Molly Ayala
Ford Motor Company has been losing money on its electric vehicles, with reports suggesting that the company is losing $100,000 on every EV sold. This has led to Ford slowing down its EV plans, delaying production, and cutting costs. The company has paused spending on a new EV factory in Kentucky and is instead focusing on cutting costs to stimulate demand and investing in hybrid vehicles. Despite this, Ford has stated that it will start making an electric commercial van in 2026 and plans to release a mid-sized electric pickup in 2027.
| Characteristics | Values |
|---|---|
| Is Ford dropping electric vehicles? | No, but Ford has slowed down its EV plans, delayed its pickup, and axed its three-row SUV. |
| Reason for slowing down EV plans | Ford is losing $100,000 on every EV it sells. |
| Alternative focus | Hybrid vehicles, which combine an electric motor with a gasoline engine. |
| Future plans | Ford is adding a new electric mid-sized pickup and van to its future lineup. |
| Future plans | Ford is planning to release a mid-sized electric pickup in 2027. |
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What You'll Learn
Ford's losses on electric vehicles
Ford Motor Company (F.N) withdrew its full-year results forecast in October 2023 due to "uncertainty" over the ratification of its deal with the United Auto Workers (UAW) union. The company also warned of continued pressure on its electric vehicle (EV) business, causing its shares to drop more than 4% after hours.
Ford lost an estimated $36,000 on each of the 36,000 electric vehicles it delivered to dealers in the third quarter of 2023. This loss was even higher than the $32,350 per EV loss in the second quarter. As a result, Ford's Chief Executive Officer, Jim Farley, announced plans to slow down investments in money-losing EVs and shift focus to their gas-electric hybrids.
The company's EV losses were attributed to customers' unwillingness to pay premiums for electric vehicles over gas or hybrid cars. This led to a decrease in EV prices and profitability. The high cost of EVs and the dominance of Tesla in the market further contributed to Ford's challenges.
Ford's decision to pause its $12 billion investment in a new EV factory in Kentucky reflects softening EV demand and customer resistance to premium prices. The company's electric F-150 Lightning Flash, a mid-priced electric truck, was introduced to cater to customers' preferences. However, Ford also cut one of the three shifts at the plant that builds this model.
While Ford's electric vehicle business faces setbacks, its Ford Pro commercial vehicle business and Ford Blue combustion and hybrid vehicle business have reported higher year-on-year revenue, EBIT, and EBIT margins.
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Slowing production of electric models
Ford has slowed down its production of electric vehicles (EVs) due to softening demand and premium pricing. The company has paused spending on a new EV factory in Kentucky, as it focuses on cutting costs to stimulate demand. This decision comes as customers are reluctant to pay high prices for EVs, resulting in Ford losing $100,000 on every EV sold, despite an 86% increase in sales in the first quarter of 2024.
Ford is not the only automaker facing this challenge. General Motors has delayed the production of its new electric trucks and SUVs, and Tesla CEO Elon Musk has expressed concerns about interest rates. Ford has responded to the changing EV landscape by adjusting its product roadmap and focusing on segments where it is already strong, such as pickup trucks and commercial vehicles. The company is also investing in hybrid vehicles, combining electric motors with gasoline engines, to woo customers with longer-range vehicles for road trips.
Ford has delayed the release of its electric pickup, the F-150 Lightning, from 2025 to the second half of 2027. This delay will allow Ford to take advantage of lower-cost battery technology and improve its profitability. Additionally, Ford has cancelled its plans for a three-row electric SUV, opting instead to develop hybrid vehicles in this segment.
Ford is not giving up on EVs entirely. The company has stated that it will start making an electric commercial van at its Ohio Assembly plant in 2026, leveraging its success in the gas-engine commercial vehicle market. Ford is also staking its future on its specialized team in California, which is developing affordable EV technology. The first vehicle based on this new technology will be the mid-sized electric pickup released in 2027.
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Delaying electric pickup trucks
Ford has delayed the release of its electric pickup truck, the F-150 Lightning, from 2025 to 2027. This delay is part of Ford's decision to slow down its electric vehicle (EV) plans, including pushing back new models and cutting costs. The company aims to focus on segments where it is already strong, such as pickup trucks and commercial vehicles, while also investing in hybrid vehicles.
Ford's decision to delay the electric pickup truck is influenced by softening EV demand and customer reluctance to pay premium prices. The company has stated that it will let customer demand dictate how many EVs it produces, and the delay will allow Ford to take advantage of lower-cost battery technology. This strategy is not unique to Ford, as other carmakers like General Motors have also delayed or canceled new electric models to avoid heavy spending on vehicles that consumers are not buying as expected.
