Support CleanTechnica’s work through a Substack subscription, on Patreon, or on Stripe. Help us produce all of the high-quality, original content we publish week after week despite the challenges of content-scraping AI, antisocial media, inflation, and other hurdles.
US President Donald Trump’s war in Iran is still raging hot and heavy. His war on EVs, not so much. The high price of gas is factoring into a reasonable outlook for EV sales after last year’s massive crash, and US automakers have not given up on zero emission mobility just yet.
What Is This Spreading Crack Of Which You Speak?
In terms of lifetime ownership costs, EVs were already in a competitive position with conventional cars before Trump green-lit the greatest FUBAR of any war launched by any US President ever, touching off a fuel price spike after Iran effectively closed the key Strait of Hormuz shipping route.
While a temporary spike in fuel prices does not necessarily wield much influence on buyer behavior over the long run, Trump’s decision to launch a full-on war against Iran last February is no short term blip. Aside from blocking an important global shipping route, Iran and its allies have also fostered attacks on refineries and other fossil energy infrastructure throughout the region.
In addition, Trump’s kid gloves treatment of Russia during its war against Ukraine is coming back to bite on the price of fuel. Trump rolled out the welcome mat for Putin but clearly underestimated Ukraine, similar to the way he underestimated Iran. More than four years after Russia first invaded, Ukraine is systematically destroying the country’s oil infrastructure. According to a Bloomberg report earlier this month, refining capacity in Russia has hit a 24-year low, contributing to an all-time low for oil product exports in July.
And, that’s where the crack spread comes in. As capably explained by economist Paul Krugman, crack spread refers to the difference in price between crude oil and products refined from crude. As Krugman notes, the loss of refining capacity is limiting the demand for crude, keeping crude prices relatively low even as the price of refined products rises. In his words, the crack spread has “exploded” since the Trump began bombing Iran, going up by about $35.00 per barrel.
“So while the price of a barrel of crude is up around $25, the price of the products refined from that barrel is up about 25+35=60 dollars per barrel, putting it in the range of middle of the road predictions of what would happen as a result of a long-term Hormuz closure,” Krugman elaborates, indicating that high fuel prices will continue to bedevil the driving public for months if not years to come.
Implications For EV Sales, And Here Comes The Ford Fathom
As everyone predicted, EV sales in the US crashed last fall, after Trump led the Republican majority in Congress on a successful quest to prematurely sunset the $7,500 federal EV tax credit. The damage was severe, but not severe enough to zero out EV sales altogether. Some EV stakeholders held up reasonably well and some outliers — including Subaru and the mid-sized truck chassis specialist Harbinger — actually saw their year-on-year sales improve. It’s also worth noting that a flood of off-lease EVs poured into the used car market earlier this year, which may have tamped down interest in new EVs (see lots more EV sales news here).
Into this scenario steps Ford, which is among the US automakers to respond to the disappearance of the federal tax credit by curtailing their EV operations last year. However Ford is sticking with the Fathom, its forthcoming mid-sized electric pickup truck which was nameless until earlier this month.
The Fathom is still pictureless, in accord with the mystery surrounding Ford’s years-long “skunkworks” project aimed at proving that US automakers can still turn out an affordable car for the masses, but without the planet-killing emissions.
Picture or not, though, Ford did let word slip earlier today that it plans to manufacture the new Fathom at its Louisville Assembly Plant in Kentucky, which used to spit out gasmobiles until Ford shut the entire 3 million square foot facility down and emptied it of all contents for a soup to nuts makeover based on the company’s elaborately engineered Universal EV Production System.
When Ford unveiled the Universal EV system last year, the company drew attention to a unique tree-like sequence rather than the straight-up linear approach. Ford cites cost-shaving advantages alongside pinpoint quality control and improved worker comfort.
Together with lower battery prices and other cost-cutting maneuvers, Ford promised a new electric pickup truck at a target price of under $30,000, which it is on track to achieve with a newly announced MSRP starting at $28,350.
US Readies Self For An EV Future
If all goes according to plan, Ford will take pre-orders early next year (sign up for pre-order info here), with production-level prototypes rolling off the tree sometime during the first quarter and volume production to follow.
“The UEV Production System and its assembly tree will allow Ford to assemble the Fathom 40% faster than LAP’s current products,” the automaker emphasizes, with LAP referring to the Louisiana facility. With other factors taken into consideration, Ford expects the Fathom operation to produce at a rate 15% faster than the former gasmobile operation.
As for EV sales overall, the US has some catching up to do as other markets around the globe surge ahead. On the plus sidde, Trump is doing his best to make up for last year’s tax credit debacle, considering that his “negotiations” to reopen the Strait of Hormuz resemble a middle school homework assignment — you know, the one the dog peed on.
For that matter, begging Ukraine to stop destroying Russia’s oil business is not a particularly good look for the Trump or his Vice President, JD Vance. On July 31, Vance reportedly implored Russian President Volodymyr Zelensky to stop attacking the Russian Navy at the Black Sea port of Novorossiysk, only to wake up earlier this week with egg on his face after Ukraine — yes, you guessed it — launched a fresh attack on the port.
Between the Iran war or Russia’s bloodthirsty land grab in Ukraine, high fuel prices will continue to cushion EV sales in the US for the time being, additionally supported by the fast-paced buildout of public EV charging stations in the US.
Readers, what do you think? Is it too early to anticipate an EV sales rebound in the US? Or will the market continue to muddle along? Share your thoughts in the discussion thread…
Photo: Ford anticipates that its forthcoming, mysteriously shrouded Fathom electric pickup truck will give it an edge as EV sales recover from the crash of 2025 (cropped, courtesy of Ford Motor Company).
Sign up for CleanTechnica’s Weekly Substack for Zach and Scott’s in-depth analyses and high level summaries, sign up for our daily newsletter, and follow us on Google News!
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
Sign up for our daily newsletter for 15 new cleantech stories a day. Or sign up for our weekly one on top stories of the week if daily is too frequent.
CleanTechnica uses affiliate links. See our policy here.
CleanTechnica’s Comment Policy