Ford reassessing EV plans, including vertical battery integration

A Ford Mustang Mach-E GT compact sport utility vehicle during the 2022 New York International Auto Show, in New York, April 14, 2022.

Michael Nagle | Bloomberg | Getty Images

DETROIT — Ford engine is rethinking its electric vehicle strategies, including “reevaluating” the need for vertical battery integration, CEO Jim Farley said Tuesday.

The Detroit automaker previously confirmed plans to delay or cut $12 billion in spending on all-electric vehicles, but Tuesday's comments are the most detailed yet on Ford's changing plans for electric vehicles, including Sales are growing at a slower pace than expected.

“One of the things we're taking advantage of in taking some delays is streamlining the level and timing of our battery capacity to meet demand and re-evaluating the vertical integration we rely on, and betting on new chemistries and capabilities.” Farley said during the automaker's fourth-quarter earnings conference call.

Farley reiterated that the company still believes electric vehicles will grow, but noted that widespread adoption by mass market consumers won't happen until costs are more in line with traditional vehicles. Electric vehicles typically cost thousands of dollars more than their gas-powered counterparts.

Ford Chief Financial Officer John Lawler said that in addition to re-evaluating vertical integration in new battery chemistries, the company was also considering adjusting installed production capacity to meet demand and potentially delaying new generation electric vehicles to “ensure that they meet our profitability criteria”. given the new market reality.

The company's EV business, known as Model e, lost $4.7 billion last year, including $1.57 billion in the fourth quarter of 2023, offset by fleet profits from the company and traditional internal combustion engine units. The two companies earned more than $7 billion each last year.

Lawler said Tuesday that the unit will have to stand on its own “sooner rather than later.”

He also said the company was setting a target for its EV unit that projected an 8% margin by 2026. The company had already set a target of two million vehicles sold per year by that date.

As Ford steps back and reevaluates the electric vehicle sector, it intends to rely on sales of hybrid vehicles, particularly trucks. The company expects its hybrid sales to increase 40% this year. It sold 133,743 hybrid vehicles in the United States in 2023.

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