Ford (NYSE: F | F Price Prediction) recently wrote off $19.5 billion due to the collapse of its EV business. GM (NYSE: GM) wrote off $6 billion because of the failure of its EV efforts, just after a $1.7 billion write-off for the same reason.
The largest write-off in the history of car companies to date was GM’s $20.8 billion write-off in 1992. This was due to a charge for retiree benefits.
Global car company Stellantis (NYSE: STLA) recently surpassed all of these with a write-off of $26 billion due to the collapse of its EV efforts. “The charges announced today largely reflect the cost of over-estimating the pace of the energy transition that distanced us from many car buyers’ real-world needs, means and desires,” Stellantis CEO Antonio Filosa said
By one estimate, U.S. and European automakers have incurred $118 billion in EV-related charges. It is unimaginably huge. The combined market capitalization of Ford and GM is $131 billion. Stellantis said it would not exit the EV market entirely, but its retreat shows it will back off almost completely.
Stellanis owns Jeep, Chrysler, Ram, and Dodge in the US. Its sales have been poor here for several years. It also owns Fiat, Peugeot, and Opel. Over the past five years, its stock has declined by 41%, and it fell an additional 20% following today’s write-off announcement.
Leaving aside the poor management of its U.S. portfolio, the Stellantis blunders are the same as those of the industry. Each major car company in the world decided to chase Tesla, and, four years ago, as Tesla’s sales surged along with its market cap, the decisions seemed like a sure bet.
In 2021, President Joe Biden said his target was for 50% of new car sales in the US to be EVs by 2030. Major EV launches included an electric version of the top selling vehicle in America. The EV versions of Ford’s F-150 were called the F-150 Lightning; Ford will no longer sell them.
The automotive industry, particularly in the US, has chipped away at Tesla’s (NASDAQ: TSLA) market share, which remains close to 50%. Even with concern about how the public viewed CEO Elon Musk’s effort to overhaul the US government, Tesla’s No.1 spot could not be bested.
Looking back at the failure of major car companies as they entered the EV market, it is easy to say they were wrong. What is staggering was that they were wrong together.
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