DETROIT (Reuters) - Ford Motor said on Wednesday it is reshuffling its electric vehicle plans, killing its three-row SUV and delaying its next-generation pickup while adding a new EV pickup and van to its future lineup, as it looks to cut costs and adjust to fluctuating demand for battery-powered models.
Slowing growth in demand for EVs has caused automakers such as Ford, General Motors and others to delay or cancel new models to avoid spending heavily on vehicles that consumers are not buying as quickly as anticipated. Ford shares rose 2.16% in early trading.
"With pricing and margin compression, we've decided to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT (earnings before interest and tax) within the first 12 months of launch for all new models," Ford Chief Financial Officer John Lawler said in a statement.
The Dearborn, Michigan automaker is doubling down on a strategy it has used in recent years, focusing on segments where it is already strong: pickup trucks and commercial vehicles.
Ford CEO Jim Farley has said one of the main solutions to slowing EV sales growth is bringing the production costs around those models down.
That is a key goal for the future health of the company, which is expected to lose up to $5.5 billion on EVs this year alone.
As Chinese competitors and Tesla continue to drive down costs on EV production, Farley has said he is staking the future of Ford on its specialized team in California, which has been developing an architecture for affordable EVs. The first vehicle based on that new technology will be a mid-size electric pickup released in 2027, the company said Wednesday.
European Commission made changes to its duties on imports of Chinese-made electric vehicles on Tuesday.
The automaker will take a special non-cash charge of about $400 million for the write-down of certain assets for the previously planned three-row SUVs, which may also result in additional expenses and cash expenditures of up to $1.5 billion.
Some automakers, such as Ford, have shifted their near-term focus to hybrid vehicle production as consumer concerns around EV pricing and charging infrastructure have made buyers wary of swapping their gas-engine vehicles for fully electric models.
MODERATING EV PLANS
"This is just the latest announcement from a traditional automaker to moderate EV growth plans in favor of hybrids," CFRA Research analyst Garrett Nelson said. "It’s largely a response to consumer demand, as the U.S. hybrid market is both larger and growing faster than the pure battery EV market."
Given the increasing emphasis on hybrids, Ford said its share of annual capital spending dedicated to pure EVs will decline to about 30% from 40%.
Ford said it will start making an electric commercial van at its Ohio Assembly plant in 2026, hoping to capitalize on its success in the gas-engine commercial vehicle market.
Meanwhile, the long-awaited successor to Ford's F-150 Lightning electric truck is again delayed, now to the second half of 2027 from an initially planned 2025 launch, a move the company said will allow it to take advantage of lower-cost battery technology.
While Ford is shelving plans to produce an electric three-row SUV, it is moving to hybrid vehicles in that segment, aiming to woo customers with longer-range vehicles for road trips.
Ford also said it will relocate some battery production to qualify for incentives under the U.S. Inflation Reduction Act (IRA) and further drive down costs, a top priority for Farley.
The carmaker will move some production of the batteries 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.