Ford Motor Company has announced a significant shift in its electric vehicle (EV) strategy, canceling plans for a large electric SUV and delaying the launch of its next-generation electric pickup truck until 2027. This decision comes in response to lower-than-expected demand for EVs, increasing competition from Chinese manufacturers, and the need to prioritize profitability.The company will instead focus on developing hybrid versions of its three-row SUVs and more affordable EV options. Ford CEO Jim Farley explained, ‘We learned a lot as the number-two U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design’.This strategic pivot will have substantial financial implications for Ford, including write-downs and additional expenses totaling up to $1.9 billion. The company is reducing its annual capital expenditure on EVs from 40% to 30% of its budget. Ford’s EV business is expected to lose about $5 billion in 2024, having lost $44,000 on every EV sold in the second quarter of this year.Despite these challenges, Ford is not abandoning its EV ambitions entirely. The company plans to launch a new electric commercial van in 2026 and two new electric pickup trucks in 2027. Ford is also developing a new, more affordable EV platform and increasing battery production in the US, including the first with LFP technology.The shift in strategy reflects broader challenges in the EV market. A recent study by J.D. Power found that 24 percent of surveyed shoppers in 2024 were ‘very likely’ to consider buying an EV, down from 26 percent the previous year. This slowdown in EV adoption has prompted other automakers to cut prices and reassess their strategies.While some industry observers view this as a setback for EV adoption, others see it as a pragmatic response to market realities. Ford’s Chief Financial Officer, John Lawler, emphasized that ‘The competitive nature of the market is changing globally… That means these vehicles need to be profitable, and if not, we will pivot and adjust and make those tough decisions’.
Key points
- Ford is canceling its large electric SUV project and delaying its next-generation electric pickup truck to 2027.
- The company is shifting focus to hybrid vehicles and more affordable EV options due to lower demand and increased competition.
- Ford expects to incur up to $1.
- The company plans to make its new EV models profitable within a year of their launch and is reducing EV capital expenditure from 40% to 30% of its budget.
9 billion in write-downs and additional expenses due to this strategy shift.
Contradictions👾While Ford is scaling back some EV projects, it still plans to launch new electric commercial vans and pickup trucks in the coming years, indicating a continued commitment to electrification despite the challenges.
