Ford Takes $19.5 Billion Charge as It Scales Back Electric Vehicle Plans
Ford Motor Co. has announced a $19.5 billion charge linked to its electric vehicle (EV) investments, marking one of the most significant retreats yet from the auto industry’s earlier enthusiasm for electrification. The decision underscores a strategic shift toward conventional petrol and hybrid vehicles, aligning production more closely with current U.S. consumer preferences.
Details of the Financial Charge
According to Ford, around $8.5 billion of the total charge stems from costs related to scrapping several long-planned EV projects, including a large electric pickup truck once slated for production in Tennessee. An additional $6 billion reflects write-downs from the company’s now-ended battery joint venture with South Korea’s SK On.
The remaining $5 billion covers other programme-related expenses. Of the full amount, only $5.5 billion will affect cash flow, which Ford expects to absorb gradually between 2026 and 2027.
EV Models Abandoned
Ford is discontinuing its next-generation EVs, notably the large electric pickup and certain commercial vans. The Tennessee plant, originally designed to manufacture up to 500,000 EV trucks annually, will now produce petrol-powered models instead.
Moving forward, Ford’s EV efforts will centre on a range of affordable vehicles being developed by a specialist team in California. The first model from this initiative—a midsize pickup priced around $30,000—is expected to debut in 2027.
Managing Financial Losses
Ford’s EV division has been a major drag on profitability, with losses of about $5 billion in 2024 and similar deficits projected for this year. Executives attribute much of the strain to persistently high battery costs. By taking a substantial charge now, the company aims to reduce future losses and strengthen its financial position. Management anticipates the EV business will turn profitable by 2029.
Emphasis on Hybrid Expansion
In the near term, Ford plans to accelerate hybrid production. Hybrids—combining petrol engines with battery power—are expected to represent half of Ford’s global vehicle mix by 2030, up from 17% today.
The company also intends to redesign the fully electric F-150 Lightning into an extended-range hybrid truck. The new version will include a petrol generator to recharge the battery while driving, offering up to 700 miles of range without external charging or refuelling.
Entering the Battery Storage Market
Ford is investing $2 billion to establish a new battery storage business using facilities in Kentucky and Michigan. The operation will supply and service batteries for energy-storage systems, catering to the fast-growing demand from data centres supporting artificial intelligence technologies. Production is expected to ramp up over the next two years.
with inputs from Reuters