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Ford Motor Company has recently announced a massive restructuring of its electric vehicle plans, including a $19.5 billion writedown, reflecting a drastic downsizing of its ambitions in the electric vehicle market. This is the most extreme instance of the auto industry's withdrawal from fully electric vehicles, driven by a changing market and policy environment under the Trump administration.
Ford’s change is coming as it is halting production of its F-150 Lightning electric pickup, which was an important component of its EV lineup. The automaker has also announced that it will cancel several electric vehicles in the future, including a next-generation large electric truck.
Furthermore, the cancellation of this program will cost $8.5 billion, to be realized through a writedown. The changes at Ford are coming due to a shift in market demand and a rethink on investment in electric vehicles.
Besides stopping the production of its best-selling electric car, Ford also has plans to re-strategize its investments in battery technology. The company will instead concentrate on developing its hybrid and gasoline-powered models.
Additionally, Ford's new plan involves developing an extended-range variant of the F-150 Lightning, which combines an electric motor with a gas-powered range extender, allowing the car to travel 700 miles.
The withdrawal of Ford from its EV plans is mainly due to the reduced demand for electric vehicles in the US. This has happened after the lapse of a federal tax credit of $7,500 for the purchase of EVs. The withdrawal of strict environmental policies by the Trump administration further reduced the government’s incentive for consumers to purchase EVs, while at the same time making it easier for gas-powered vehicles to meet emission standards.
Consequently, Ford is shifting its focus to manufacturing more hybrids and extended-range electric vehicles. Ford's intention is to see the hybrids and extended-range electric vehicles contribute 50% of their global sales by 2030, up from the 17% expected in 2025. Ford will also shift its focus to manufacturing more affordable electric vehicles, with a midsize electric truck priced at approximately $30,000 set to hit the market in 2027.
However, despite all these transformations, Ford continues to support the electric vehicle market. The organization wants to optimize its development time for electric vehicles and work on more affordable models.
The new Universal EV Platform, which will be used for smaller and more affordable electric vehicles, will be the foundation for future models. The first one will be a fully connected midsize pickup truck, which will be launched in 2027.
Ford is entering the energy storage market, retooling its battery factories to cater to data centers and other infrastructure requirements. The company has announced an investment of $2 billion in the next two years to capitalize on the emerging demand for energy storage solutions fueled by the artificial intelligence revolution.
Although Ford will book short-term losses and restructuring expenses, the company is confident that the new strategies it has adopted will place it on the path to success in the automotive and energy sectors. The company is shifting its focus to align with market preferences.
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