Ford slows EV plans, delays takeover and ditches three-row SUV to cut costs

Ford Motor said Wednesday it is killing a planned three-row electric SUV and rejecting a new electric version of its best-selling F-150 pickup, the latest delay by the U.S. automaker as it focuses on cutting costs to stimulate demand. .

Ford, General Motors and other automakers have delayed or canceled new electric models to avoid spending heavily on vehicles that consumers aren’t buying as quickly as anticipated.

“With pricing and margin compression, we have taken the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of achieving positive EBIT (earnings before interest and tax) in the first 12 months from launch for all new models. John Lawler, Ford’s chief financial officer, said in a statement.

Ford also said it is adding a new pickup truck and an electric mid-size van to its upcoming lineup as it doubles down on a strategy it has used in recent years to focus on segments where it is already strong: pickup trucks and commercial vehicles. Ford shares rose 1.1 percent.

Instead, the Dearborn, Michigan-based automaker has invested more in hybrid vehicles, which combine an electric motor with a gasoline engine. Hybrid sales by Ford, Toyota 7203.T and other automakers have grown as consumers turn to the technology as a less expensive halfway point between gas cars and electric vehicles.

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“The criticism Ford must face is why its product plan wasn’t more flexible from the start, why it was slow to implement these changes, and why investors will have to wait until next year for a comprehensive update,” Bernstein analyst Daniel said. Roeska said in a research note.

Ford CEO Jim Farley said one of the main solutions to slowing electric vehicle sales growth is to cut production costs around those models. That’s a key focus for the future health of the company, which expects to lose as much as $5.5 billion on electric vehicles this year alone.

As Chinese rivals and Tesla continue to drive down the cost of producing electric vehicles, Farley said he is staking Ford’s future on his specialized team in California that has developed an architecture for affordable electric vehicles. The first vehicle based on this new technology will be THE mid-size electric pickup truck launched in 2027.

The automaker will take a special, non-cash charge of about $400 million to write down certain assets for the previously planned three-row SUV, which may also result in additional expenses and cash outlays of up to 1.5 billion dollars.

Given the growing focus on hybrids, Ford said its share of annual capital spending dedicated to pure electric vehicles will drop to about 30 percent from 40 percent.

“Affordable Battery”

Ford said it will begin producing an electric commercial van at its Ohio assembly plant in 2026, hoping to capitalize on its success in the gas-powered commercial vehicle market.

Meanwhile, the long-awaited successor to the Ford F-150 Lightning electric truck is being pushed back again, now to the second half of 2027 from an originally planned 2025 launch, a move the company says will allow it to take advantage of battery technology with lower costs. .

While Ford is considering plans to produce a three-row electric SUV, it is moving to hybrid vehicles in the segment, aiming to attract customers with longer-range vehicles for road trips.

Ford also said it would relocate some battery production to qualify for incentives under the US Inflation Reduction Act (IRA) and further reduce costs, a top priority for Farley.

The automaker will move part of the battery production it makes with South Korean battery partner LG Energy Solution for its Mustang Mach-E cars from Poland to Holland, Michigan.

“An affordable electric vehicle starts with an affordable battery,” Farley said in the statement.

Another battery joint venture, with Kentucky-based SK Innovation, will begin producing cells for the E-Transit van starting in mid-2025 and batteries for Ford’s new electric commercial van in Tennessee in late 2025.

The automaker said production of lithium iron phosphate (LFP) batteries is on track to begin in 2026 at its Michigan battery farm and will qualify for IRA benefits.

Ford is licensing technology from Chinese company CATL for its LFP batteries, a deal that has been heavily criticized by some lawmakers. The terms of that agreement are unchanged, a Ford spokesman said.

Ford said it will provide an update on electrification, technology, profitability and capital requirements in the first half of 2025.

(Reporting by Nora Eckert, additional reporting by Nathan Gomes in Bengaluru and Ben Klayman in Detroit; Editing by Louise Heavens, Bernadette Baum and Tomasz Janowski)