Ford’s decision to kill its previously announced electric three-row SUV is the latest sign of the challenges facing the EV sector.
After previously delaying the rollout of a vehicle that Ford CEO Jim Farley had touted as a “personal bullet train,” the automaker last week said it was scrapping the vehicle altogether after determining it wouldn’t be profitable soon enough.
Instead, Ford signaled it’s leaning even harder into the gas-electric hybrid vehicles that have proven popular with consumers amid choppy EV demand and growing competitive pressures.
Ford isn’t abandoning EVs—in a recent news release from the company, the automaker outlined plans to introduce a new electric commercial van in 2026, followed by two new electric pickup trucks in 2027. Meanwhile, the company added that a specialized team in California continues its work to deliver a flexible platform for affordable EVs.
“This thing is hard, this whole transition to electrification, because it’s so many different tentacles,” Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told Tech Brew. “OEMs are going to continue to have to adjust and figure out how (to) match consumer demand in a very quickly changing marketplace.”
Under pressure: In the news release announcing its change in plans, Ford pointed to a “rapidly evolving” EV market characterized by growing competition from Chinese EV makers with seemingly better cost structures, and by mainstream consumers who might be less willing than early adopters to pay a premium for battery-powered vehicles.
“This, coupled with scores of new electric vehicle choices hitting the market over the next 12 months and rising compliance requirements, has amplified pricing pressures,” the company said.
Valdez Streaty explained the conundrum facing automakers: while EVs made record sales last year, the pace of growth has slowed as consumers grapple with concerns about affordability and charging.
EV sales in the US grew 11.3% year over year in Q2, according to Cox Automotive data. Ford’s EV sales—which include the Mustang Mach-E, the F-150 Lightning, and the E-Transit van—increased 61.4%.
However, Ford isn’t making money on EVs yet; its EV business is on track to lose as much as $5.5 billion this year, per its Q2 earnings report. Ford executives reiterated in their release that the automaker won’t introduce a new generation of EVs until they’re confident the vehicles would be profitable within a year.
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“We will not launch vehicles at a loss that are not good for our business, knowing what we know now about the reality of the market equation,” Farley said during Q2 earnings. “And we clearly see China and Tesla as the cost benchmark.”
Pivot: Now, the company says it will double down on the segments where it’s successful—commercial vehicles and pickup trucks—and produce hybrid versions of its future three-row SUVs. Meanwhile, it announced a further delay of a next-gen electric truck, claiming that delaying the launch will enable savings from lower-cost battery technologies.
The automaker also stated it will reduce the share of annual capital expenditures on EVs from 40% to 30%. The change in plans will result in Ford taking a special non-cash charge of about $400 million. The company could also see “additional expenses and cash expenditures of up to $1.5 billion,” per the release.
Ford also highlighted steps it’s taking to source its batteries from the US so it can take advantage of incentives from the Inflation Reduction Act. “An affordable electric vehicle starts with an affordable battery,” Farley said. “If you are not competitive on battery cost, you are not competitive.”
It’s tricky: This isn’t the first time Ford has pulled back on EVs, nor is it the only automaker to do so. Industry analysts have said that automakers over-anticipated the level of EV demand and have had to adjust their plans in response to market conditions. At the same time, legacy automakers’ profits from combustion engine vehicles have remained healthy.
Valdez Streaty added that the EV landscape may only grow more competitive in the coming years.
“It’s going to be important [to see] what they do in the interim, when there’s other OEMs that are going to be launching EVs,” she said.