Ford Alters EV Strategy Amid Market Shifts
DETROIT (AP) — Ford Motor Co. is adjusting its electric vehicle (EV) strategy in response to evolving market conditions and rising competition. The company will now concentrate on developing two new electric pickup trucks and a commercial van, shifting away from previous plans.
Ford is focusing on new electric pickup trucks and a commercial van.
The company aims for these new vehicles to be more cost-effective, offer a longer driving range, and become profitable within a year of their showroom debut. Ford has been losing money on its current EV models. While specific details about the new products were limited, the company announced several key changes.
Production of the next-generation full-size electric pickup truck in Tennessee will be postponed by 18 months, pushing the launch to 2027. Ford will also forgo producing fully electric three-row SUVs due to high battery costs, opting instead to focus on gas-electric hybrid versions of these vehicles.
The second new pickup will be a mid-size model, built on new underpinnings developed by a small team in California. It is also slated to go on sale in 2027. Production of the as-yet-unspecified commercial van will begin in 2026 at an assembly plant located west of Cleveland.
These strategic adjustments will lead Ford to take a $400 million write-down on its current assets associated with its large electric SUVs, with additional expenses reaching up to $1.5 billion.
“We’re committed to creating long-term value by building a competitive and profitable business,” said Chief Financial Officer John Lawler in a statement. The company also intends to reduce its capital expenditure on EVs, allocating 30% of its annual capital budget to EV development, a decrease from the current 40%.
Ford, which has long expressed its aim to achieve profitability in the EV market, experienced a loss of $2.46 billion in the first half of the year from its EV segment. This has negatively impacted the profits from its gas-powered and commercial vehicle units.
In a prepared statement, the company noted that the worldwide EV market is rapidly evolving. Ford must adapt to compete with Chinese automakers, which benefit from lower production and engineering costs. Additionally, current EV buyers have become more cost-conscious than early adopters.
“These dynamics underscore the necessity of a globally competitive cost structure while being selective about customer and product segments to ensure profitable growth and capital efficiency,” the company stated. Ford will also produce more commercial and consumer vehicles utilizing new, more affordable EV underpinnings, with further details expected to be released in the first half of next year.
While EV sales in the U.S., Ford’s most profitable market, are still growing, the pace has slowed as potential buyers express concerns about range and recharging availability. Market leader Tesla Inc. has lowered prices, prompting other manufacturers to follow suit.
According to Motorintelligence.com, overall U.S. electric vehicle sales rose approximately 7% during the first half of the year, reaching 599,134 units. EVs accounted for 7.6% of the U.S. new vehicle market, a similar percentage to the previous year. Lease deals, which include federal tax credits, have helped to boost sales.
Significantly, sales of gas-electric hybrids surged 35.3% between January and June, totaling 715,768 units, surpassing EV sales. This trend influenced Ford’s decision to focus on hybrids for its large SUVs. The company stated that hybrids offer profit margins comparable to those of gas vehicles, which Ford plans to continue producing.
Ford shares saw a 2.1% increase during Wednesday’s trading session.
