Writing at The Atlantic, Patrick George muses, “Ford is pivoting to small electric cars. Will a country of SUV lovers actually buy them?” As to the former, the company currently makes precisely one “car,” the Mustang, but has decided that, if it’s going to make EVs profitably, it needs to do so with smaller vehicles than the behemoth trucks and SUVs that have been in demand the last three decades.
The follow-up question is more interesting. Whenever it comes up, we get observations like this:
Americans now tend to equate “small” cars with “dinky” or even “unsafe.” Maybe you want a Mini Cooper, but wouldn’t you feel safer putting your child in a giant Ford Expedition? Car buyers have learned to want more than they need. “We really do buy vehicles for the future and not the now,” Drury said. “Like the occasion where you have family members visiting: ‘Well, I gotta have a seven-seater,’ even if you drive by yourself 99 percent of the time.”
Which drives me nuts. For most of us, our vehicles are the second-most expensive thing we own, behind only our homes. So, unlike things like clothes, shoes, and cookware, we tend to own one rather than having an array that we can choose from based on the task at hand.
It’s true that most of the time, I’m alone in my 3-row SUV, a Mazda CX-9. And I seldom have more than three passengers, rendering the third row empty. But, several times a year, I indeed need to haul 7 passengers. Am I supposed to ignore that need when making my buying decisions? For that matter, the third row is usually folded down, accommodating more cargo.
Indeed, I already compromise. There are several times a year when I really wish I had a full-size SUV like a Chevy Suburban to haul a Home Depot purchase or to get all our vacation gear in more easily. But the trade-off in up-front cost, gas, insurance, parking, and handling isn’t worth it.
Over time, as lithium-ion batteries get cheaper, big EVs should also come down in price too; GM, for one, seems to be banking on this. But the basic economics of building a car are simply different in the electric age. For the foreseeable future, bigger EVs will be much more expensive to make than bigger gas cars—and much harder to profit from. But America’s carmakers have another reason to start downsizing. They face a potentially devastating wave of Chinese competitors selling EVs that are smaller, cheaper, more technologically advanced, and actually profitable. If Ford can’t compete with the Toyota Camry, how can it keep up with BYD’s acclaimed $11,500 Seagull? The Chinese company has already introduced its models in many countries, and it globally sold more EVs than Tesla last year.
American companies can’t compete on price with Chinese companies using slave labor. The cheapest Harley Davidson motorcycle costs more than the Seagull—which isn’t surprising, since they have to pay American workers a living wage to assemble the bikes. (Which would be considerably more expensive if the parts, too, were domestic.)
But . . . if Americans are attracted to something like the Seagull, it would seem that the problem is solved?
For Ford, the answer is a new EV program tasked with designing a new family of electric models that are smaller, more efficient, profitable, and hopefully priced from $25,000. GM and Stellantis have similar moves planned, like the soon-to-be-reborn Chevrolet Bolt and Jeep Renegade, both of which could cost $30,000 or less. To convince Americans that small isn’t bad anymore, automakers may have to bank on the inherent strengths of EVs: Without an engine to account for, these smaller cars can be designed with much more space inside. Great compact EVs may just result from engineers being forced to rethink how to make them newly appealing, Edmunds’ Drury said. “Put the handcuffs on some of the product designers, product planners, engineering … Necessity is the mother of invention, right?”
So . . . there’s an imagined future in which Ford can sell vehicles for a mere double what foreign competitors charge? While convincing people that small vehicles aren’t as small as they think?
And then we get back to this:
Still, American buyers have to learn that, no, they might just not need the biggest SUV possible for the one weekend a year their sister-in-law and her kids come to visit. Environmental concerns take a back seat to convenience, real or imagined. In one survey, American buyers claimed that they couldn’t go electric until EVs have 500 miles of range or more and can fully recharge in minutes; we always seem to be on the verge of some imaginary long-distance road trip and yet we drive 40 miles a day or less on average. Removing such deep-seated ideas from our collective consciousness may be harder for automakers than pivoting their businesses toward cars that run on batteries and software.
So, yes, if one literally only needs a large vehicle one weekend a year, it makes no sense to buy one. The other family can drive separately. But my strong guess is that essentially nobody in that situation is buying one with that purpose in mind. Maybe they also need to haul large objects occasionally? Or they just like the higher vantage point and sense of safety they get from a larger vehicle— especially since most of the other vehicles on the road are big?
But scolding people about their driving habits is no substitute for making great EVs. China’s car companies have already done that, and now they’re posting up just south of Texas. If Ford and other companies can’t do things differently, American jobs and technology might not be the only things that suffer. U.S. carmakers may have no choice but to respond to affordable foreign cars by doing what they’ve always done: leaning further into gas-guzzling trucks and SUVs.
Again, it’s just a fool’s errand to pretend that there will come a day when American companies can pay American workers American wages while complying with American environmental protection and workplace safety laws and compete on price with goods made by developing world labor, much less slave labor in totalitarian states.
If we want Americans to buy smaller, American-made vehicles, the free market is unlikely to get us there.
We can apply tariffs on imports to offset the advantages of cheap labor and lax regulations. But doing so will radically increase the costs to American consumers and upend the liberal order we’ve spent the last eight decades building.
We can radically increase CAFE standards, further driving up the costs of gas-guzzling vehicles. But, again, that harms consumers, forcing them to settle for products—again, the second-most expensive thing they own—they don’t want or pay more for what they do, thus being unable to afford other purchases.
We can more heavily subsidize the purchase of American-made EVs, at a fairly hefty cost to the Treasury.
There are probably other interventions that haven’t come readily to mind. But we’re not going to innovate our way out of the problem.
