch of several EV models to focus on profitability, as it grapples with the rising cost of United Auto Workers strikes, which surged to $200 million a week this month.

The U.S. automaker on Tuesday withdrew its previous 2023 profit outlook.

“After extensive studies and analysis, we have come to a mutual decision to discontinue the program. Each company remains committed to affordability in the EV market,” the companies said in a joint statement.

Honda said there was no change in its plan to sell only electrified vehicles by 2040.

GM cited a joint statement that pointed to the projects the companies are still working on together in acknowledging the end of EV plan.

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High interest rates are derailing the ambitions of climate regulators and automakers to accelerate the shift to electric vehicles, underscored Wednesday by the scrapping of a GM-Honda partnership and a warning from a battery maker.

Electric vehicle sales are still growing strongly, but that demand is not keeping up with the expectations of carmakers and other companies that have invested billions of dollars in the EV space. Expectations for persistently higher interest rates has led companies to alter plans as they eye 2024 warily.

“EV demand next year could be lower than expectations,” Lee Chang-sil, chief financial officer at South Korean battery maker LG Energy Solution (373220.KS) said on Wednesday, due to global economic uncertainty.

Also on Wednesday, Honda (7267.T) and General Motors (GM.N) announced they were ending a $5 billion plan to develop lower-cost EVs together just a year after announcing the effort. GM on Tuesday said it would focus near-term EV efforts on meeting demand rather than hitting specific volume targets.

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Shell has taken another axe to its once lofty decarbonization plans, as the U.K. oil giant’s pivot back to fossil fuels picks up steam.

The group plans to cut at least 15% of staff working in its low-carbon solutions division while scaling back its hydrogen business, Reuters first reported Wednesday.

The move will see 200 jobs go in 2024, with another 130 placed under review by the company, according to a statement from Shell.

The division specializes in solutions to decarbonize the transport and industry sector, but is separate from its renewables business. The focus of the cuts is its hydrogen light mobility unit, which develops technologies for passenger vehicles. The unit’s ambitions have been clipped as customers opt for EVs.

“We are transforming our Low Carbon Solutions (LCS) business to strengthen its delivery on our core low-carbon business areas such as transport and industry,” a representative for Shell told Fortune.

“We remain committed to investing in viable low-carbon business models and focusing on our strengths as we play our part in decarbonization of the global energy system.”

There are 1,300 people working in the LCS division, Reuters reported, but the company has said that isn’t a full reflection of the people contributing to the unit.

It’s the latest move from CEO Wael Sawan, who joined in January, that pivots Shell back to fossil fuels.

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Britain is on track to become reliant on imported oil and gas as North Sea production dries up faster than demand for the fuels declines.

New forecasts from the North Sea Transition Authority (NSTA) show oil and gas production will dwindle to near zero over the next two to three decades, leaving the nation largely dependent on imports.

The NSTA’s latest projections suggest UK gas production will fall 94pc by 2050, from 38bn cubic metres in 2022 to just 2bn by the middle of the century. Oil output will fall from 35m tonnes to just 7m tonnes over the same period.

North Sea production is set to fall much faster than any corresponding fall in demand, creating an energy gap that will have to be filled by imports.

The Climate Change Committee predicts the UK will still need 14m tonnes of oil and 19bn cubic metres of gas a year in 2050.

Those figures are based on the UK meeting its carbon budgets, which it has so far failed to do. If those failures continue, demand for oil and gas will be much higher.

Andy Brooks, NSTA director of new ventures, said: “Oil and gas currently meet three-quarters of the UK’s energy needs and projections suggest they will both play an important role in the energy mix for decades to come.”

Britain imported 47m tonnes of oil last year, mostly from Norway and the United States. About 41bn cubic metres of gas came from abroad, with the vast majority from Norway and the rest coming mainly from the US and Qatar as liquefied natural gas (LNG).

Energy companies have recently signed long-term deals to supply Qatari gas to France, the Netherlands and Italy, while Germany already has a similar deal in place. All stretch out to at least 2050.

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12) Tilak Doshi: Climate change hurts the poor: but not the way you think it does
Forbes, 26 October 2023

Moves to “fight climate change” are precisely what is hurting the poor most. It is not “climate change” but the policies adopted in response to it that are the problem afflicting the poor the most.

