Ford Shifts Focus to Affordable Electric Vehicles Amid Declining Demand
However, despite its efforts to become a leader in the electric vehicle (EV) market, Ford is pivoting its strategy to focus on producing more affordable EVs and hybrid vehicles. This move comes as the company struggles to sustain demand for its Model E line, with EV sales tumbling 61% in November.
Meanwhile, Ford attributed the need for a change in its production focus to battery prices remaining stubbornly high and an affordability crisis shaking consumer brand loyalty. The company said it will launch five new “affordable” vehicles by the end of the decade, four of which will be assembled domestically.
Production Facility Repurposing and Workforce Adjustment
Consequently, Ford will repurpose some of its facilities, including revamping its Tennessee Electric Vehicle Center into the Tennessee Truck Plant, which will no longer produce EVs but rather manufacture the new Built Ford Tough truck models beginning in 2029. The company will also employ thousands of workers in the next few years to staff its American plants.
Therefore, Ford will book $19.5 billion in charges, most of which will occur in 2026, as a result of the pivot, including an $8.5 billion asset write-down for its Model E division. The automaker raised its EBIT guidance for 2025 to about $7 billion, up from $6 billion.
Future Outlook and Challenges
In addition to the changes in its production focus, Ford expects its Model E to be profitable by 2029, a prediction that analysts have been hesitant to laud. The company’s decision to pivot its strategy comes as the EV market remains hot and cold, with some analysts warning that billions of dollars invested in factory changes and fresh vehicle production may be for nought if the vehicles don’t appeal to consumers.
Moreover, Ford’s announcement follows its decision in August to invest $2 billion in retooling a Kentucky factory to manufacture EVs and to rejig its production process to a “universal EV platform” to lower the cost of its models.
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