Ford’s $5 billion EV loss sparks strategic shift to hybrids

The trend of legacy automakers abandoning electric vehicle plans and investments continues, with Ford the latest to cancel plans for a large three-row electric sport utility vehicle, according to a new report from the Wall Street Journal.

The company will take $1.9 billion in special charges and write-downs as a result, the report said.

Ford is canceling due to pricing pressures and increased competition, opting instead to focus on hybrid versions of its popular Explorer and Expedition models.

This decision reflects a broader trend among automakers that we’ve written about over the past year or two, especially after the UAW squeezed negotiated the latest labor contracts from Detroit automakers.

In addition, consumer demand was weaker than anticipated, with concerns about costs and charging infrastructure. As a result of all these factors, combined with increased competition from China, traditional automakers are reducing EV investment. VW too announced that he was backing out from VE to focus on hybrids earlier this year, as I wrote in May.

Ford CFO John Lawler commented: “Depending on where the market is and where the customer is, we’ll pivot and adjust and make those tough decisions.”

WSJ reported on Tuesday that Ford also delayed the launch of a new electric pickup truck until 2027, marking its second delay, and cut its investment in EVs to 30 percent of its budget from 40 percent.

The company expects to lose $5 billion from its electric vehicle business this year, with a loss of about $44,000 per vehicle in the second quarter. Executives are focused on cutting losses and making sure future electric vehicles are profitable.

Despite plans to recalibrate to include more hybrids, Ford is continuing with more full electric vehicles, including an electric commercial van in 2026 and two new pickup trucks in 2027, according to report.

Farley said last month: “We believe the fitness of the Chinese in electric vehicles will eventually affect our entire industry in all regions.”

I wrote in June that nearly half of electric vehicle drivers in the US they had in mind switching back to gas. Forty-six percent of electric vehicle owners surveyed in the United States say they are likely to return to driving gasoline vehicles.

Globally, the survey of 30,000 respondents in 15 countries found that more than a quarter (29 percent) of electric vehicle owners will return to driving gasoline cars.

Remember in April we noted that Ford was “re-timing” its efforts to go electric and back in February we wrote that GM was also moving to plug-in hybrids.

CEO Mary Barra said on an earnings call in February: “Let me be clear, GM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035, but in the meantime, implementing technology plug-in in strategic segments will deliver results. some of the environmental or environmental benefits of electric vehicles as the nation continues to build this charging infrastructure.”

By Zerohedge.com

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