Ford To Trade In Its EV Plans For Hybrids Amid Stiff Rivalry

As the electric vehicle (EV) market fills up with a wide range of automobile manufacturers offering a diverse range of products based on pricing, sizes and utility, some automakers are facing the challenge of producing cost-effective vehicles.

This includes 120-year-old, globally renowned Ford, which announced some changes in its business plans.

So, what is the company’s new plan regarding its vehicles? Let’s explore!
 

What Did Ford Reveal About Its New Plan?

 

• Through a news release published on its website, Ford Motor Company said it will turn its initiative to produce vehicles with lower CO2 emissions into a more profitable and capital-efficient business model.

• This includes offering more propulsion choices for customers in North America, including hybrid vehicles.

• The company’s new roadmap will expand to offer a range of EV options designed to enhance customer adoption based on factors such as lower prices and longer ranges.

• The move comes as the company faces stiff competition from Chinese automakers, such as BYD and more, who leverage low-cost engineering, advanced battery technology, digital experiences and unique cost structures.

• Furthermore, today’s EV customers are more cost-conscious and are looking for savings in charging cost and time.

• With the addition of new EVs coming onto the market over the next year, Ford is facing pricing pressure, leading it to imbibe globally competitive cost structures and selective customer and product segments to garner profitable growth.

 

What Does Ford’s New Plan Consist Of?

 

• As such, for its next three-row SUVs, Ford is planning to leverage hybrid technologies, replacing its previous plan to produce all-electric three-row SUVs, which will be scrapped.

• This also included Ford readjusting its product range and realigning its United States battery sourcing plan to reduce costs, maximize capacity utilization and support current and future electric vehicle production.

• The move could end up costing Ford $1.5 billion in further expenses, while the company will take a special non-cash charge of about $400 million for the write-down of certain product-specific manufacturing assets.

• On the other hand, delivering on the demand for hybrid vehicles will allow Ford to reduce its annual capital expenditures dedicated to pure EVs from around 40% to 30%.

• John Lawler, Ford Vice Chair and Chief Financial Officer, said, “We’re committed to creating long-term value by building a competitive and profitable business.”

• [Contd.] “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 [earnings before interest and taxes] within the first 12 months of launch for all new models.”

• Accelerating the mix of battery production in the US can improve Ford’s profitability by qualifying the company for the Advanced Manufacturing Tax Credit.

• However, Ford will still offer EVs, with the next generation of its EVs coming in the form of a commercial van starting in 2026.

• The company will also bring in a new digitally advanced commercial van in 2026, two new advanced pickup trucks in 2027 and other future affordable vehicles.

• Its next-generation electric truck will build on the company’s heritage of a century-long heritage of truck leadership and the best-selling electric truck in the US, the Ford F-150 Lightning.

• It will also reschedule its groundbreaking electric truck code-named “Project T3” to the second half of 2027.

 

What Did Ford’s President And CEO Say?

 

• Jim Farley, Ford President and CEO, said, “We are committed to innovating in America, creating jobs and delivering incredible new electric and hybrid vehicles that make a real difference in CO2 reduction.”

• “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.”

• “We recruited the most technically skilled and creative professionals from inside and outside Ford to drive a radical change in how we develop an electric vehicle. The work of this highly talented team has evolved into a critical enabler of our electric vehicle strategy. These electric vehicles will be lower cost, and not compromised in any way.”

• “As the global leader in pickup trucks, we are future-proofing this valuable franchise across all sizes with hybrid, electric and other electrified propulsion options, giving individual customers and businesses choice based on how they use their trucks.”

Ford's move follows a recent report by McKinsey & Company that found 29% of global current EV owners are considering switching back to traditional internal combustion engine (ICE) vehicles.

The same report found that the number was higher in the United States, where 46% of EV owners are thinking about the switch back, joined by Australia (49%), Brazil (38%), China (28%), Germany (24%) and others too.

Do you think this move will help Ford improve its sales and capture a better position in the automobile market? Do you think the plan to produce more hybrid vehicles will inspire other automakers to make similar moves?

Let us know in the comments below!