Ford to take $19.5 bn hit as it scales back EV push, shifts to hybrids

Ford said it will take $19.5 billion in charges mainly linked to its EV business, as weak demand forces the carmaker to scale back electric plans and focus more on hybrids and petrol vehicles

Ford Motor on Monday said it expects to take around $19.5 billion in charges, largely linked to its electric-vehicle (EV) business, as the company reshapes its strategy amid weak demand for EVs, The Wall Street Journal reported.

 

The charges underline how far Ford has retreated from its earlierEV ambitions. Since 2023, the company has lost $13 billion on its EV operations. Now, it plans to lean more heavily on gas-powered vehicles, hybrids and so-called extended-range electric vehicles, which use a gasoline engine to support the battery.

 

Shift away from loss-making EVs

 

Ford said the strategy change is aimed at exiting unprofitable assets and redirecting money earlier set aside for EVs into vehicles that can generate stronger returns.

 

“Instead of plowing billions into the future knowing these large EVs will never make money, we are pivoting,” Ford Chief Executive Jim Farley said in an interview. “We now know enough about the US market where we have a lot more certainty in this second inning” of reduced-emissions powertrains, he said.

 

Regulatory changes and slow consumer adoption have pushed US automakers to slow their transition to electric vehicles. Ford, which once made EVs the centre of its growth plans, is now among the companies making the biggest course corrections.

 

Focus on hybrids, affordable EVs

 

While pulling back from large, costly EVs, Ford said it is still committed to developing cheaper electric models. The company said it remains on track to launch a $30,000 electric pickup by 2027, which it expects to be the first of several low-cost EVs.

 

“Now this is the core of our EV strategy in America,” Farley said. “We’ve got to land the plane.”

 

As part of the shift, Ford will stop producing the all-electric F-150 Lightning pickup and instead offer an extended-range version of the truck. Plans for another electric truck and electric commercial vans have also been dropped, the news report said.

 

By 2030, Ford expects about half of its global vehicle sales to come from hybrids, extended-range vehicles and EVs, compared with 17 per cent this year. Hybrids are gaining traction worldwide as buyers see them as more affordable and practical than fully electric models.   

 

Battery plant to be repurposed

 

To generate new revenue, Ford said it will convert its Kentucky EV battery factory into a battery storage business. The site will supply stationary batteries to customers such as utilities, renewable energy developers and large data centres used for artificial intelligence, the news report said.

 

While Ford plans to hire thousands of workers across the US, around 1,600 employees at the Kentucky battery plant will be laid off as the facility is retooled.

 

In Kentucky, Ford and its former partner SK Group had invested nearly $6 billion in what was planned to be the largest single-site battery complex in the US. One building was never equipped, while the other ran below capacity making batteries for the now-cancelled electric F-150.

 

Financial impact and wider industry trend

 

The $19.5 billion charge includes $6 billion related to ending a joint venture with SK to build EV batteries in the US. Most of the charges will be booked in the fourth quarter.

 

Despite the write-down, Ford raised its earnings outlook, forecasting $7 billion in adjusted pretax earnings, up from an earlier range of $6 billion to $6.5 billion. In 2024, Ford reported net income of $5.9 billion on revenue of $185 billion, the news report said.

 

Other automakers are also scaling back. General Motors has written down EV assets and abandoned its plan to sell only electric vehicles by 2035.

 

Farley said high battery costs, cooling demand after the post-Covid-19 EV surge and the needs of truck buyers made Ford’s earlier strategy unworkable. He said that a mixed approach is the safer path forward. “This is a better solution for customers,” Farley said. “None of us really know what the future is going to be, but Ford knows enough about the future to know that this mix is the right mix.”