Ford Refocuses EV Strategy, Emphasizing Lower Costs and New Models
DETROIT (AP) — Facing increasing competition from automakers with lower production costs, Ford Motor Co. is making a strategic shift in its electric vehicle (EV) development. The company now plans to concentrate on the creation of two new electric pickup trucks and a new commercial van, according to statements released by Ford.
Ford aims to make these new models more affordable, extend their driving range, and achieve profitability before taxes within a year of their launch. While the company has provided limited specifics about these upcoming products, they are emphasizing the need to adapt to the evolving market.
Ford is currently facing financial losses on its existing EV lineup. Consequently, the production of its next-generation full-size electric pickup truck in Tennessee has been delayed by 18 months, with a new target of 2027. Additionally, the company will no longer pursue the development of fully electric three-row SUVs, citing the high costs associated with batteries. Instead, Ford will focus on producing these vehicles as gas-electric hybrids.
The second new pickup truck will be mid-sized and will utilize new underpinnings developed by a small team in California, also slated for release in 2027. The unspecified commercial van is expected to begin production in 2026 at an assembly plant west of Cleveland.
These changes have prompted Ford to write down $400 million in assets related to its current range of large electric SUVs, and the company anticipates additional expenses reaching up to $1.5 billion. “We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Chief Financial Officer, in a statement.
Ford has also announced a reduction in capital spending on EVs. The company’s annual capital budget allocated to EV development will now be 30%, a decrease from the previous 40%. The company lost $2.46 billion on its EV ventures in the first half of the year, which negatively impacted profits from its traditional gas-powered and commercial vehicle divisions.
In a prepared statement, Ford acknowledged the fast-paced changes in the global EV market, highlighting the need to compete with Chinese automakers, who have lower production and engineering costs. Moreover, the company noted a shift in consumer preferences, indicating that current buyers are 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 base more of its commercial and consumer vehicles on new, more affordable EV underpinnings. Additional details about this will be discussed at an event planned for the first half of next year.
Electric vehicle sales in the U.S., Ford’s most profitable market, continue to grow, though the pace has slowed somewhat as consumers consider range limitations and recharge accessibility. Market leader Tesla Inc. has reduced prices, triggering price adjustments by other automakers. According to Motorintelligence.com, overall U.S. electric vehicle sales rose by 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, essentially the same percentage as the previous year. Lease deals, which included federal tax credits, helped boost sales. Meanwhile, sales of gas-electric hybrids surged by 35.3% between January and June, totaling 715,768, surpassing electric vehicle sales. This trend was a key factor in Ford’s decision to incorporate hybrids in its large SUVs. Hybrids, according to the company, have profitability levels that are similar to those of gasoline vehicles, which Ford will continue building.
Shares of Ford saw an increase of 2.1% in trading on Wednesday.
