Ford Motor Co. is making significant changes to its electric vehicle strategy in response to increasing competition from automakers with lower costs. The company announced that it will focus on developing two new electric pickup trucks and a new commercial van, all of which are expected to cost less, have longer range, and be profitable within a year of reaching showrooms.
One of the key changes in Ford’s strategy is the decision to delay production of its next-generation full-size electric pickup truck in Tennessee until 2027. This delay is aimed at ensuring that the vehicle meets the company’s profitability targets. Additionally, Ford will not be building fully electric three-row SUVs due to high battery costs. Instead, the company will focus on producing gas-electric hybrid versions of these vehicles.
The new lineup of electric vehicles from Ford will include a mid-sized pickup truck based on new underpinnings developed by a small team in California. This vehicle is also expected to go on sale in 2027. Production of the new commercial van will start at an assembly plant west of Cleveland in 2026. These new vehicles are part of Ford’s efforts to create a globally competitive cost structure while meeting the evolving demands of the market.
In order to implement these changes, Ford will incur significant expenses, including a write-down of $400 million for its current assets related to big electric SUVs. The company also expects additional expenses of up to $1.5 billion. Despite these costs, Ford remains committed to building a competitive and profitable business in the electric vehicle market.
To support its new electric vehicle strategy, Ford will reduce capital spending on EVs from 40% to 30% of its annual capital budget. This shift in spending reflects the company’s focus on developing more affordable EVs while maintaining profitability. Ford has been facing challenges with its current EV lineup, losing $2.46 billion on them in the first half of the year, which has impacted its overall profits.
The global EV market is rapidly evolving, with Chinese automakers posing a competitive threat due to lower production and engineering costs. Ford recognizes the need to adapt to these changes and be selective about customer and product segments to ensure profitable growth and capital efficiency. The company plans to build more commercial and consumer vehicles using new, more affordable EV underpinnings, with further details to be announced at an event in the first half of next year.
In the U.S., electric vehicle sales continue to grow, but at a slower pace as practical consumers express concerns about range and charging infrastructure. Market leader Tesla Inc. has lowered prices, prompting other automakers to follow suit. Despite the growth in EV sales, gas-electric hybrids have seen a significant increase in sales, surpassing electric vehicles in the first half of the year.
Ford’s decision to focus on gas-electric hybrids for its big SUVs is driven by the profitability of these vehicles, which is similar to gas-powered vehicles. The company will continue to build gas vehicles alongside its new lineup of electric and hybrid vehicles. The shift in strategy has been well-received by investors, with Ford’s shares rising 2.1% in trading following the announcement.
Overall, Ford’s new electric vehicle strategy reflects the company’s commitment to adapting to the changing market dynamics and ensuring long-term profitability. By focusing on more affordable EVs, hybrids, and maintaining a competitive cost structure, Ford aims to secure its position in the evolving electric vehicle market.