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Although Ford Motor (NYSE:F) will continue to invest in EVs, it announced it will be delaying the production of an all-electric SUV and pickup truck in order to introduce hybrids across its North American lineup by the end of the decade. Ford’s shift comes as the entire automotive industry is in the process of rethinking its EV plans in response to the demand slowdown.
The EV venture is costly.
In 2023, Ford’s EV business lost $4.7 billion. In the fourth quarter alone, making e-models created a loss of $1.57 billion. In February, Ford guided for 2024’s loss to be in the range between $5 billion and $5.5 billion. Last year, Ford already announced its plans to delay or cancel $12 billion in planned EV spending due to challenges.
Therefore, it should come as no surprise that Ford decided to postpone the production of its three-row SUV at a plant in Canada from the initially planned 2025 to 2027. Moreover, the gigantic Tennessee facility that belongs to the $11.4 billion investment announced back in 2021, also pushed back the production of Ford’s next-generation all-electric truck named T3 from 2025 to 2026.
However, the additional time will enable Ford to take advantage of developing battery technology. Ford confirmed it is continuing construction of its battery plants in Michigan, Tennessee and Kentucky. For example, producer of truck bed tonneau covers for pickups committed to creating clean energy automotive accessories and solutions, recently revealed its strategic move to integrate Gallium Nitride semiconductors in its upcoming products to deliver unparalleled efficiency, performance and durability. Worksport will also be bringing its solar-powered tonneau cover SOLIS and portable battery system COR to the market this summer. Earlier this year, Worksport confirmed that it will develop its power duo COR battery bundle for the requirements of the F-150 Lightning, providing its drivers with with off-grid solar power.
Ford had a good first quarter.
During the first quarter, Ford was just behind Tesla Inc (NASDAQ:TSLA) in E sales. However, as a company, it came after Tesla and Hyundai Motor Company (OTC:HYMTF) when Kia and Genesis are included. Hyundai outsold Ford when it comes to EVs. Interestingly, Hyundai also tapped Worksport back in 2022 for the innovative tonneau-cover maker to develop a prototype of the SOLIS and a customized version of the COR for the dimensions of the Hyundai Santa Cruz.
During the first three months of 2024, Ford reported its EV sales rose 86% YoY while hybrid sales rose 42% YoY, leaving behind their internal combustion engine counterparts whose sales rose 2.6%.
EV euphoria might not be necessarily dead, but reality kicked in.
High production costs and hefty prices are a barrier to mass production kicked in, one that even Tesla still didn’t succeed to annul. On Thursday, Ford CEO Jim Farley summed up Ford’s approach as its focus use capital wisely and bring the right mix of traditional, hybrid and all-electric vehicles at the right time. As the second EV brand in the U.S. over the past two years, just behind the EV king Tesla itself, Ford wants its next-generation EVs to be new from ground up to maximize its odds for the breakthrough it needs. In simple words, Ford is opting for a cautious approach not because of gone EV euophoria but because it is trying to be wise.
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This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.