The F-150 Lightning is a highly anticipated electric truck, and despite the delay, Ford remains committed to the EV market. The company has released other electric vehicles, such as the Mach-E and E-Transit, and continues to invest in developing affordable EVs. However, Ford has faced financial challenges, with reports claiming that the company is losing $100,000 on every EV it sells, impacting its overall profitability.
While Ford's decision to delay the electric pickup truck may be a strategic move to manage costs and address demand dynamics, it also highlights the challenges faced by the automotive industry in the transition to electric vehicles. Ford's approach underscores the importance of balancing customer expectations, technological advancements, and financial considerations in the evolving EV market.
The delay in the release of Ford's electric pickup truck could have implications for both consumers and the industry. Consumers eager to adopt electric vehicles may need to wait longer or explore alternative options. Additionally, the delay could impact the overall pace of EV adoption and potentially influence the strategies of other automakers navigating the transition from traditional combustion engines to electric powertrains.
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Axing three-row electric SUVs
Ford has been losing money on its electric vehicles (EVs) despite rising sales. In fact, according to Bloomberg, Ford lost $100,000 on every EV sold in the first quarter of 2024, with the Model e division losing as much as the entire company gained. As a result, Ford has slowed down its EV plans, including delaying its pickup truck and axing its planned three-row electric SUV.
Ford is not alone in its struggles with EV production. General Motors has pushed back production of its new electric trucks and SUVs, and Tesla CEO Elon Musk has expressed concerns about interest rates. With softening demand and customers balking at premium prices, Ford has decided to tap the brakes on big projects. The company has paused about $12 billion in spending on a new EV factory in Kentucky and is instead investing in hybrid vehicles, which combine an electric motor with a gasoline engine.
Ford's decision to axe the three-row electric SUV is part of a broader strategy to cut costs and stimulate demand. The company has stated that it will focus on segments where it is already strong, such as pickup trucks and commercial vehicles. Ford is also relocating some battery production to qualify for incentives under the U.S. government. By delaying the launch of the three-row electric SUV, Ford aims to take advantage of lower-cost battery technology in the future.
While Ford is shelving its plans for a three-row electric SUV, there have been calls for the company to bring back the Ford Flex as an electric vehicle. With little competition in the three-row EV space, an electric Flex with good range and fast charging could be successful in the non-luxury market. However, it remains to be seen whether Ford will act on this idea or stick to its current strategy of focusing on hybrids and strong segments.
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Customers balking at premium prices
In late 2023, Ford paused its investment in a new EV factory in Kentucky, citing softening demand and customers' reluctance to pay premium prices. The company's $12 billion in spending on electric vehicles (EVs) was put on hold as a result of this decision.
Ford is not the only company facing these challenges. General Motors has also delayed the production of its new electric trucks and SUVs, and Tesla CEO Elon Musk has expressed concerns about interest rates. The high prices of EVs seem to be a significant factor in customers' purchasing decisions, with many potential buyers experiencing "sticker shock" and choosing to keep their wallets closed.
To address this issue, Ford released the F-150 Lightning Flash, a mid-priced trim of its electric truck. However, the company acknowledged that customers would ultimately decide the number of EVs it produces, indicating a shift in power dynamics in the automotive industry.
Despite the challenges, there are opportunities for Ford to innovate and adapt to changing market demands. For instance, there is a suggestion to bring back the Ford Flex as an EV, which could attract families looking for three-row EVs and provide competition in the non-luxury market. However, it remains to be seen whether Ford will take on this suggestion and how quickly they can respond to the evolving landscape of the automotive industry.
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Frequently asked questions
No, Ford is not dropping electric vehicles. However, they have slowed down their EV plans and delayed the production of some models, such as the F-150 Lightning electric truck, to cut costs.
Ford has stated that they are slowing down their EV plans to cut costs due to softening demand and premium prices that customers are balking at. The company has also mentioned that they will focus more on hybrid vehicles, which combine an electric motor with a gasoline engine.
No, Ford is not the only carmaker slowing down its EV plans. Other companies such as General Motors, Stellantis, and Mercedes-Benz have also delayed or cancelled new electric models due to various reasons, including production costs and doubts over electric ambitions.
Yes, Ford is still investing in EV development, particularly in its specialized team in California, which is working on affordable EVs. Ford has also mentioned that it will start making an electric commercial van at its Ohio Assembly plant in 2026 and plans to release a mid-sized electric pickup in 2027.
