U.S. Automakers Pull Back from Electric Vehicles – The Institute for Energy Research

Report on U.S. Automakers’ Strategic Shift Amid Electric Vehicle Market Challenges

Introduction

Major U.S. automakers General Motors (GM), Ford Motor, and Stellantis are implementing significant cost-cutting measures, including workforce reductions, in response to declining demand for electric vehicles (EVs). This report highlights these developments with a focus on their implications for the Sustainable Development Goals (SDGs), particularly SDG 9 (Industry, Innovation and Infrastructure), SDG 11 (Sustainable Cities and Communities), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).

Automakers’ Financial Write-Downs and Production Adjustments

1. Ford Motor:
   • Announced a $19.5 billion write-down related to EV assets.
   • Removing several EV models from its lineup.
   • Shifting production at a Tennessee factory from electric to gas-powered pickup trucks.
   • Converting the F-150 Lightning from a pure electric vehicle to a hybrid model.
   • Repurposing its Kentucky EV battery factory to produce batteries for energy storage applications.
   • Planning to launch a competitively priced medium electric truck by 2027, targeting affordability and accessibility.
2. General Motors (GM):
   • Recorded a $1.6 billion write-down on EV assets with expectations of further charges.
   • Reducing production of electric models such as the Cadillac Lyriq and Chevy Bolt.
   • Suspending shifts and delaying production expansions at key assembly plants.
   • Exploring partnerships to supply batteries for energy storage systems.
3. Stellantis:
   • Taking drastic measures to reduce costs, including shifting focus toward combustion engine vehicles and energy storage batteries.

Market and Policy Influences on EV Demand

• EV sales in the United States, especially for higher-priced models, have slowed significantly since early 2024.
• The Trump administration’s rollback of financial incentives and modification of automobile efficiency standards have reduced consumer demand for EVs.
• Chinese EV manufacturers pose a competitive threat with affordable, smaller EV models, although tariffs currently restrict their entry into the U.S. market.
• Automakers are responding by adjusting their product offerings to include more hybrids and extended-range vehicles, which are seen as more practical and affordable.

Shift Toward Energy Storage Solutions

In response to the EV market slowdown, automakers and battery manufacturers are repurposing EV battery production facilities to serve growing markets in energy storage for utilities, data centers, and renewable energy developers. This transition supports SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action) by enabling increased integration of renewable energy sources and enhancing grid reliability.

• Tesla’s energy generation and storage division has experienced significant revenue growth, demonstrating the viability of this market segment.
• GM is partnering with Redwood Materials to supply batteries for large-scale storage projects, promoting circular economy principles aligned with SDG 12.
• Other manufacturers are considering similar pivots to sustain business amid EV sales challenges.

Regulatory Developments in Europe

The European Union has moderated its previously strict ban on new gas-powered vehicles by adopting a 90% fleet carbon emissions reduction target by 2035 instead of a 100% zero-emission mandate. This adjustment allows for continued production of hybrid and highly efficient combustion vehicles, including those utilizing carbon-neutral e-fuels and advanced biofuels. This regulatory flexibility reflects a balance between environmental goals (SDG 13) and economic feasibility (SDG 8 – Decent Work and Economic Growth).

Analysis and Implications for Sustainable Development Goals

1. SDG 9 – Industry, Innovation and Infrastructure: Automakers are innovating by diversifying production to include hybrids and energy storage batteries, fostering resilient industrial development.
2. SDG 11 – Sustainable Cities and Communities: The shift toward more affordable and practical hybrid vehicles supports sustainable urban mobility.
3. SDG 12 – Responsible Consumption and Production: Battery recycling partnerships and repurposing of manufacturing facilities promote sustainable resource management.
4. SDG 13 – Climate Action: Although EV adoption is slowing, energy storage solutions and hybrid technologies contribute to emissions reduction and climate resilience.

Conclusion

The current strategic realignment by U.S. automakers reflects a response to market realities and policy changes, emphasizing consumer demand and economic sustainability. While the EV revolution faces challenges, the industry’s pivot toward hybrid vehicles and energy storage technologies presents new opportunities to advance multiple Sustainable Development Goals.

Contact Information

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1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • The article discusses the shift in production from electric vehicles (EVs) to combustion engine vehicles and energy storage batteries, highlighting issues related to clean energy adoption and energy storage solutions.
2. SDG 9: Industry, Innovation and Infrastructure
   • Automakers are innovating by repurposing EV battery plants for energy storage and adapting production lines, reflecting industrial innovation and infrastructure changes.
3. SDG 11: Sustainable Cities and Communities
   • The transition in vehicle types and energy storage impacts urban transportation sustainability and infrastructure.
4. SDG 12: Responsible Consumption and Production
   • Issues of overproduction, write-downs, and shifting consumer demand relate to sustainable production and consumption patterns.
5. SDG 13: Climate Action
   • The article addresses emissions targets, bans on gas-powered vehicles, and the shift in policies affecting climate-related goals.
6. SDG 8: Decent Work and Economic Growth
   • Layoffs and cost-cutting measures by automakers affect employment and economic growth.

2. Specific Targets Under Those SDGs Identified

1. SDG 7: Affordable and Clean Energy
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • Target 7.3: Double the global rate of improvement in energy efficiency.
2. SDG 9: Industry, Innovation and Infrastructure
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
3. SDG 11: Sustainable Cities and Communities
   • Target 11.2: Provide access to safe, affordable, accessible and sustainable transport systems for all.
4. SDG 12: Responsible Consumption and Production
   • Target 12.2: Achieve the sustainable management and efficient use of natural resources.
   • Target 12.5: Substantially reduce waste generation through prevention, reduction, recycling and reuse.
5. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning.
6. SDG 8: Decent Work and Economic Growth
   • Target 8.5: Achieve full and productive employment and decent work for all women and men.
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation.

3. Indicators Mentioned or Implied to Measure Progress

1. SDG 7 Indicators
   • Proportion of energy from renewable sources (implied by the shift in EV production and energy storage battery use).
   • Energy intensity measured in terms of primary energy and GDP (implied by efficiency standards changes).
2. SDG 9 Indicators
   • Research and development expenditure as a proportion of GDP (implied by innovation in battery repurposing and vehicle production changes).
   • Manufacturing value added as a proportion of GDP (implied by shifts in production lines and layoffs).
3. SDG 11 Indicators
   • Proportion of population with convenient access to public transport (implied by vehicle availability and affordability).
4. SDG 12 Indicators
   • Material footprint, material footprint per capita, and material footprint per GDP (implied by production write-downs and shifts in consumption patterns).
   • Waste generation per capita (implied by write-downs and production adjustments).
5. SDG 13 Indicators
   • Greenhouse gas emissions per unit of value added (implied by emissions caps and vehicle emissions standards).
   • Number of countries with national and local disaster risk reduction strategies (implied by policy changes).
6. SDG 8 Indicators
   • Unemployment rate (implied by layoffs).
   • Labor productivity measured as GDP per employed person (implied by economic shifts).

4. Table: SDGs, Targets and Indicators

Source: instituteforenergyresearch.org