US car giant Ford is to take a massive $US19.5 billion ($A29.3 billion) hit to its profits so that it can pivot away from electric vehicles (EVs) and back towards internal combustion engine (ICE) and hybrid models, a move which will see the death of several planned electric models and the dissolution of a battery joint venture with South Korea’s SK On.
The decision by Ford to turn tail and run away from EVs has been a long time coming, with lower-than-expected sales, increased costs, and the schizophrenic nature of American policy under the second Trump administration all contributing to soften the company’s EV ambitions.
But the scale of Ford’s new plans has still taken many by surprise.
Ford is billing this new “decisive redeployment of capital” as an effort to “meet customer demand and drive profitable growth” and shift to “higher-return opportunities”.
The decision to halt production of “select larger electric vehicles where the business case has eroded” was therefore blamed on “lower-than-expected demand, high costs, and regulatory changes.”
“This is a customer-driven shift to create a stronger, more resilient and more profitable Ford,” said Jim Farley, Ford president and CEO.
“The operating reality has changed, and we are redeploying capital into higher-return growth opportunities: Ford Pro, our market-leading trucks and vans, hybrids and high-margin opportunities like our new battery energy storage business.”
Among the electric vehicles Ford has relegated to the dustbin of its history is the F-150 Lightning which, as was reported separately, will reemerge next year as a so-called EREV (extended range electric vehicle) with a fossil fuel generator on board to boost the battery range.
Ford is also scrapping a previously planned new electric commercial van for Europe and a planned electric commercial van for North America, which the company says it will replace with a new and “affordable” commercial van with gas and hybrid variants.
Scrapping these EVs will make way for what Ford describes as its “plan to launch five new affordable vehicles by the end of the decade” – using the word “affordable” again and again in its announcement as if by sheer repetition the company’s PR department might be able to stave off the inevitable criticism.
But the underlying explanation behind the company’s thinking is highlighted by its decision to rename the Tennessee Electric Vehicle Center to the Tennessee Truck Plant, which will produce “new affordable gas-powered trucks” in 2029 and its target of 50 per cent for hybrids, EREVs, or BEVs by 2030.
At least Ford’s obsession with ‘affordability’ has ensured that it will continue development of its new low-cost and flexible Universal EV Platform, which is intended to underpin a family of smaller and “affordable” EVs.
The first car to be built on this Universal EV Platform is expected to be a fully connected midsize pickup truck that will be assembled at the company’s Louisville Assembly Plant starting in 2027.
Somewhat tellingly, however, in a separate announcement last week, Ford revealed a plan for Europe which includes a new lineup of “electrified” passenger vehicles, at least two of which will be developed through a new strategic partnership with French automaker Renault and built on Renault’s Ampere platform.
These two EVs are expected to make it into European showrooms in 2028.
Ford’s CEO Jim Farley rather embarrassingly felt he had to explain that “As an American company, we see Europe as the frontline in the global transformation of our industry.
“How we compete here — how we innovate, partner, and invest — will write the playbook for the next generation. We are committed to a vibrant future in Europe, but that future requires us to move with greater speed and efficiency than ever before.”
But the subtle finger-pointing at US president Donald Trump was undone by Ford’s president of its European operations, Jim Baumbick, who reiterated his company’s increasing commitment to undermining the global electric transition by weighing in on the ongoing debate around Europe’s current commitment to end the sale of all cars and vans with internal combustion engines.
According to Baumbick, “We need to enable everyone to benefit from electrification and letting customers choose — whether that’s fully electric or hybrid vehicles.
“It is about making the transition more attractive and more affordable for all consumers and businesses, stimulating demand rather than stifling it.”
In pursuit of this supposed democratisation of automotive policy, Ford essentially called on Europe to abandon the ban on hybrid vehicles by 2035 in favour of “a realistic and reliable 10-year planning horizon”.
Back in Ford’s hometown America, the company’s new direction has also resulted in the dissolution of its battery joint venture, BlueOval SK, with South Korean company SK On.
The two companies invested $US11.4 billion back in 2022 to build joint battery plants in Kentucky and Tennessee. However, as of last week, the joint venture will be dissolved, with Ford walking away with the Kentucky battery plants and SK taking ownership of the Tennessee plant.
Separately, in another sliver of good news, Ford has committed to making smaller Amp-hour battery cells for use in residential energy storage solutions at its BlueOval Battery Park Michigan in Marshall, Michigan.
This ensures that the plant also remains on track to begin manufacturing lithium iron phosphate (LFP) prismatic battery cells in 2026 to power Ford’s first EV built on its Universal EV Platform.
The cost for Ford’s decision to abandon EVs is high, with the company expecting to record a $US19.5 billion writedown, spread primarily in the fourth quarter but spread through next year and into 2027.
About $US8.5 billion of this is related to cancelling its planned EV models, $US6 billion to the dissolution of its joint venture with SK On, and $US5 billion to so-called “program related expenses”.
Joshua S. Hill is a Melbourne-based journalist who has been writing about climate change, clean technology, and electric vehicles for over 15 years. He has been reporting on electric vehicles and clean technologies for Renew Economy and The Driven since 2012. His preferred mode of transport is his feet.