Prediction: Ford’s shift to EVs and hybrids will benefit investors over the long term

I see (F -0.90%) recently announced that it is scrapping plans for a three-row electric SUV and will instead look to introduce the vehicle as a hybrid. The move is part of a wider shift in strategy that will see the automaker shift more resources to hybrids and away from electric vehicles (EVs).

My prediction is that this will prove to be a very good move for Ford going forward, despite the cost of changing plans.

Change of plans

In addition to deciding not to continue with its three-row electric SUV, the company announced a number of other planned changes. It will push the successor to the F-150 Lightning until 2027, while it will begin production of a new electric van aimed at professionals and commercial users in 2026. It also plans to begin production of an electric midsize pickup in 2026. Meanwhile , will move battery production from Poland to Michigan to take advantage of tax credits.

Ford will take a $400 million cashless discount for the three-row electric SUV. Meanwhile, it said its actions could lead to an additional $1.5 billion in expenses and capital expenditures (capex).

The company also said that its investments dedicated to pure electric vehicles will be reduced from a planned mix of 40% to 30% in the future. It cited growing demand for hybrids around this decision, so it will likely devote more resources to hybrids going forward. Ford added that it will not produce new electric vehicle models unless it believes they can be EBIT (earnings before interest and taxes) positive in the first 12 months after launch.

Image source: Getty Images.

The declining growth of electric vehicles and the shift to hybrids

Ford’s announcement comes at a time when electric vehicle sales growth has slowed and competition in the space is growing. According to Kelley Blue Book, sales of electric vehicles in the US rose 11% in the second quarter. While that was a record, it marked a big slowdown from last year’s more than 50 percent increase in electric vehicle sales in the US.

At the same time, several companies introduced EV models to the market. However, this has led to some very steep discounts on some makes and models. For example, the new Kia EV9 sold for an average discount of $18,000 below MSRP (manufacturer’s suggested retail price) in June. To put that into context, the lead generation platform TrueCar lists the average customer offer for the popular hybrid and plug-in hybrid versions of the 2025 Kia Sportage above MSRP.

People have started to shy away from electric vehicles for a few reasons. One is that there is a concern about the longevity and cost of replacing batteries. While most EV batteries are expected to last over a decade and generally have solid warranties, the cost to replace them can be astronomical.

For example, the cost of replacing a Chevrolet Bolt’s battery is estimated to be between $17,000 and $19,000, including labor, while a adze The Model 3 battery costs between $15,000 and $18,000. This has led to some EVs seeing huge depreciation and concerns among consumers about having to spend more on battery replacement than a car might be worth.

At the same time, access to charging can be a problem for many potential EV car buyers. People who live in apartments or condos may not be able to charge their vehicles at home, while charging outside is generally not convenient or fast. Many people still worry about long journeys and electric vehicles running out of power.

Hybrids eliminate many of these worries. Non-plug-in hybrids do not need to be charged, instead getting their charge from regenerative breaking. They also take gas, so no worries about running out of power on long trips. Hybrids, meanwhile, have smaller batteries that cost less to replace.

Against this background, hybrid sales growth took off, with hybrid sales up 41% and plug-in hybrid sales up 49%.

Why Ford stock is now more attractive

In my opinion, Ford is making the right move by moving closer to hybrid vehicles. Electric vehicles will still play a role for the company, but it will be in segments where it has very strong positions, such as pickups.

However, hybrids are where consumer interest is right now. I don’t think this will change anytime soon, as it helps save fuel, but it alleviates many of the worries and ownership hurdles people may have with EVs. As such, modernizing its strategy should benefit the company in the long run.

Ford currently trades at a forward price-to-earnings (P/E) ratio of just over 5.7 and an enterprise value-to-EBITDA multiple of 11 times the basis, which is a premium to its rival. General Motors (NYSE: GM). However, this is likely due to GM’s high exposure to the Chinese market.

F PE Ratio data (before 1y) by YCharts.

Overall, I think Ford moving away from electric vehicles, where the company has accumulated losses, and moving to hybrids is a great strategic move. It shows increased focus because the company needed to show investors that it was moving away from money-losing businesses.

The company still has its work cut out for it and we’ll have to see how the economy holds up, but for now it’s a better long-term buy than it was before this move.