In a surprising turn of events, Ford Motor Company has abandoned its plans to manufacture a three-row electric sports utility vehicle (SUV). This decision could potentially cost the American carmaker up to $1.9 billion, as car buyers show lacklustre enthusiasm for electric vehicles and increased competition forces manufacturers to reduce prices. The scrapped model, according to Ford, would not have been profitable in the first year after launch. This assessment takes into account the more cost-conscious nature of current EV buyers compared to early adopters, as well as the numerous new models set to enter the market within the next 12 months, which will likely put downward pressure on prices.
The slowing growth in demand for EVs and heightened competition has led carmakers, including Ford, General Motors, and others, to postpone or cancel new models. Consumers have been hesitant to switch from petrol-engine vehicles to EVs due to higher prices and unreliable charging infrastructure. Ford anticipates that this strategic shift will cost up to $1.9 billion, including a $400 million write-down of assets for the previously planned three-row SUVs and additional costs of up to $1.5 billion.
Jim Farley, Ford’s chief executive, has emphasized that reducing production costs for EV models is one of the primary solutions to slowing EV sales growth and achieving the company’s future health, as it is expected to lose up to $5.5 billion on EVs this year alone. As part of this strategic adjustment, Ford will reduce the percentage of its annual capital expenditure allocated to purely electric vehicles from 40% to 30%. The company plans to launch a new electric commercial van in 2026, as business customers show a stronger appetite for EVs.
However, the successor to Ford’s F-150 Lightning electric truck has been delayed to the second half of 2027 from its initially planned 2025 launch, allowing the company to take advantage of lower-cost battery technology. Analysts have questioned why Ford’s product plan was not more flexible from the beginning and why it has been slow to implement these changes. The company’s shares rose 0.17, or 1.6%, to 10.85 in New York on Wednesday following the announcement.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.