Article 1 of 2 A Ford Electric E-Transit is displayed on the forecourt of a Ford dealership in Stoke-on-Trent, Britain, September 20, 2023. REUTERS/Carl Recine/File Photo
(1/2)A Ford Electric E-Transit is displayed on the forecourt of a Ford dealership in Stoke-on-Trent, Britain, September 20, 2023. REUTERS/Carl Recine/File Photo Purchase Licensing rightopens new tab
DETROIT, Aug 21 (Reuters) – Ford Motor (FN)opens new tab said on Wednesday that it was putting on hold the release of a planned three-row electric SUV and the release of a new electric version of its best-selling pickup truck, the F-150, the latest delay by the U.S. automaker as it focuses on cutting costs to stimulate demand.
Ford, General Motors (GM.N)opens new tab and other automakers have delayed or canceled new electric models to avoid spending heavily on vehicles that consumers are not buying as quickly as expected.
“Given price and margin compression, we have made the decision to adjust our product and technology roadmap and our industrial footprint to achieve our goal of achieving positive EBIT (earnings before interest and taxes) within the first 12 months of the launch of all new models,” Ford CFO John Lawler said in a statement.
Ford also announced that the company will expand its future product range to include a new mid-size pickup truck and van with electric drive. The company is thus continuing a strategy that it has pursued in recent years. The group is focusing on segments in which the company is already strong: pickup trucks and commercial vehicles. Ford shares rose 1.1 percent.
The Dearborn, Michigan-based automaker has instead invested more in hybrid vehicles that combine an electric motor with a gasoline engine. Ford, Toyota Hybrid Sales (7203.T)opens new tab and other automakers have seen a resurgence as consumers view the technology as a more cost-effective middle ground between gasoline-powered cars and electric vehicles.
“Ford faces criticism over why its product roadmap was not more flexible from the start, why implementation of these changes has been so slow, and why investors will have to wait until next year for a comprehensive update,” Bernstein analyst Daniel Roeska said in a research note.
Ford CEO Jim Farley said one of the key solutions to slowing growth in electric car sales is to reduce production costs for these models. That’s an important goal for the future health of the company, which is expected to lose up to $5.5 billion on electric cars this year alone.
As Chinese competitors and Tesla (TSLA.O)opens new tab Farley has said he is betting Ford’s future on its specialized team in California that is developing an affordable electric vehicle architecture to further reduce the cost of producing electric vehicles. The first vehicle based on this new technology will be the midsize electric pickup truck, which will launch in 2027.
The automaker will take a non-cash charge of approximately $400 million to write off certain assets for the three-row SUVs it plans to build, which could also result in additional costs and cash expenditures of up to $1.5 billion.
Given the increasing importance of hybrid vehicles, Ford announced that the share of annual capital expenditure on pure electric vehicles would decrease from 40% to about 30%.
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Ford announced that it will begin producing an electric delivery truck at its Ohio assembly plant in 2026, hoping to capitalize on its success in the gasoline-powered commercial vehicle market.
Meanwhile, the release of the long-awaited successor to Ford’s F-150 Lightning electric truck has been delayed again: the market launch, originally planned for 2025, has now taken place in the second half of 2027. The company says this step will allow it to use more cost-effective battery technology.
While Ford is shelving its plans to produce an electric SUV with three rows of seats, the company is focusing on hybrid vehicles in this segment and wants to attract customers with vehicles with longer range for road trips.
Ford also announced it will relocate some of its battery production to qualify for U.S. Inflation Reduction Act (IRA) incentives and further reduce costs, a top priority for Farley.
The automaker will outsource part of its battery production to South Korean battery partner LG Energy Solution (373220.KS).opens new tab 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 SK Innovation (096770.KS)opens new tab in Kentucky, will begin producing cells for the E-Transit van in mid-2025 and will begin producing batteries for Ford’s new electric commercial vehicle van in Tennessee at the end of 2025.
The automaker said production of lithium iron phosphate (LFP) batteries should begin at its Michigan battery park in 2026 and will be eligible for IRA benefits.
Ford licenses technology from Chinese company CATL (300750.SZ)opens new tab for its LFP batteries, an agreement that has been heavily criticized by some politicians. The terms of that agreement remain unchanged, a Ford spokeswoman said.
Ford announced it will provide an update on electrification, technology, profitability and capital requirements in the first half of 2025.
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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
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Nora Eckert covers the automotive industry from Detroit. Her focus is on the Big Three automakers, the UAW, and the transition to electric vehicles more broadly. She was previously an automotive industry reporter at The Wall Street Journal in Detroit, where she covered news about major automakers like Ford, as well as the auto union’s historic six-week strike in 2023. Her previous work with the newspaper’s investigative team, which examined how the Covid-19 pandemic devastated nursing homes, was named a finalist for the 2021 Pulitzer Prize. Before moving into automotive reporting, Nora was an investigative reporter at the Rochester Post Bulletin in Minnesota. Her series on the state’s organ transplant system won the Minnesota Newspaper Association’s Best Investigative Story of 2022 award. A Wisconsin native, Nora holds a master’s degree in journalism from the University of Maryland, College Park, and attended St. Norbert College as an undergraduate.
