Ford Motor Co. is canceling plans for a fully electric sport utility vehicle in a shift that may cost the carmaker around $1.9 billion.
In addition to scrapping already delayed all-electric three-row SUV, Ford announced on Aug. 21 it will further postpone a next-generation electric pickup and reduce spending on electric vehicles (EVs) by 10 percent to 30 percent of its annual capital expenditures. And it’s shaking up battery-sourcing plans to better compete with lower-cost Chinese competitors.
“This is a tremendous pivot for us, and we’re not going to make a tremendous pivot without doing a lot of homework to convince ourselves this is the exact right plan,” Ford chief executive officer Jim Farley told Bloomberg News. “I’m very confident.”
Bottom Line Concerns
The actions come as the automakers have incurred significant costs spooling up production while industry sales growth began to taper off. Ford officials have forecasted its EV unit will lose as much as $5.5 billion this year.
Ford officials are now concentrating on delivering EVs that are priced on par with traditional vehicles—including a battery-powered midsize pickup truck due to debut in 2027—and hybrid vehicles that turn a profit within a year after they launch.
“We are committed to innovating in America, creating jobs and delivering incredible new electric and hybrid vehicles that make a real difference in CO2 reduction,” said Farley. “We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths.”
Dealer’s Concerns
With the sales slowdown for EV, dealers have pushed for gas-electric hybrid models that have been better received by consumers. Farley is particularly high on a type of hybrid called extended-range electric vehicles (EREVs) use a small gasoline engine to keep an on-board battery charged while driving, enabling longer driving range.
Ford now is considering extended-range EV technology for its next-generation three-row SUVs as company officials ultimately determined it couldn’t make money on an all-electric big SUV.
“We loved our three-row crossover and I was so excited to show everyone the work we did,” Farley said. “But there was just no way it would ever meet our criteria of being profitable…We don’t approve ’em unless they’re going to be profitable in the first year.”
New Plans
Moving forward, Ford is going to produce a new fully electric commercial van in Ohio starting in 2026, followed by two new pickups in 2027—a medium-size model based off a platform headed up by the former engineering lead of Tesla‘s best-selling Model Y and next-generation truck Ford will build in Tennessee about two years later than initially planned.
To qualify for manufacturing tax credits in the Inflation Reduction Act, Ford will increase its battery production in the U.S. South Korea’s LG Energy Solution, one of Ford’s cell suppliers, will move the battery output needed for Mustang Mach-E electric SUVs to Holland, Michigan, from Poland next year.
Additionally, the Detroit-based company’s joint venture with another South Korean cell manufacturer, SK On will move up their timeline to start making batteries for the automaker’s current E-Transit vans to mid-2025 in Ohio. Ford official have found its commercial customers have been more receptive to EVs.
LFP in Michigan
Ford is on track to start making lower-cost lithium iron phosphate (LFP) batteries in Michigan beginning in 2026, believed to be the first LFP cell plant in the U.S. The batteries qualify for IRA tax credits of up to $7,500 for consumers as well.
Farley said the midsize pickup that will be powered by the LFP battery made in Michigan will be cheaper to own and operate than a traditional internal combustion engine or hybrid model.
“It’s a game-changing product from a cost-of-ownership standpoint,” Farley said.
