Ford cancels plans for electric SUV
Automaker cancels large electric SUV and expects to take $1.9 billion in related special charges and writedowns.
Ford Motor is cancelling plans for a large electric sport-utility vehicle and expects to take US$1.9 billion in related special charges and writedowns, as automakers continue adjusting their EV plans because of softer-than-expected demand.
The Dearborn, Mich., automaker said it is scrapping plans for an electric three-row SUV, citing tough pricing pressure as automakers resort to aggressive discounts to move their EVs. This spring, Ford had said it would delay plans for that model by two years, to a 2027 release date.
Ford instead will offer hybrid gas-electric versions of future large, three-row SUVs, a popular vehicle category that includes the brand’s Explorer and Expedition nameplates.
The company’s moves are the latest example of automakers unwinding EV-investment plans they made years ago, when it looked like there was big untapped consumer demand for battery-powered models. There has been more hesitancy among car shoppers than auto executives initially expected, with surveys showing concerns about high prices and finding places to charge.
General Motors last month pushed back the timeline on the opening of a suburban Detroit factory that is being renovated to build electric pick-ups and delayed the release of a Buick EV.
Ford also pushed back the launch of a new electric pick-up truck by one year, until 2027, the second time it has pushed back the timeline. In addition, Ford said it would trim its capital spending on fully electric vehicles to about 30% of its budget, from 40%.
“Based on where the market is and where the customer is, we will pivot and adjust and make those tough decisions,” Ford Chief Financial Officer John Lawler said.
Ford shares rose 1.5% in midday trading Wednesday. The stock remains down 11% in 2024.
Ford has said its EV business is on pace to lose about $5 billion this year. In the three-month period ended in June, the automaker lost about $44,000 on every electric vehicle that it sold.
Executives have said the company is trying to reduce the losses on its current EV line-up while making sure future offerings turn a profit.
Carmakers are trying to strike a tricky balance on electric vehicles. Tougher tailpipe-emissions rules, along with the rapid rise of Chinese EV makers, are pressuring them to invest in the technology. But consumer interest in EVs has waned after a burst of enthusiasm.
For example, while Ford is recalibrating its plans to include more hybrids, it also is moving ahead with the rollout of several full EVs. It will start making an electric commercial van in 2026 and two new pick-up trucks a year later.
One of the trucks will be a midsize pick-up, built using a new, lower-cost EV system that has been under development for nearly two years by a team of about 100 Ford engineers in Irvine, Calif. Led by former Tesla executive Alan Clarke, that project is designed to produce several electric models that Ford says will be profitable and allow the company to compete with Chinese EV makers.
Ford Chief Executive Jim Farley has said that China’s EV companies have the advantage of a lower-cost supply chain and that Ford needs to find ways to lower its own costs to compete.
“We believe that the fitness of the Chinese in EVs will eventually wash over our entire industry in all regions,” Farley told analysts last month.
Ford said it would take a special, noncash charge of $400 million to write down expenses related to the cancellation of the electric SUV. The move also may result in additional expenses of $1.5 billion, which would be reflected as special items in future quarters, the company said.
GM and other traditional automakers also have pulled back or delayed some EV investments, citing slower-than-expected demand for vehicles that run on batteries alone.
Sales of fully electric models rose 6.8% through the first half of the year, according to Motor Intelligence data, a sharp deceleration from near 50% growth in 2023.
Meanwhile, sales of hybrid vehicles have risen sharply over the past year, and many automakers have said they plan to roll out more of them as an interim step for customers who aren’t ready to make the leap to a fully electric model.
The Wall Street Journal
