Ford has announced a new electrification strategy this Wednesday by confirming the cancellation of the electric SUV it was planning to manufacture, resulting in additional expenses and write-offs totaling $1.9 billion. In a statement, the American manufacturer explains that in this new strategy, they plan to adjust the product launch cadence and realign battery supply, focusing on utilizing hybrid technologies for their upcoming three-row SUVs. As a result, Ford will incur a non-cash special charge of approximately $400 million for the write-off of certain manufacturing assets specific to the fully electric three-row SUV previously planned but no longer in production.
Additionally, these actions may result in additional expenses and cash outflows of up to $1.5 billion that the company will reflect in the quarter incurred as a special item. The total expenses could reach $1.9 billion. The company’s plan also includes adjusting the vehicle roadmap for North America, prioritizing the introduction of a new digitally advanced commercial van in 2026, followed by two advanced pickup trucks in 2027 and other affordable vehicles in the future.
The commercial van will be assembled at Ford’s Ohio plant starting in 2026. One of the pickup trucks will be a mid-size model based on a platform led by Tesla’s former Model Y engineering leader, and the other will be a next-generation truck that Ford will build in Tennessee two years later than initially planned.
Ford has also realigned its battery supply plan in the U.S. to reduce costs, maximize capacity utilization, and support current and future electric vehicle production.
On the other hand, Ford’s Vice President and Chief Financial Officer, John Lawler, stated in the release that to improve the financial performance of their electric vehicle business, they will increase their battery production mix in the U.S. to benefit from the manufacturing tax credits included in the Biden Administration’s 2022 Inflation Reduction Law. Additionally, given the propulsion options and the growing demand for hybrids, Ford’s annual capital expenditure mix dedicated to battery electric vehicles (BEVs) will decrease from approximately 40% to 30%.
The automaker also announced that it is modifying its battery supply plans, citing the need to better compete with lower-cost Chinese competitors.
Lastly, Ford indicates that for some commercial applications and larger vehicles, the cost of a purely electric vehicle battery remains a challenge. Therefore, they are developing a new family of three-row electrified SUVs that will include hybrid technologies to offer efficiency, performance benefits, emission reduction compared to pure gasoline vehicles, and extend the vehicle’s range on road trips compared to pure electric vehicles.
Furthermore, the next-generation Super Duty F-Series truck will have a variety of propulsion options, leveraging Ford’s sales leadership in hybrid trucks with the F-150 and Maverick. „As a global leader in pickup trucks, we are preparing this valuable franchise for the future in all sizes with hybrid, electric, and other electrified propulsion options, providing individual customers and businesses the choice based on how they use their trucks,“ said Ford’s President and CEO, Jim Farley. Additionally, Ford’s new U.S. labor contract will cost the automaker $8 billion.