“Climate impacts hit the world’s poor the hardest”. By sheer dint of repetition in countless “expert” reports and mass media articles, this line in the climate change narrative has become a truism. According to the International Monetary Fund, “by hitting the poorest hardest, climate change risks both increasing existing economic inequalities and causing people to fall into poverty.” The World Economic Forum states that “the lowest income countries produce one-tenth of emissions, but are the most heavily impacted by climate change.”

It would seem straightforward that resolving the “climate change” problem would serve the poor the most, given that they are the hardest hit. But, by a tragic turn of irony, moves to “fight climate change” are precisely what is hurting the poor most. It is not “climate change” but the policies adopted in response to it that are the problem afflicting the poor the most.

“Fighting climate change” — which for most Western politicians and policy makers means achieving the “net-zero [carbon emissions] by 2050” policy target of the UN Paris Agreement — has thus also become a fight for the world’s most poor and vulnerable. That the climate industrial complex claims the interests of the world’s poor within its ‘net zero’ agenda is a powerful lever in public relations.

The call to “save the planet” includes, by definition, ensuring the welfare of the world’s poor. But making the fight even more so about helping “the most vulnerable” gives the narrative of “fighting climate change” a philanthropic edge. Philanthropy is universally admired, like Mother Theresa. It is a particularly attractive hobby for the rich who have made their fortune and want to “give back” to society. Thus, Bill Gates’ or Michael Bloomberg’s self-proclaimed philanthropic interests in the global poor, public health and climate change.

When discussions of climate change issues turn to helping the poor and the vulnerable, Africa quickly becomes the center of attention. Africa is the world’s second largest and second-most populous continent, both after Asia. The share of the sub-Sahara African population living in extreme poverty, defined as those living on less than $2.15 per day (in international dollars adjusted for cost-of-living differences among countries), was 35% in 2021. This compared to the world average of 8.4%.

In 2019, out of the world total of almost 760 million people without access to electricity, sub-Saharan Africa accounted for almost 590 million or approximately 78%. Without electricity or clean fuels such as natural gas, keeping warm (or cool), getting drinking water, cooking food cleanly, and getting enough light to read after the sun sets is not possible.

Most of us who take affordable electricity ‘24/7’ supply for granted are unaware of the existential constraint on people’s daily lives that a lack of electricity implies. This was brought home brilliantly by Geoff Hill at a talk in House of Lords in Westminster on Monday. Geoff is Africa correspondent for The Washington Times, the first non-American John Steinbeck Award winner and has published with the Mail & Guardian (Johannesburg), The East African (Nairobi) and across the African continent.

With electricity unavailable or too expensive for 600-million people in Africa, vast areas of forest are being denuded for fuelwood or charcoal to cook and to warm homes by those who have no other fuel. Faced with buying logs from a plantation or cutting them for free in the wild, people who don’t have enough money for food choose the latter. With deforestation, the land degrades and soon enough there’s a desert where the jungle once stood.

As Geoff points out, “Africa is losing its forest. Not just a few trees here and there: an area the size of Switzerland is cleared every year… A staggering 90% of the timber is used as firewood, commonly turned into charcoal, and sold in markets across the continent.” There is a need for reliable energy, and at a price local people can afford. Without this, Geoff observes, the forest will continue to decline and, ultimately, vanish.

The impact of indoor pollution due to cooking with dirty solid fuels like charcoal and firewood on respiratory health and mortality on Africans is severe. The death rate in Africa from indoor pollution in 2019 was three times that of the global average. While 69% of the world’s population had access to clean fuels for cooking (such as LPG or electricity), only 19% of Africa’s population did so in 2020. Conversely, the percentage of Africa’s population using dirty solid fuels (such as dung, firewood, or charcoal) for cooking was 77% in 2010; the world average was 41%. Mr. Hill cites a global study which puts the mortality rate in Africa as higher than AIDS, malaria and TB combined.

Africa — home to giant river systems including the Nile, Congo, Zambezi and Volta — has abundant water. Dams and lakes are plentiful. But the challenge lies in getting water to where it is needed. Urbanization in Africa has been very rapid over the past 50 years, creating some of the world’s largest cities. Urban demand for water is huge and supply is often pitiful. “Without water, hospitals can’t function, schools close, factories often must shut for hours at a time, food can’t be washed and diseases such as typhoid and cholera begin to spread.” As Mr. Hill shows, the chronic water problems of African cities – either poor or undrinkable supply – mostly come down to a shortage of electricity required to pump water to where it is needed.

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