Ford Downshifts EV Rollout

Ford Motor Co., which has been an aggressive adopter of electric vehicle technology with models like the F-150 Lightning and the Mustang Mach-E, is slowing the introduction of some EVs and canceling others. 

“We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Ford vice chair and chief financial officer. “With pricing and margin compression, we’ve made the decision to a “We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Ford vice chair and chief financial officer. “With pricing and margin compression, we’ve made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”  

The company says that as the EV market has shifted from zealous early adopters to pragmatic mainstream customers, would-be buyers demand competitive pricing and a dependable public charging network.

In response, Ford is killing off its previously announced three-row SUV and will delay its next-generation, lower-cost electric pickup models by two years, until late 2027. Canceling the SUV will cost the company $400 million for product-specific manufacturing assets and a potential total bill of $1.5 billion. In its place, Ford will introduce a new hybrid-electric three-row SUV. With these changes, the next new EV from Ford will be a commercial van that will arrive in 2026.

The 2027 electric pickup will be the first model employing technology developed by Ford’s California-based Model E EV team. The company says that this group applied a systems-integration approach across design, engineering, supply chain, and manufacturing to fundamentally rethink the full vehicle for reduced cost and complexity. 

“The work of this highly talented team has evolved into a critical enabler of our electric vehicle strategy,” said Ford president and CEO Jim Farley. “These electric vehicles will be lower cost, and not compromised in any way.”

The company is refining its battery supply chain to cut the cost of its EVs too. “An affordable electric vehicle starts with an affordable battery,” Farley said. “If you are not competitive on battery cost, you are not competitive.”

With that in mind, Ford will shift some Mustang Mach-E battery production from Poland to Holland, Michigan, starting in 2025 to capture the tax benefit of the Inflation Reduction Act.

They will also turn to the BlueOval SK joint venture in Kentucky to provide cells for the Lightning and E-Transit van starting in mid-2025, which is earlier than previously planned. These cells will provide significant cost reduction, according to Ford.

At the same time, the BlueOval SK Tennessee plant will start making cells for the new commercial van by late 2025. And Ford will produce lower-cost lithium-iron-phosphate batteries in Michigan starting in 2026 for a supply of the lowest-cost batteries available.

“These product announcements indicate that a lot of what Ford had hoped to achieve in terms of cost savings and technology improvements from its Model E reorganization is still far from being achieved,” observed Sam Abuelsamid, principal analyst for transportation and mobility at Guidehouse Insights. “Whether this is due to not finding the savings of challenges in actually developing the new electric propulsion, electronic architecture, and software platforms is unclear, but it’s probably a combination of all of these.”

With the Hyundai Group continuing to accelerate its shift to EVs with models like the three-row Kia EV9 SUV that addresses the market Ford just abandoned, it is hard to imagine that these changes will leave Ford in a stronger position in the future. “The inability of Ford to develop a competitive, profitable lower cost EV in the near term is likely to be a major challenge going forward as it faces increased competition from the likes of Hyundai and Kia as well as the future potential from Chinese OEMs,” Abuelsamid noted.

Ford says it will provide another update on its EV strategy in the first half of next year.