Ford has abandoned plans to build certain large three-row electric SUVs and is revising its North American electrification strategy, the company announced recently. The automaker, currently trailing Tesla in US electric vehicle sales, is now focusing on more affordable and efficient EVs, including new commercial vehicles. The canceled electric SUVs will eventually be replaced with hybrid models instead.
Shift in Strategy
Ford has never been hesitant to change its plans, especially regarding EVs. The Mustang Mach-E was initially conceived as a compliance car until an internal team called Team Edison proposed a crossover concept in 2017. Despite ambitious plans, including creating a new ‘Model e’ division for EVs and securing 600,000 EV batteries annually from 2023, sales have been underwhelming. In 2023, Ford sold 72,608 EVs in the US, a number expected to be surpassed in 2024 but still far from initial projections.
New Focus on Affordable EVs
Ford’s new EV roadmap prioritizes a commercial electric van, slated for production in Ohio in 2026. The company also plans to introduce two new EV pickup trucks in 2027, including a midsize model using a low-cost platform developed by a special skunkworks team. “We recruited the most technically skilled professionals to drive a radical change in EV development,” said Ford CEO Jim Farley. The new EVs will be more affordable without compromising on features.
Financial Adjustments
Ford is also reducing EV-related expenditures, cutting capital spending from 40% to 30% of total outlays. “We’re committed to creating long-term value by building a competitive business,” stated John Lawler, Ford vice chair and CFO. The company aims to achieve positive EBIT within the first 12 months of launch for all new EV models.
Battery Production and Costs
Ford is adjusting its battery production plans to leverage the IRS clean vehicle tax credit by moving some Mach-E cell production from Poland to Michigan. Domestic battery production is seen as key to reducing costs: “An affordable electric vehicle starts with an affordable battery,” Farley emphasized. The changes reflect Ford’s efforts to create a more competitive and profitable EV business.
