Ford Lays Off Hundreds of Workers as Hybrid Car Sales Decline
With cheap gasoline across the U.S. boosting large vehicle sales, Ford has seen sales of its greenest cars dip in the past six months. That market trend forced the automaker’s hand in eliminating a shift at its Wayne, Mich., plant, where Ford said it will lay off 700 employees tasked with building the Focus and C-Max hybrids, the Associated Press reports. The shift cut was the automaker’s first since 2009 and hints of the uncertain future of standard hybrid cars on the U.S. market.
Electric vehicle plant cuts
Employees at the Wayne plant produce the Focus, Focus Electric, Focus ST, C-Max hybrid, and C-Max Energi, a plug-in hybrid. The Focus (40 miles per gallon highway), C-Max Energi (88 miles per gallon in EV mode), and Focus Electric (105 miles per gallon combined) represent the automaker’s most efficient vehicles, yet this selling point has not appealed to U.S. consumers of late.
In the first quarter of 2015, C-Max hybrid sales have fallen 31% year-over-year, while the low-volume Focus Electric dropped 9% over the same time period. While sales of the compact Toyota Corolla have jumped 17% in 2015, Ford Focus sales have stagnated, with 2% gains in 2015 after dropping 6% in 2014. Ford’s biggest winner is Explorer, which has gained 27% in 2015.
Likewise, Ford has improved upon its massive sales totals for the flagship F-150 pickup, which has found 177,312 buyers in 2015. As the construction market continues to show strength, sales of trucks remain high for U.S. automakers offering full-size pickups. Yet the lack of demand for cars like the C-Max hybrid, which charge a premium over comparable gas cars, creates a problem for automakers when gas prices dip.
Hybrid car challenges
The situation at Ford’s Wayne plant prompts a deeper look at the place of standard hybrid vehicles in the current U.S. market. A look at the sales statistics compiled by Autoblog Green showed a decline across the board for cars from the Honda Accord Hybrid to the vaunted Toyota Prius, with March showing the poorest sales of any car mentioned.
There is little appeal for a more expensive hybrid model when gas prices do not justify the short-term investment required to upgrade from a standard gas model. By contrast, plug-in vehicles offering pure electric range deliver superior efficiency at much lower costs, no matter how gas prices move. Studies have shown the majority of trips last fewer than 20 miles, which gives models like the C-Max Energi a selling point in a cheap gas market (i.e., driving is free).
Gasoline remains over $1.20 cheaper in the U.S. compared to late April 2014 prices, so the short-term impact on factories like Ford’s Wayne plant could continue into the summer. Yet automakers would make a grave error to abandon their commitment to green cars. Even though plug-in hybrids generally offer more appeal, we are only one gas price hike away from standard hybrids returning to favor among American drivers.