This delay is a consequence of the challenges Ford faces in pursuing its ambitious plans to significantly ramp up the production of EVs. While both Ford’s and the broader industry’s sales of EVs are on the rise, the growth is not meeting Ford’s earlier expectations.
Ford executives clarified that the company is not reducing its investments in future electric vehicle models. Instead, they are adjusting their strategy to gradually increase EV manufacturing capacity and corresponding spending.
CFO John Lawler stated during a media briefing that they are committed to their second-generation EV products but are reevaluating the pace at which they are expanding their production capacity. Some of the planned investment will be pushed back.
Ford revealed that many customers in North America are no longer willing to pay extra for an electric vehicle when compared to internal-combustion or hybrid alternatives.
Regarding the postponed investments, Lawler mentioned that approximately $12 billion in spending for EV manufacturing capacity, including a second battery plant in Kentucky, will be delayed. However, the construction of Blue Oval City, Ford’s new EV manufacturing campus in Tennessee, will proceed as initially planned.
Lawler emphasized that customer demand will dictate production volumes, and Ford aims to balance the production of gasoline, hybrid, and electric vehicles to align with the pace of EV adoption better than its competitors.
As part of its third-quarter earnings report, Ford disclosed that its electric-vehicle business unit, Ford Model e, incurred an operating loss of $1.3 billion during the period. This represents roughly double the loss from the previous year, despite a 26% increase in revenue.
For the first three quarters of 2023, Model e reported an operating loss of about $3.1 billion, in line with Ford’s previous guidance projecting a full-year operating loss of $4.5 billion for the Model e business unit.
Additionally, Ford withdrew all of its 2023 guidance due to its tentative agreement with the United Auto Workers labor union.