What is the American Car Culture today? You do not need to look closely or even need glasses to examine or see what it is today. It is no longer a car, it is SUVs and pickups, larger pickups two rows of seating, and even larger pickups with dually wheels. Many are vehicles which never haul anything except one driver and maybe a small family once and a while. Now manufacturers are trying to electrify them for longer distances to get similar mileage the same as gasoline vehicles. Ford didn’t invent the American Car Culture , but it might as well have. The cheap, simple, and small Model T brought the automobile to the masses. By the early 1920s, about half of the world’s cars were made by Ford. But these days, Ford is only nominally in the car
Topics:
Angry Bear considers the following as important: Hot Topics, US EConomics
This could be interesting, too:
Angry Bear writes The FED Should Cut Rates in September
NewDealdemocrat writes UPDATE: Real median household income for 2023
Angry Bear writes Another After the Debate Update
Robert Waldmann writes Why Do We Need Industrial Policy???
What is the American Car Culture today? You do not need to look closely or even need glasses to examine or see what it is today. It is no longer a car, it is SUVs and pickups, larger pickups two rows of seating, and even larger pickups with dually wheels. Many are vehicles which never haul anything except one driver and maybe a small family once and a while. Now manufacturers are trying to electrify them for longer distances to get similar mileage the same as gasoline vehicles.
Ford didn’t invent the American Car Culture , but it might as well have. The cheap, simple, and small Model T brought the automobile to the masses. By the early 1920s, about half of the world’s cars were made by Ford. But these days, Ford is only nominally in the car business. Of the 1.9 million vehicles that Ford sold in the U.S. last year, a mere 48,636 were listed as “cars.” (Ford sells just one in America, the Mustang.) The rest were SUVs and trucks, such as the ubiquitous F-150.
Small Vehicles are the Hardest Sell in America.
It’s the same deal at the other “Big Three” automakers, General Motors and Stellantis (the vaguely pharmaceutical-sounding conglomerate that now owns Chrysler, Jeep, Ram, and Dodge). Although all once had lineups of sedans, station wagons, coupes, and hatchbacks, they now primarily focus on trucks and SUVs. Companies keep making bigger and bigger cars, and Americans keep buying them. Visit another country and you’ll quickly realize how exceptionally chunky the vehicles are stateside: By one measure, cars in the U.S. are 20 percent heavier than those in Europe.
And yet in June, Ford’s CEO, Jim Farley, said something almost heretical coming from an American auto executive: “We are just in love with these monster vehicles, and I love them too, but it’s a major issue with weight.” Americans, he added, need to “get back in love” with smaller cars. This can feel a bit like hearing the CEO of Anheuser-Busch say, You know, Americans are just drinking way too much beer.
Farley’s primary concern with weight is not pedestrian safety (though that is a problem) but electric-vehicle batteries. Bigger electric cars require heftier batteries—and because batteries represent the most expensive part of any EV, those come with a higher price tag. Asking customers to foot the bill hasn’t worked out. Yesterday, Ford punted on its EV strategy, canceling a large, three-row SUV. The Ford executive John Lawler said on a conference call.
“We could not put together a vehicle that [would] be profitable in the first 12 months.”
Ford is making a similar calculus as many other car companies: With EVs, smaller may be better. But that strategy only pays off if people actually buy these cars. Persuading drivers to go electric has already proved to be a tough ask. Persuading them to go smaller may be even tougher.
A large part of why Americans prefer bigger cars is that carmakers have been very successful at pushing them on us. It’s a matter of basic economics: With gas cars, bigger vehicles aren’t much more expensive to build than smaller ones. But the former are sold at much higher prices. For that reason, since the end of World War II, American car companies have never been particularly good at, or interested in, making puny compacts.
For decades, the full-size luxury sedan—functionally land yachts loaded with creature comforts—was the pinnacle of American car making. Over time, the emphasis shifted to big trucks and SUVs, with features that push profit margins even higher.
Ivan Drury, the director of insights at the car-buying website Edmunds, told me.
“Look at the evolution of the F-150 from work truck to luxury barge on wheels.”
The F-150 ranges from spartan $37,000 workhorses to fully loaded tanks that cost $90,000 and mix luxury with intense towing and hauling power. You’d be hard-pressed to find such expensive add-ons with smaller cars. To goose profits, Farley’s predecessor began axing small cars and sedans from Ford’s U.S. lineup in 2018 to focus on trucks and SUVs.
All of this has gone a long way in shaping the way that 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.”
Recently, rising prices and interest rates have meant that some smaller and more affordable cars are gaining momentum, but America is still overwhelmingly a truck and SUV country. You can find lots of small cars for sale, but not typically from the biggest American automakers. Over time, they largely ceded the sedan and small-car market to companies such as Honda, Toyota, and Hyundai. Today, Toyota sells more cars in the U.S. than Ford does.
So far, Ford and GM have approached the EV era by making battery-powered versions of the big trucks and SUVs that buyers know so well. At the end of last year, GM stopped production of its sole small EV, the Chevy Bolt. But sales of many big EVs have lagged behind expectations, in large part because of the price tags. Ford’s all-electric F-150 Lightning retails for at least $10,000 more than its gas-powered counterpart. The only Chevy Silverado EV pickup truck you can buy retails for almost $97,000, thanks to its giant battery, and that’s two or even three times the cost of a gas Silverado.
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.
Right now, the only things keeping Americans from flocking to options from BYD, Nio, or Zeekr are tariffs and geopolitical tensions. But those are a Band-Aid at best, especially as Chinese carmakers build factories in Mexico with the likely aim to eventually sell vehicles in the U.S. Or maybe they’ll just build cars in Ohio. Donald Trump now says that if he wins a second term, he wants Chinese automakers to set up factories in America too. Farley has been unusually candid about the stakes:
“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 has said. And if we don’t make profitable EVs in the next five years, what is the future?”
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?”
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.
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.