The name of the game in the auto industry is global expansion, but the American automakers have had a rough go on that front in recent years. They've all but entirely retreated from Europe, they're smaller than ever in Latin America, and more existentially, they're getting hammered in China by newer, better homegrown competition.

Ford CEO Jim Farley seems to get it: without a future lineup of affordable, profitable electric vehicles, his company's destiny is probably just being a maker of gas-powered trucks in North America. It's the difference between being the Ford Motor Company, a global titan, and being, well... maybe John Deere with leather seats. 

Farley's latest on the affordable EV race kicks off July's installments of Critical Materials, our morning news roundup. Also on tap today: we look at the predictions around Tesla's sales slide, and examine some of the biggest EV battery plant investments in America. Let's dive in. 

30%: Ford's Farley Says Profitable $30,000 EVs Coming In Two Years, But Get Ready To Get Small

Jim Farley Ford EVs

Jim Farley Ford EVs

As I've written here before, I generally like Ford CEO Jim Farley. His approach to Ford's EV transition has hardly been perfect, but seems to Get It, and has shown a penchant for outside-the-box thinking that's sometimes sorely needed in the often inert and entrenched American auto industry. But he's also in charge of a huge, old-school automaker that runs on truck profits and has a dealership network that isn't exactly down for rapid change

So on Friday at the Aspen Ideas Festival—right after penning an editorial about EVs that I think may have been crafted to head off any controversies during last week's CNN presidential debate—Farley told CNBC that radical change is needed or else Ford is going to shrink long-term:

Farley said Ford is first focusing on smaller EVs instead of larger all-electric trucks and SUVs, which have historically been gas-powered profit engines for the company, because such vehicles are “never going to make money.”

“You have to make a radical change as an [automaker] to get to a profitable EV. The first thing we have to do is really put all of our capital toward smaller, more affordable EVs,” Farley said during an interview with CNBC’s Julia Boorstin. “That’s the duty cycle that we’ve now found that really matches. These big, huge, enormous EVs, they’re never going to make money. The battery is $50,000. … The batteries will never be affordable.”

A Ford spokesman later clarified Farley was referring to large vehicles such as the company’s Super Duty models or vehicles that require massive battery packs to achieve significant EV ranges of 500 miles. He was not referring to ones such as Ford’s current all-electric F-150 Lightning pickup or next-generation EVs.

[...] Farley said it is crucial for Ford to make profitable EVs in the next five years as Chinese automakers continue to expand globally.

“If we cannot make money on EVs, we have competitors who have the largest market in the world, who already dominate globally, already setting up their supply chain around the world,” he said. “And if we don’t make profitable EVs in the next five years, what is the future? We will just shrink into North America.” 

And he's right, too. The American automakers are specifically powered by their large, expensive, gas-powered pickup trucks. Those vehicles will likely have a long-term role in American society for all kinds of reasons, but globally, Ford has to figure out other options too.

Yet it's what Farley said about making things that aren't the F-Series trucks that really stuck with me: 

He also said Americans need to “get back in love” with small cars instead of larger ones, a surprising statement given a majority or Ford’s profits come from trucks and considering American carmakers have historically had trouble making money on small models.

“We have to start to get back in love with smaller vehicles. It’s super important for our society and for EV adoption,” Farley said Friday. “We are just in love with these monster vehicles, and I love them too, but it’s a major issue with weight.”

That's a fascinating dose of reality coming from the CEO of the Ford Motor Company, which—and to be fair, this all predates Farley—got rid of all its smaller cars and sedans in recent years in order to focus on truck and SUV profits.

Historically, unless they got help from partners in Europe, Japan or Korea, the American automakers have never been that great at making smaller, more affordable cars, period; how do think Volkswagen made inroads into this country? The American emphasis has always been on size, comfort and profit margins. It's also why they got creamed by the Japanese in the 1970s and '80s when gas got expensive and emissions standards got tight. 

I'm not saying Ford can't pull this off; far from it. But for a company that no longer has a single compact car, truly small crossover or sedan in its U.S. lineup, this is gonna be one hell of a sea change. 

60%: Tesla Deliveries Set To Fall Again

Tesla Supercharging station

A Tesla Supercharging station.

Lately, the data we're seeing around EV growth indicates that almost every brand's electric sales are rising while Tesla's are dropping hard. That's bringing down the entire market in aggregate since Tesla made up the majority of global EV sales. 

So what do we anticipate from Tesla sales in Q2, which ended yesterday? Here's what Reuters reports: 

The company is expected to deliver 438,019 vehicles for the April to June period, according to an average estimate based on forecasts from 12 analysts polled by LSEG, seven of whom slashed their expectations in the past three months. The EV maker is expected to announce the results on Tuesday.

Tesla has hit a speed bump after years of rapid growth that helped make it the world's most valuable automaker. It warned in January that deliveries growth in 2024 would be "notably lower" as a boost from months-long price cuts wanes.

Barclays analyst Dan Levy predicted an 11% drop in second-quarter deliveries, Tesla's biggest ever. He said "a soft delivery result could turn attention back to the currently challenging fundamental environment for Tesla".

I wonder if that environment has anything to do with this:

As rivals in China have rolled out cheaper models, Tesla has been slow to bring new designs to market. In April, Musk said Tesla would introduce "new models" later this year, including affordable vehicles, but offered no details about pricing.

Tesla might be trying to turn itself into a robotics and AI company, but until it does, it needs new models on the road. And not toys like the Cybertruck or Model 3 Performance, but real, volume-selling models that can keep up its sales lead.

90%: A List Of America's Biggest Battery Factory Investments

Ford's Blue Oval City in Tennessee

Ford's Blue Oval City in Tennessee

Even if EV sales aren't growing as quickly or as evenly as the industry once hoped, the smart players are keeping their local battery plant investments moving along. Automotive News has a new, helpful list of the biggest plant developments and where they're at. General Motors, Ford and Hyundai have some of the major ones. 

Here's Ford's, since we started with them today:

Ford has teamed up with SK On for two lithium ion battery projects: BlueOval SK in Glendale, Ky., and BlueOval City in Stanton, Tenn. The Kentucky project includes a $5.8 billion investment for two battery plants that are expected to create up to 5,000 jobs, although Ford in October announced it was indefinitely delaying one plant. The other is expected to open in 2025.

The Tennessee battery facility will be part of the sprawling BlueOval City complex that includes an EV assembly plant. The total investment there is $5.6 billion, and the battery plant is expected to open in 2025.

Another project, BlueOval Battery Park in Marshall, Mich., is again under construction after a roughly two-month pause last year amid tense contract negotiations with the UAW. However, Ford has downsized its plans. The project is now expected to create 1,700 jobs, down from the initial announcement of 2,500. Planned capacity of the lithium iron phosphate batteries has been cut by more than 40 percent to 20 gigawatt-hours annually. And total investment in the plant has been reduced to roughly $2.2 billion from an initial $3.5 billion.

Worth keeping an eye on in the future.

100%: Can America Make Good Small EVs? 

BYD Seagull (2023)

BYD Seagull (2023)

What does an American competitor to something like China's $11,000 BYD Seagull look like? And which automaker can really pull that off?

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