Ford Motor is reevaluating its plans for electric vehicles, including the need for in-house battery production, as stated by CEO Jim Farley on Tuesday.
The Detroit-based car manufacturer had previously announced plans to postpone or reduce $12 billion in spending on fully electric vehicles. However, the remarks made on Tuesday provide more insight into Ford’s evolving strategies for electric vehicles, whose sales are not growing as fast as anticipated.
Farley, during the company’s fourth-quarter earnings call, said, “One of the things we’re doing with the delays is adjusting our battery capacity to meet demand and reevaluating our reliance on in-house battery production, while also exploring new battery technologies and capacities.”
Farley reaffirmed the company’s belief in the growth of electric vehicles but noted that widespread use by everyday consumers won’t occur until the prices are comparable to conventional vehicles. Electric vehicles are usually much more expensive than their gasoline-powered equivalents.
John Lawler, Ford’s Chief Financial Officer, mentioned that in addition to reevaluating in-house production of new battery technologies, the company is also considering adjusting its production capacity to meet demand and possibly postponing the launch of next-generation electric vehicles to ensure they are profitable under the new market conditions.
The company’s electric vehicle division, known as Model e, reported a loss of $4.7 billion last year, including $1.57 billion in the fourth quarter of 2023. This was offset by profits from the company’s fleet and traditional internal combustion engine divisions, both of which earned more than $7 billion last year.
Lawler stated on Tuesday that the division will need to become self-sufficient “sooner rather than later.”
He also mentioned that the company is withdrawing a profitability target of 8% by 2026 for its electric vehicle division. The company had previously set a sales target of two million vehicles per year by that time.
As Ford reassesses its electric vehicle business, it plans to focus more on the sales of hybrid vehicles, particularly trucks. The company expects its hybrid sales to grow by 40% this year. It sold 133,743 hybrid vehicles in the U.S. in 2023.
A Ford Mustang Mach-E GT compact sports utility vehicle during the 2022 New York International Auto Show in New York on April 14, 2022. Image Credit: Michael Nagle | Bloomberg | Getty Images