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Detroit’s near future based on SUVs, not EVs, production plans show

DETROIT: General Motors Co and Ford Motor Co have widely touted their commitment to emission-free electric cars, but their production plans show a growing reliance on ever-larger gas-powered vehicles.

The two biggest U.S. automakers will make more than 5 million SUVs and pickup trucks in 2026, but only about 320,000 electric vehicles, according to detailed production plans for North America seen by Reuters.

That will be about 5% of their combined vehicle production in North America, but less than Tesla Inc, the world leader in electric vehicles, produced last year.

The plans show that Detroit’s Big Two are betting their short-term future on satisfying America’s demand for bigger, petroleum-fueled vehicles which they can sell at a higher profit margin than mostly smaller, expensive-to-develop electric vehicles.

Large SUVs consume about a quarter more energy than midsize cars, meaning the plans will most likely wipe out any gains in overall fuel efficiency or reduction in auto emissions that were targeted over the next six years, according to industry experts.

The recent collapse of oil prices – pointing toward cheap gas for the foreseeable future – and a dip in demand caused by the coronavirus may only serve to strengthen automakers’ commitment to the strategy.

Detroit has tried to latch onto the consumer and investor excitement over electric vehicles made by Tesla, whose market value is double that of GM and Ford combined, even though its sales are much smaller.

GM executives have been repeating a “zero emissions” mantra since 2017, and the company’s website features a prominent commitment to its “all-electric future.” Ford’s Executive Chairman Bill Ford told the Detroit auto show two years ago: “We’re all in on this. We’re taking our mainstream vehicles, our most iconic vehicles, and we’re electrifying them.”

But it is hard to detect a major change of direction from the companies’ production plans.

According to data from AutoForecast Solutions seen by Reuters, North American production of SUV models by GM and Ford will outpace production of traditional cars by more than eight to one in 2026, and 93% of those SUVs are expected to be gas-fueled. The data has not previously been reported.

AutoForecast’s data is based on planning information provided to suppliers by the automakers, and is widely used across the industry. GM and Ford executives interviewed by Reuters did not dispute the accuracy of the data.

“GM and Ford understand that buyers want more SUVs and trucks, but they’re also trying to play to Wall Street, which thinks the future is all about electric vehicles,” said Sam Fiorani, vice president, global vehicle forecasting at AutoForecast. “The Detroit automakers would love to get a little of that Tesla magic and money.”

The plans show that Detroit's Big Two are betting their short-term future on satisfying America's demand for bigger, petroleum-fueled vehicles which they can sell at a higher profit margin

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