Peter Vosper: Ford revises electric plans

Ford is shaking up its strategy for electric vehicles in the USA, scrapping plans for a large three-row all-electric SUV and postponing the launch of its next electric pickup truck. This is just after the new electric Ford Explorer started selling in the UK and the Company has announced a medium-sized electric car, the Ford Capri which will become available later in the year.

Chief financial officer John Lawler was adjusting its plans in response to pricing and margin compression. The move comes as demand for electric vehicles has faltered in the USA, as in the UK, leading to price wars and other pressures. Ford said the new timetable would allow it to take advantage of technological advances that are expected to lower costs and give an improved range on a single charge. 

Overall, the carmaker said changes would reduce the share of annual capital expenditures dedicated to ‘pure’ electric vehicles from 30 to 40%. Chief executive Jim Farley said the firm had “learned a lot” from its efforts and had built a new plan that would give customers choice and “play to our strengths”.

Just a few years ago Ford outlined plans for an aggressive push for electric vehicles with hopes to produce some 2 million a year by 2026. It launched an electric version of its best-selling F150 truck in 2022. Ford, like others in the industry, including rivals like General Motors, has already said it would scale back its investments and ambitions because of weaker-than-expected consumer demand and preference for hybrids.

Although sales of electric cars in the US have picked up in recent months, competition has kept the pressure on car manufacturers. Ford reported last month it had sold more than 50,000 electric cars since the start of the year ‘up more than 60%’ but its electric business had lost 2.5 billion dollars.

Ford said it was moving some battery production from the US to Poland as part of its strategy to lower costs. The new electric pick-up truck, which is due to be produced next year at a new factory in Tennessee, has been put back to 2027.  They will concentrate on vans for business customers with production starting in Ohio in 2026.

UK Ford dealers who have seen Ford's share of the car market drop since Ford dropped the best-selling Fiesta and a limited electric car offering, will watch with interest. Ford still dominates the light commercial vehicle market with Transit and Ranger products. 

This will add to the pressure on the new government to open discussion with the Society of Motor Manufacturers and Traders {SMMT} and the National Franchised Dealer Association (NFDA) to get sales of electric vehicles back on target to achieve net zero objectives. The industry bodies are hoping to persuade the government to come up with incentives to make electric vehicles cheaper to buy whereas the government wants the manufacturers to get electric cars around the same price as internal combustion engine cars before taking steps to make electric vehicles cheaper to buy.

September will see more Chinese car brands appearing on UK roads and the government will watch with interest following the European Union’s decision to increase tariffs on certain Chinese brands.