Ford Motor Company has announced a significant change in its electric vehicle strategy that will impact its production plans and financial outlook. The automaker is postponing the launch of a next-generation all-electric pickup truck and halting development of a new three-row electric SUV. Instead, Ford will focus on improving its hybrid lineup and expanding its lineup of commercial electric vehicles (EVs).

Ford focuses on hybrid and commercial electric vehicles

Sales of Ford electric vehicles rose sharply in July, reaching a 31% increase over the same month last year. The rebound was driven by strong performance of the Mustang Mach-E and F-150 Lightning, although overall vehicle sales grew at a slower pace.

Ford’s SUV sales have significantly dragged down overall performance, posting a 7% decline in July. Key models such as the Edge (-59%), Bronco (-30%) and Escape (-15%) saw double-digit declines. The company stopped production of the Edge earlier this year, while the new Explorer saw sales increase 49% last month.

During Ford’s second-quarter earnings call, CEO Jim Farley emphasized the company’s focus on developing smaller, more affordable electric vehicles. The team in Long Beach, which includes former executives from Tesla, Rivian, Lucid and Apple, is focused on developing highly efficient electric vehicles.

Farley stressed that Tesla and Chinese low-cost manufacturers are the main competitors. He also expects that many competitors will look for electric vehicle platforms from China, similar to Volkswagen’s strategy. Most recently, the US carmaker presented its plans for new electric cars.

Production of the next generation of electric pickup trucks, originally planned at Ford’s new $5.6 billion plant in Tennessee, will now launch later than planned. The full-size truck will be produced in 2027, while a new midsize truck is being developed in California.

The shift in focus is aimed at leveraging Ford’s strengths in commercial vehicles and SUVs, said CFO John Lawler.

Ford’s revised electric vehicle roadmap and strategic transformation

The decision to reposition itself comes as Ford responds to market trends and customer demands. Lawler stressed that the company will focus on areas where it has a competitive advantage, such as commercial vehicles and SUVs. This strategic adjustment is expected to result in a special write-off of about $400 million, which will not be paid in cash, as certain assets, including the canceled SUV, will have to be written off.

Ford’s future capital spending plans will shift the focus of investments in all-electric vehicles from around 40% to around 30%. While no specific timeline was given for this change, it reflects the company’s recalibrated approach to investing in electric vehicles. Production at the Tennessee plant, originally scheduled to begin next year, is now expected to begin producing battery cells in 2025.

The adjustments come amid a slower-than-expected rollout of electric vehicles and the challenges of achieving profitability with these vehicles. Ford’s new strategy follows an earlier decision to delay production of the three-row SUV and the next-generation electric pickup truck, codenamed “T3.”

Lawler explained that the company’s agility in responding to customer feedback is critical, and highlighted the need for more diverse electrification options based on market experience over the past two years.

From all-electric ambitions to hybrid reality

Ford will continue to produce and improve existing electric models, including the Mustang Mach-E and F-150 Lightning. The company plans to unveil its next generation of electric vehicles with a new delivery truck to be assembled at Ford’s Ohio assembly plant in 2026.

Two new pickup trucks will follow in 2027: a mid-size truck developed by Ford’s California-based Skunkworks team and the Project T3 truck.

Ford has also announced plans to expand its battery production capacity. Starting in 2025, battery production for the Mustang Mach-E will move from Poland to a new plant in Holland, Michigan. This is intended to make production eligible for tax credits under the Inflation Reduction Act (IRA).

The BlueOval SK plant in Kentucky will produce cells for the current E-Transit van. The BlueOval City plant in Tennessee will produce cells for the new electric van and Project T3 truck in 2025.

In addition, Ford will begin producing lithium iron phosphate (LFP) batteries in 2026 at Michigan’s BlueOval Battery Park. The automaker will use technology licensed from China’s CATL. This plant will also benefit from IRA incentives.

The company’s revised approach is consistent with its previously announced $12 billion reduction in electric vehicle spending. Ford will seek to meet emissions targets in a variety of ways, including by purchasing carbon credits as needed. Tesla is by far the biggest seller of these carbon credits to rivals that don’t comply with emissions regulations.

This strategic shift is in line with Ford’s revised approach to electric vehicle profitability. The company is moving away from initially selling electric vehicles at a loss to comply with regulatory requirements and grow market share. Ford has committed to providing a detailed update on its electrification strategy, technology advancements, profitability and capital requirements during its “EV Day” in the first half of 2025.