Ford Motor Co. said it was recalibrating its EV strategy, including dropping its electric SUVs, due to concerns about profitability.
Ford is dropping plans to build a large, three-row electric SUV.
“We were very happy with the three-row crossover and were excited to show everyone what we’d accomplished, but it just didn’t meet our standards for profitability,” Ford CEO Jim Farley said.
Ford is cutting its future capital spending plans for pure EVs from 40% to 30%.
Ford is currently planning to use hybrid technology in its next-generation three-row SUV.
Ford predicts that smaller, cheaper EVs will dominate in the future, with hybrid technology likely to be used to power larger vehicles.
“This is about us being agile and listening to the response from our customers,” said John Lawler, Ford’s vice chairman and CFO. said “For these customers, hybrid technology is the best solution,” he said on a conference call Wednesday.
roller Added“we [EV] “We’ve been in this market for more than two years now, we’ve learned a lot, and we understand that customers want more electrified options.”
Lawler said Ford will cut its capital spending plans for pure electric vehicles from 40% to 30% going forward, but did not provide a timeline for the pure electric vehicle cuts.
“From what we’ve learned in the market and what we’ve seen where people are gravitating, we’re going to focus on areas where we have a competitive advantage – commercial overland trucks and SUVs,” Lawler said.
“This is a big shift for our company, and we’re not going to make a big shift without doing our homework to convince ourselves that this is exactly the right plan. I’m very confident,” Farley said in an interview.
The Blue Oval on Wednesday press release As a result of the cancellation of the contract, Ford will take a special non-cash charge of approximately $400 million to write down the value of manufacturing assets that it will no longer be using.
Ford also acknowledged that its strategy of embracing hybrids over all-electric vehicles could cost it up to $1.5 billion in additional expenses and cash outlays.
Ford’s EV division is on track to lose as much as $5.5 billion this year, the company said in a report on Thursday. Bloomberg.
Bloomberg Ford reported in May, citing people familiar with the matter, that it would lose $100,000 for each electric vehicle it delivers in the first quarter of 2024.
Ford also announced this week that it would push back the launch of its next-generation pickup truck, codenamed the T3, by two years to 2027. The T3 pickup is Ford’s $5.6 billion A production facility in Blue Oval City, Tennessee, scheduled to open in 2025.
Ford still announced plans to introduce an all-new, all-electric commercial van that will begin production in Ohio in 2026.
The company said it plans to move some battery production for its Mustang Mach-E electric SUV from Poland to Holland, Michigan, next year in order to qualify for the Inflation Control Act’s manufacturing tax credit.
“A key driver of achieving profitability will be the mix of batteries that are produced in the U.S. and qualify for the Advanced Manufacturing Tax Credit,” Lawler explained. “This will be a big part of our efforts to achieve profitability.”
Last year, the U.S. Department of Energy Announced The company had provided a $9.2 billion conditional loan to a joint venture between Ford Motor Co. and South Korea’s SK Onco to build three battery factories in Tennessee and Kentucky.
Ford plans to begin producing low-cost lithium iron phosphate (LFP) batteries at its Blue Oval Battery Park factory in Michigan starting in 2026.
Farley said the LFP batteries will be used in the company’s upcoming all-electric mid-size pickup trucks, which will be cheaper to own and operate than traditional internal combustion engine and hybrid models.
“This is a game-changer from a cost of ownership perspective,” Farley said. “If you’re not competitive on battery cost, you’re not competitive.”
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