Ford announced earlier this week that it would delay or completely cancel several electric vehicle models in an effort to align with consumer trends and hone in on a more profitable business after losing billions chasing Tesla.
While it may not be the most ideal thing, it is the best strategy for Ford right now, as it will shift more toward hybrids, leaning on current EV offerings and stopping the bleeding on financials.
Ford was arguably the most committed when it came to legacy automakers. It had put forth a solid investment plan that would see it expand its EV offerings over the course of a decade, bringing exciting offerings to each market based on its needs.
Ford’s love affair with EVs softens as profitability and consumer trends take focus
However, being the most committed does not always mean the most successful. Ford had suffered tremendous losses in 2023 because of its overwhelming commitment to EVs, so much so that CEO Jim Farley admitted at one point that it was on the lower end of its investment range for electrification moving forward.
“We’ll probably be on the low end of that range,” Farley said earlier this year about the $8 billion to $9 billion investment range. “And we’re being very consistent about our discipline on profitability.”
But now, things have totally changed.
Earlier this week, Ford all but admitted that it simply did not have the time or the money to keep going with its EV commitment. It was costing it billions, and instead of chasing after Tesla, it did what it should do: chase after money to keep it afloat. As Van Wilder’s dad said in the movie, “Sometimes in life, you have to realize a poor investment and cut your losses.”
Ford made the right choice. It was going along with the EV goals too far and too hard. Honda’s executives said recently that you simply cannot force people to buy something they don’t want. Right now, Teslas are what people want, at least in the United States, as the automaker, despite a growing number of competitors, continues to hold a sizeable lead in market share over competitors.
The lack of a truly competitive EV offering that appeals to consumers is what the issue is. There needs to be a product that truly outperforms Tesla in every way. That’s how people will switch, and that’s how EVs will be worth it. This goes for all companies, not just Ford.
To be the best, you have to beat the best.
“We’re committed to creating long-term value by building a competitive and profitable business,” Ford’s Vice Chair and CFO John Lawler said earlier this week as the company announced its softening EV stance. “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 within the first 12 months of launch for all new models.”
It will still bring forward a variety of new models, including a new truck, in the coming years. But for now, it is best that Ford does what it needs to do: scale back its commitment to EVs and continue to rely and lean on the Mustang Mach-E, F-150 Lightning, and E-Transit for the time being. The truth is that Ford simply did not and did not have enough of a consumer base that is interested in EVs, thus not justifying its mass commitment, and it might have cost them their business if it kept up the shtick.
From left to right: Ford’s F-150 Lightning, E-Transit van, and Mustang Mach-E (Credit: Ford)
Tempering its EV push and bringing new models as people want them is going to help Ford maintain capital while also softening the negative effects EVs have had on its financials. Ford has lost money on every EV it’s ever delivered to a customer, although it may not be the best thing for it to continue acting like things are all okay.
But in the meantime, Ford can do a few things to help consumers: offer affordable vehicles that cater to needs and develop a vehicle lineup that truly makes consumers on a massive scale consider things other than Tesla.
Leaning on classic names like the Mustang and F-150 and electrifying them might have won some people over. But it seems, especially with the popularity of the Bronco and Bronco Sport, Ford is missing a huge opportunity by not even hinting toward an EV version of the vehicle.
I think a lot of people might be disappointed, but this announcement seemed like it was coming sooner rather than later. As someone who has driven Fords and still owns one, I was hoping to make my next vehicle an electric Bronco. I have talked highly about the F-150 Lightning. But it is evident that it is still making a lot of its money selling the gas-powered F-Series and its other tried and true vehicle models.
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