Ford Delays New EVs in Favor of Hybrids Amid Broader US Market Challenges

A Ford F-150 Lariat PowerBoost hybrid pickup truck is displayed for sale at a Ford dealership in Glendale, California, on August 21, 2024. Mario Tama/Getty Images

Ford Motor Co. has announced significant changes to its electric vehicle (EV) strategy, canceling plans for a fully electric three-row SUV and delaying production of its next-generation electric pickup truck as it focuses more on hybrids because of growing pricing pressure from high battery costs and inflation-weary consumers.

The changes, announced by Ford on Aug. 21, reflect broader challenges facing the U.S. auto industry, as automakers grapple with rising production costs, slower-than-expected EV demand, increasingly cost-conscious consumers, rising compliance requirements, and tougher competition as a bevy of new EVs hit the market over the next 12 months.

Ford said that as part of the strategic shift, it will prioritize the development of hybrid electric vehicles and electric commercial vehicles, such as a new electric commercial van expected to start production in 2026 in Ohio.

The decision to cancel the three-row SUV, which would have been fully electric, is mostly a result of high battery production costs and the challenges of making such vehicles affordable to buyers, according to the company.

Ford will instead make its next three-row SUVs as gas-electric hybrids, taking a non-cash charge of about $400 million for the write-down of product-specific manufacturing assets for the fully electric SUVs it will no longer produce.

The automaker also said it will incur another $1.5 billion or so in additional expenses related to the electric SUV cancellation, while reducing its overall mix of annual expenditures on pure electric vehicles from about 40 percent to 30 percent amid higher demand for hybrids.

The delayed electric pickup truck is a full-size model to be produced at Ford’s new plant in Tennessee, originally slated for 2025 but now pushed to the second half of 2027. In addition, a new midsize electric truck is being developed by a specialized “skunkworks” team in California, also expected to be introduced in 2027.

John Lawler, Ford’s chief financial officer, said that these moves are designed to create a more profitable and capital-efficient EV business, while providing a broader range of electrification options meant to speed up customer adoption.

Lawler added that a key factor in improving the company’s profitability is to increase the production of batteries within the United States and that the company is aiming to take advantage of the Advanced Manufacturing Tax Credit, a federal incentive to encourage domestic production and reduce reliance on foreign production.

Ford President and CEO Jim Farley said the new plan is designed to offer customers maximum choice while capitalizing on the company’s expertise.

“We learned a lot as the number-two 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,” he said.

Ford’s decision to scale back its EV ambitions comes as the entire industry faces challenges in transitioning to electric.

Despite the Biden administration’s EV advocacy, including setting a goal that 50 percent of all new vehicle sales be electric by 2030, consumer interest in electric vehicles has waned. A recent study by J.D. Power found that 24 percent of surveyed shoppers in 2024 were “very likely” to consider buying an EV, down from 26 percent the previous year.

The top concern among those hesitant to buy EVs is the availability of charging stations, followed by high purchase prices, long charging times, and limited driving range. This reluctance was particularly evident among consumers who rely on a single vehicle for their transportation needs. While 68 percent of buyers looking to add a second vehicle to their household were likely to consider an EV, only 47 percent of those needing a primary vehicle were open to the idea.

These challenges have led other automakers, such as General Motors, to scale back their EV production targets. GM, for example, recently reduced its 2024 EV production forecast by 50,000 vehicles, citing softened demand and the risk of oversupply. The company had initially planned to produce up to 300,000 EVs but now aims for 200,000 to 250,000, with GM Chief Financial Officer Paul Jacobson attributing the change to “100 percent demand-driven” factors.

Naveen Athrapully contributed to this report.