A Ford Mustang Mach-E GT small sport utility vehicle is seen during the 2022 New York International Auto Show on April 14, 2022 in New York.
Michael Nagel | Bloomberg | Getty Images
Detroit- Ford Chief Executive Jim Farley said on Tuesday that the company is rethinking its electric vehicle strategy, including “re-evaluating” the need for vertical integration of batteries.
The Detroit automaker has previously confirmed plans to delay or cut $12 billion in spending on all-electric vehicles, but Tuesday’s comments were the most detailed yet on Ford’s changing plans for electric vehicles, which have seen sales grow slower than expected.
“One of the things we’ve taken advantage of in terms of taking some time delays is rationalizing the level and timing of our battery capacity to meet demand and actually re-evaluating the vertical integration that we rely on and bet on new chemistries and capacities. ,” Farley said on the automaker’s fourth-quarter earnings call.
Farley reiterated that the company still believes electric vehicles will grow, but noted that mass market consumers won’t adopt EVs widely unless costs are more in line with traditional cars. Electric vehicles are typically thousands of dollars more expensive than gas-powered vehicles.
Ford Chief Financial Officer John Lawler said that in addition to re-evaluating vertical integration of new battery chemistries, the company is further considering adjusting installed capacity to meet demand and may delay the launch of next-generation electric vehicles to “ensure they Meets our profitability criteria and takes into account new market realities.”
The company’s electric vehicle business, known as Model e, lost $4.7 billion last year, including a loss of $1.57 billion in the fourth quarter of 2023, which was offset by profits from the company’s fleet and traditional combustion engine units. Last year, both companies made more than $7 billion in profits.
Lawler said Tuesday the department must operate independently “sooner rather than later.”
He also said the company is adjusting its electric vehicle unit’s target to achieve an 8% profit margin by 2026. At that time the company had set a target of selling 2 million vehicles per year.
As Ford pulls back and re-evaluates its electric vehicle business, it intends to rely on sales of hybrids, especially trucks. The company expects hybrid vehicle sales to grow 40% this year. In 2023, the company sold 133,743 hybrid vehicles in the United States.
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