Spooked by weakening demand for EV sales, and the number and ingenuity of Chinese automakers, Ford is scaling back its all-electric ambitions, despite manufacturers, including Ford, experiencing significant growth for electric car sales in the first quarter.
Noting that the Dearborn, Michigan, company is responding to market demand, chief financial officer John Lawler told reporters on a call today that Ford would be “pivoting” away from its existing electric future and instead expand its other platforms.
“What we’ve learned is that customers want choice, and so we’re providing that choice, with a full lineup of EVs, hybrid, electric, gas and diesel products,” said Lawler.
Ford’s limited number of existing EVs, including the Lightning and Mach-E, would remain in the portfolio in North America, he said, but announced the cancellation of higher-range all-electric EVs with three rows of seats, which Ford CEO Jim Farley previously described as a “personalized bullet train.”
These SUVs will be built as hybrids instead, leading to the company taking a non-cash charge of about $400 million for the sunk costs. Ford also warned the cancellation could lead to an additional future hit of $1.5 billion.
The creation of a 300-person EV skunkworks team in 2022—charged with developing a low-cost EV to take on China—was Ford’s attempt to be “nimble,” Lawler told reporters. Ford officials revealed today that the first vehicle from the Irvine, California, skunkworks team will be a midsize pickup due out in 2027.
“We saw what was happening [in the market] and we knew that we needed to change our approach,” he pointed out, seemingly oblivious to industry analysts’ warnings about China’s EV prowess for the past 10 years or more.
“The market is changing globally, with the Chinese at overcapacity, and so it’s all going to come down to being nimble, having a low cost and multiple low-cost platforms, and being able to adjust as we continue to develop the transition of this industry,” said Lawler.
He said that softening EV sales were due to auto customers’ “shifting requirements,” and stated that Ford had to go where the market was.
Cost of Early Adoption
The EU-only Ford Capri EV launched in July and is built on an EV platform borrowed from rival VW’s ID.4.
Photograph: FORD
Early auto technology adopters have already purchased EVs, and automakers such as Ford have struggled to persuade skeptical mainstream buyers to go all electric, with those customers fearful of perceived limited range and a continued dearth of charging stations.
Even early adopters and those seeking to reduce their CO2 emissions wilt at some EVs’ first-year depreciation of 50 percent.
Automakers, too, are feeling the heat. In a press release Ford said it was to broaden choices for customers as it “adjusts its rollout of pure electric vehicles to deliver a capital-efficient, profitable electric vehicle business.” It also noted that Chinese automakers have “advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences.”
By killing its three-row SUV and delaying a next-generation pickup, Ford is hoping to stem losses resulting from its previously ambitious EV plans, which went as far as to state that in Europe its coming vehicles were paving a way for “an all-electric future”.
“It’s coming back to understanding the customer, understanding how this is going to transition over time,” Lawler said in this morning’s media briefing. “It’s about providing them those choices that meet their duty cycles and their needs, and that is giving them the options between full battery electric vehicles, hybrid technologies.”
Future Fords Must Make Money
In a hostage to fortune, Lawler said that Ford would not launch any EVs in the future unless they can be profitable within 12 months.
“We are launching multiple electric vehicles in Europe this year,” Ford said in a statement, referring to the EU-only Ford Explorer EV and the Capri built on the same platform borrowed from rival VW’s ID.4. “We are adjusting the company’s North America vehicle roadmap to offer a range of electrification options designed to speed customer adoption, including lower prices and longer ranges.”
The Ford statement added that “scores of new electric vehicle choices hitting the market over the next 12 months and rising compliance requirements” were causing pricing pressures. “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,” explained the statement.
Among the cost-cutting, Ford is delaying its T3 electric truck, thought to be a more advanced successor to the F-150 Lightning, to the second half of 2027. It was supposed to start production next year. The truck will be assembled at BlueOval City’s Tennessee Electric Vehicle Center. Ford also plans to introduce an all-new, fully electric commercial van that is slated to begin production in 2026 in Ohio.
Lawler said that Ford has “multiple hybrid technologies under development” and is working on other powertrain options. “We’re going to continue to provide gas vehicles and diesel vehicles, because there’s a demand for those and that’s going to continue,” he confirmed.
“Our focus here is to remake Ford into a high growth, higher margin, more capital, and an efficient and durable business,” Lawler said.
EVs need to turn a profit, he stressed. “And if they’re not profitable, based on where the customer is in the market, we will pivot and adjust and make those tough decisions, and that’s what we’ve done.”
Ford is not the only automaker in pivot mode. General Motors and Honda ditched a plan to codevelop low-cost EVs last year, with GM preferring to prioritize hybrids. VW of America, too, said recently that a “balanced approach is the best way.”
Correction: This article has been changed to reflect that Ford’s EV sales have grown in the first quarter of 2024; that the T3 truck was supposed to start production in 2025; and that Ford’s previously announced all-electric future plans were in relation to the EU.
