Ford faces £1.5bn loss, which is a significant financial hit following its decision to cancel a planned all-electric SUV, as the company shifts its focus to more affordable hybrid vehicles. The car manufacturer revealed on Wednesday that the move was in response to changing consumer demand, with many drivers unwilling to pay the higher prices associated with electric vehicles (EVs). This strategic shift marks a setback for Ford’s push towards full electrification and reflects broader challenges in the evolving automotive industry.
In recent years, Ford has invested heavily in its EV lineup, aiming to be at the forefront of the electric revolution with models like the F-150 Lightning pickup and Mustang Mach-E SUV. However, the cancellation of the electric SUV, which was scheduled for release in 2025 but delayed by two years, highlights the complexities of the transition from petrol and diesel cars to EVs.
Ford’s decision to scale back its electric vehicle plans is expected to cost the company up to £1.5bn in writedowns and other associated costs. The Detroit-based carmaker also announced the delay of its electric pickup truck, codenamed “Project T3,” which is now slated for release in 2027. These setbacks come as Ford adapts to increased competition and growing price sensitivity among consumers.
Competition from China and Consumer Preferences
One of the key challenges facing Ford is the growing competition from Chinese electric vehicle manufacturers. These companies benefit from lower production costs, enabling them to sell EVs at more competitive prices. As a result, Ford has found it difficult to maintain profitability while offering affordable electric cars to a market that is becoming increasingly price-conscious.
Ford stated, “The electric vehicle market is rapidly evolving as Chinese competitors leverage advantaged cost structures. In addition, today’s electric vehicle consumers are more cost-conscious than early adopters, looking to electric vehicles as a practical way to save money on fuel and maintenance, as well as time by charging at home.”
This shift in consumer behaviour has amplified pricing pressures, with more affordable models flooding the market and tightening competition. Consumers who once sought EVs for their environmental benefits are now placing greater emphasis on cost savings, making it challenging for premium-priced models to succeed.
The Move Towards Hybrids
In response to these market dynamics, Ford has decided to increase its focus on hybrid models, which combine internal combustion engines with electric motors. This shift is part of Ford’s strategy to appeal to a broader audience of consumers who are interested in fuel savings but hesitant to commit to fully electric vehicles. The hybrid market allows Ford to offer a middle ground, providing some of the benefits of EVs, such as reduced fuel consumption, while still addressing concerns about cost and charging infrastructure.
John Lawler, Ford’s Chief Financial Officer, confirmed that the company will reduce its spending on electric vehicles from 40% to 30% of its capital expenditure. Lawler believes this will help ensure that newly released vehicles are profitable within 12 months. The company aims to navigate the challenges of the evolving market while maintaining a sustainable business model.
Financial Impact and Future Prospects
Ford’s decision to pivot away from full electrification comes as the company is expected to lose around $5bn (£3.9bn) from its EV business this year alone. Despite the challenges, Ford has managed to sell 52,422 electric cars in the US this year, accounting for 4% of its total sales. However, hybrid vehicle sales have seen faster growth, suggesting that consumers are more interested in hybrid options than fully electric models at this time.
Meanwhile, Chinese competitors like Xiaomi are thriving in the EV space. Xiaomi, known for its smartphones, has made a successful foray into the electric car market. After launching its first EV earlier this year, the company raised its sales forecast by 20%, demonstrating the growing demand for more affordable EVs in China and beyond.
