Ford Overhauls Electric Vehicle Strategy Amid Shifting Market Demands

Ford is making significant adjustments to its electric vehicle (EV) strategy, responding to an unexpected shift in the American market where consumers are increasingly concerned about costs and battery range. The automaker announced on Wednesday that it will pivot its focus towards hybrid vehicles and more affordable options, moving away from its original plans for an all-electric lineup.

Ford revealed that it has scrapped plans for its next generation of all-electric SUVs, opting instead to develop hybrid models that combine shorter electric range with extended overall mileage through gasoline engines. This strategic shift comes with a hefty price tag, as the company will incur at least $400 million in costs related to the write-down of manufacturing equipment intended for the now-cancelled EV SUVs. The total financial impact could reach up to $1.5 billion.

In response to the changing market, Ford also plans to enhance its battery sourcing and streamline manufacturing processes to reduce costs. Going forward, only 30% of the company’s annual capital expenditures will be allocated to pure electric vehicles, down from the previous 40%.

Despite trailing Tesla in EV production, Ford’s electric vehicle segment is expanding, with its F-150 Lightning holding the title of the best-selling electric truck in the U.S. However, the growing popularity of hybrid technology has prompted Ford to align its offerings with current consumer preferences.

“We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths,” said Ford CEO Jim Farley.

While Ford will continue to produce electric vehicles, the pace will be slower than initially planned. The company’s next EV offering will be an electric commercial van, set to debut in 2026, aiming to compete with Rivian’s electric vans widely used by Amazon. Following that, Ford will introduce a “groundbreaking” electric truck, codenamed “Project T3,” in the second half of 2027. This truck will feature bi-directional charging and enhanced aerodynamics, with a focus on reducing battery costs to make the vehicle more affordable.

“An affordable electric vehicle starts with an affordable battery,” Farley emphasized. “If you are not competitive on battery cost, you are not competitive.”