Ford’s Shift in Strategy: Hybrid Focus Amid Losses
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Ford Revises Electric Vehicle Strategy Following Significant Losses in the First Half of the Year
In response to substantial losses reported in the first half of the year, Ford is overhauling its electric vehicle (EV) strategy, shifting its focus towards hybrid powertrains instead of fully electric large SUVs, as reported by Manager Magazin.
The company is planning to launch two new electric pickup trucks and a van. These vehicles are expected to be more affordable, have a longer range, and become profitable within just a year of their market introduction. This strategic shift aims to ensure long-term financial savings for the automaker.
$44,000 Loss per Vehicle: Ford’s Struggles with Electric Cars
Ford has decided to scale back its investment in electric vehicles. Previously, 40 percent of its annual budget was allocated to EV development; however, this figure is now being reduced to 30 percent. Consequently, large SUVs with three rows of seats will no longer be exclusively electric.
Despite this reduction in investment, according to Ford representative Jim Farley, these upcoming electric vehicles are expected to be more cost-effective. Nonetheless, Ford is projected to incur a loss of $5 billion from its electric vehicle division in 2024 alone. Currently, the company loses $44,000 on every electric vehicle it sells.
$1 Billion in Costs: Expensive Plans Ahead
As per Manager Magazin, Ford’s decision to cease production of fully electric large SUVs is expected to result in write-downs of $400 million (approximately €359 million). Additionally, the company anticipates incurring costs of up to $1.5 billion (approximately €1.35 billion) as a result of this strategic pivot.
This move is a direct response to the current state of the EV market. During the COVID-19 pandemic, there was a surge in demand for electric vehicles, which led to significant profits and sales for Tesla. However, the demand has since declined, impacting the broader electric vehicle market, including Ford’s sales.
