Ford pulls back on its EV plans...again

Ford is pulling back further on its EV rollout to improve the profitability of these models amid growing competition from automakers with lower costs at home and overseas. 

Driving the news: Ford is canceling plans for an already delayed three-row SUV EV and postponing the launch of a full-size EV pickup by around 18 months.

• Instead, the automaker will introduce more hybrids and a new, all-electric commercial van in 2026, followed by a mid-sized EV pickup in 2027.

• The change in strategy will cost Ford big time. John Lawler, Ford’s Vice Chair and CFO anticipates a $400 million write-down of its current assets for big electric SUVs which could lead to $1.5 in additional expenses and expenditures down the line. 

Why it matters: Consumers dictate the market and Ford is listening. So far this year, EV sales growth has remained stagnant – increasing by around 7%. On the other hand, hybrid vehicle sales skyrocketed 35.3% from January through June. 

Between the lines: Despite EV sales surging 61% year-over-year in Q2 for Ford, the segment is not profitable for the automaker.

• Last quarter, Ford’s EV division lost $1.1 billion. In total this year, Ford posted EV losses of $2.5 billion.

• But according to the automaker, hybrids have profitability that is similar to gas vehicles – making them an integral part of Ford’s strategy pivot moving forward. 

• Lawler said Ford's mix of annual capital expenditures on EVs will drop to about 30%, from about 40%.                                                    

Key quote: "Our focus here is to remake Ford into a higher-growth, higher-margin, more capital-efficient and durable business, and that means these vehicles need to be profitable," Lawler said on a call with media Wednesday morning. "And if they're not profitable, based on where the customer is in the market is, we will pivot and adjust and make those tough decisions."

Zooming out: Early adopters have already embraced EVs but mass adoption remains elusive. Automakers like Ford have to convince skeptical mainstream buyers, who worry about limited range and subpar charging infrastructure. To increase its momentum in the EV space, Ford is bringing down the production costs for these models – stating that future EVs will only be launched if they can be profitable within 12 months.

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