Ford delaying start of EV production at Oakville, Ont., plant until 2027

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Ford Motor Co. F-N says it will delay by two years the launch of electric vehicles at its plant in Oakville, Ont., as sales of zero-emissions cars falter.

The plant west of Toronto, which will shut down in May for a $1.8-billion EV retooling, was scheduled to produce electric SUVs by 2025.

But the Detroit-based automaker said on Thursday it needs more time to allow the consumer market for larger EVs to develop, and to “enable Ford to take advantage of emerging battery technology.” The plant will not be turning out vehicles until 2027.

Ford also announced on Thursday it is pushing deliveries of its second-generation electric pick-up truck to be made in Tennessee into 2026 from 2025, while expanding its lineup of gas-electric hybrids.

The federal and Ontario governments are giving billions in incentives to makers of electric cars and batteries to transform the sector amid a shift away from the production of gas-powered vehicles. Taxpayers are giving Ford $580-million to transform the Oakville plant to make EVs and battery packs.

Governments are phasing-in electric-vehicle sales quotas to reduce the carbon emissions that are causing the climate emergency.

By 2035, Canada will require that zero-emission cars comprise all new light-duty vehicles sales, with interim targets of 20 per cent and 60 per cent by 2026 and 2030, respectively. However, there are signs consumers are reluctant to give up their gas-burning vehicles.

Auto industry wins concessions on hybrid vehicles under Canada’s zero-emissions regulations

Car review site Edmunds recently said its survey showed consumers are reluctant to buy EVs for several reasons, including high prices, manufacturers’ focus on electric pick-ups rather than cars, a buyer preference for hybrids, battery range and a lack of charging stations.

Tesla TSLA-Q, the biggest seller of electric cars, has cut its prices but still posted an 8-per-cent drop in sales in the first quarter, compared with a year ago. Tesla warned its growth this year will be lower amid higher interest rates that have made its models less affordable.

Transport Canada says electric cars accounted for 8.9 per cent of light-duty vehicle sales in 2022.

RBC Capital Markets stock analyst Tom Narayan said in a note to clients U.S. sales of EVs were up by 40 per cent in the fourth quarter of 2023, compared with the year-earlier period, but flat compared with the third quarter of 2023. Quarterly sales in Western Europe, meanwhile, fell year-over-year and quarter-over-quarter.

“We are experiencing a near-term EV slowdown,” Mr. Narayan wrote, blaming high prices, lack of desirable models and concerns about battery range. He predicted sales will perk up as makers introduce more entry-level models in Europe and SUVs and pick-ups in the U.S.

Delaying EV production in Oakville will mean extended layoffs for the majority of the factory’s 2,700 workers, said Ford spokesman Said Deep. Assembly workers will be most affected, while some workers in the skilled trades will remain on the job, said Mr. Deep, who did not have precise numbers.

“We’re going to work with Unifor to mitigate the impact on our employees there,” Mr. Deep said by phone.

Lana Payne, Unifor’s president, said she is “disappointed” by the delay and extended layoffs. She called on Ford to consider all possible options to limit the impact on workers, and said the union will push the employer to do more for them.

“Our members have done nothing but build best-in-class vehicles for Ford Motor Co. and they deserve certainty in the company’s future production plans,” Ms. Payne said.

Unifor and Ford in 2023 agreed to a contract that provided wage and benefit supports that extend beyond employment insurance for what was expected to be an eight-month layoff. Unifor members with one year’s seniority are eligible for 70 per cent of their weekly earnings while on layoff, according to the three-year collective agreement ratified in September.

Unifor on Thursday said the contract includes provisions to negotiate an extension to the arrangement.

The Oakville plant currently makes the Edge SUV, which is slated to be dropped from Ford’s lineup.

Ford has not named the vehicle to be built in Oakville, and describes it as a family EV with three rows of seats.

Ford is converting or building plants in Michigan, Ohio, Kentucky and Tennessee to make EVs, and is expanding its hybrid electric car lineup.

“As the No. 2 EV brand in the U.S. for the past two years, we are committed to scaling a profitable EV business, using capital wisely and bringing to market the right gas, hybrid and fully electric vehicles at the right time,” said Jim Farley, Ford chief executive officer, in a statement.