As part of the strategic shift, the automaker is cancelling a planned electric F-Series truck, shifting production toward gas and hybrid vehicles and repurposing an EV battery plant. — Bloomberg
NEW YORK: Ford Motor Co will take US$19.5bil in charges tied to a sweeping overhaul of its electric vehicle (EV) business after struggling for years to make it profitable.
The majority of the charges will come in the fourth quarter, Ford said Monday in a statement.
As part of the strategic shift, the automaker is cancelling a planned electric F-Series truck, shifting production toward gas and hybrid vehicles and repurposing an EV battery plant.
Ford will also convert its signature electric F-150 Lightning pickup into an extended-range hybrid vehicle.
The magnitude of asset impairments and writedowns is a testament both to the degree of difficulty Ford has had trying to profitably build and sell EVs, and the extent to which US President Donald Trump’s policy changes will only exacerbate those challenges.
In taking the charges, Ford is acknowledging it built far too much battery production capacity and was going down a dead-end with large EVs that were destined to lose more money.
The moves will make Ford’s EV operations profitable by 2029, Andrew Frick, head of the unit, told reporters in a briefing.
The division lost US$5.1bil last year and the company expects losses could be worse this year.
“It didn’t make sense to keep plowing billions into products that we knew would not make money,” Jim Farley, Ford’s chief executive officer, said in an interview on Bloomberg TV. “We had to make this choice.”
The automaker boosted its 2025 guidance to US$7bil before interest and taxes, up from a prior estimate of US$6bil to US$6.5bil.
Farley attributed the increase to the progress Ford has made in lowering costs and its move “to more profitable vehicles.”
Ford shares rose 1% in extended New York trading. The stock had risen 38% so far this year.
After many pivots and false starts, Ford now has a plan that pares back its exposure to EVs, while capitalising on growth in hybrids, said Sam Abuelsamid, vice-president for market research at Telemetry, a Detroit-based consultant.
“This is probably the plan that will see them through to the end of the decade, with lots of focus on hybrids and extended range EVs,” Abuelsamid said.
“Ford’s perpetual problem is actually executing. They come up with lots of good plans, but then actually building the stuff seems to be more difficult.”
Farley has predicted consumer demand for plug-ins will fall by half after Trump ripped up most of Joe Biden’s policy platform.
Now companies are trying to find ways to limit the financial damage caused by idle plants. In October, General Motors Co. took US$1.6bil in charges to write down EV assets.
One of the most promising options is converting EV battery plants to produce cells for stationary storage, where demand is booming thanks to growth in artificial intellignce data centres and needed upgrades to the power grid. — Bloomberg
