Ford scraps big EV plans, hopes to produce lower cost electric ute

Well that didn’t work out well, did it? Ford has torn up its electric vehicle strategy, scrapped plans for a large electric SUV, and decided instead to focus on lower cost and smaller electric cars and electric utes. It turns out that customers want to buy affordable vehicles, even when electric. Who knew?

“We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths,” CEO Jim Farley said in a statement issued this week.

Except it didn’t apply those learnings to electric vehicles.

The Ford statement admits what most others in the industry have known for a while. Chinese EV companies are better than this than they are. They do the cars better, and they do them cheaper, and despite its own best efforts, Ford has been losing about $US80,000 for every EV it produces.

“The electric vehicle market is rapidly evolving as Chinese competitors leverage advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences to expand their global market share,” the Ford statement says.

“In addition, today’s electric vehicle consumers are more cost-conscious than early adopters, looking to electric vehicles as a practical way to save money on fuel and maintenance, as well as time by charging at home.

“This, coupled with scores of new electric vehicle choices hitting the market over the next 12 months and rising compliance requirements, has amplified pricing pressures. These dynamics underscore the necessity of a globally competitive cost structure while being selective about customer and product segments to ensure profitable growth and capital efficiency.”

Ford’s electric rollout has been patchy. It has the Mach-e, which has done OK despite its relatively high price, and the enormous F150 Lightning electric pick up. Its done better in global markets with its electric Transit delivery van.

It had planned a three-row electric SUV, but decided that’s not going to work and will do a hybrid version instead. It’s going to write off $US400 million from that failure, and may write off a further $US1.9 billion as it recalibrates its business and fixed up its mistakes.

It promises a new electric van – to leverage off the success of the e-transit, and a new platform that will respond to buyer preferences and deliver a lower cost, “mid-sized” pickup, or electric ute, although that won’t be available until 2027.

And it is moving its battery manufacturing – particularly for the Mach-e – from Poland to the US, to cash in on the benefits of the Inflation Reduction Act. “An affordable electric vehicle starts with an affordable battery,” Farley said. “If you are not competitive on battery cost, you are not competitive.”

Uh, huh. Meanwhile, the only thing protecting the US market from the smarter Chinese EV manufacturers are stiff tariffs. But that might not be enough to protect the reputation of the US car makers, or protect them from their own follies.