Ford is taking a step back from its ambitious electric vehicle (EV) plans after revealing significant financial losses. Recent reports indicate the automaker is scaling down its orders of EV batteries following an alarming $100,000 loss per EV sold in its Model e division.
This strategic recalibration was detailed in a Bloomberg report, where anonymous sources confirmed Ford’s partnerships with key battery suppliers, including SK On, LG Energy Solution, and Contemporary Amperex Technology Co. Ltd. (CATL), will remain intact despite the cutbacks.
Forecasting the Extent of EV Unit Losses
In Ford’s Q1 2024 earnings call, CEO Jim Farley shared a grim forecast of the company’s EV unit losses, predicting a staggering $5.5 billion deficit this year. “Model e is the main drag on the whole company right now,” Farley emphasized, acknowledging the immense financial burden of the EV division on Ford’s broader operations.
Scaling Back Ambitious EV Plans
The decision to reduce battery orders aligns with Ford’s broader strategy to pivot towards gas and hybrid vehicles. This is particularly evident after the company’s October announcement to delay a $12 billion EV investment. In April, Ford revealed further adjustments by postponing the launch of a three-row EV and a next-generation electric pickup, despite EV sales reaching an all-time high.
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Impact on the F-150 Lightning
Company’s recalibration also affected its highly anticipated F-150 Lightning, which saw production paused in February. The company opted to focus on delivering gas-powered versions of the truck instead. Two-thirds of the F-150 Lightning workforce were affected by this shift, offered alternative roles or retirement packages as Ford aimed to streamline its operations. Production and deliveries of the electric pickup resumed in April, accompanied by significant price cuts across various configurations to stimulate interest.
Ford’s EV Strategy Shift: Navigating Complex Challenges
Company’s decision to scale back its EV ambitions reflects the complex challenges automakers face in the rapidly evolving electric vehicle landscape. While demand for EVs is growing, the high production costs and competitive market pose significant hurdles. Ford’s cautious approach signals a pragmatic acknowledgment of these realities while reaffirming its long-term commitment to electrification through sustained partnerships with key battery suppliers.
