Volkswagen EV Collapse a Warning to Ford

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24/7 Wall St. Insights

• Volkswagen abandoned its electric vehicle (EV) plans and warned of plant closures in its home market.
• Is Ford Motor Co. ( NYSE: F ) next?
• Also: Two dividend legends to hold forever .

Like a big ship turning at sea, auto giant Volkswagen has had to reverse the engines as it tries to dominate the electric vehicle (EV) market, particularly in Europe. It is a major decision because the EU EV market has been so weak. VW has invested billions in EVs, in a way that mirrors Ford Motor Co.'s ( NYSE: F ) trouble in the United States.

VW may close one or more plants in its home market of Germany. It has never done this in the country where it was founded in 1937. Its headquarters is in Wolfsburg, Germany. VW recently announced that it would have EV versions of all its vehicles in 2030. The plans were to cost $33 billion. Ford made similar plans. Three years ago, it said its EV investment could be $30 billion.

The warning to Ford is that EV sales can crater in a huge manufacturer's home market. Ford has moved away from EVs , but in its primary U.S. market, EV sales continue to grow. In North America, EV sales were up 12% in the first half of the year. They rose 31% in China. In Europe, though, sales rose only 1%. In Germany, they have been falling.

Ford remains optimistic about its EV future, at least in public. It has, however, cut production and moved back to a reliance on gasoline-powered cars. However, the number two U.S. car company still operates in a growing EV market. If the United States starts to look like Europe, Ford’s problems will deepen.

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