“Rather than spending billions more on large EVs that now have no path to profitability,” says Ford exec as company takes $19.5 billion hit. In a dramatic strategic reversal, Ford Motor Company announced on Monday it is cancelling key electric vehicle models and will absorb a massive $19.5 billion financial charge. This move marks one of the most significant responses yet from a major automaker to shifting U.S. policies under the Trump administration and falling consumer demand for electric cars.
Which Ford Electric Models Are Being Cancelled?
Ford is halting production of its flagship electric truck, the F-150 Lightning. Additionally, the company is scrapping plans for a next-generation electric truck and a line of electric commercial vans. This decision effectively ends the development of Ford’s announced second-generation EV lineup. Instead of pure electric models, Ford stated it will now pivot its focus and investment toward expanding its lineup of gas and electric hybrid vehicles, particularly a type known as Extended-Range Electric Vehicles (EREVs).
Why Is Ford Taking a $19.5 Billion Loss?
The enormous financial charge, known as a writedown, covers the costs of this strategic U-turn. According to reports, $8.5 billion is linked directly to killing the planned electric vehicle programs. Another $6 billion stems from dissolving a joint-venture battery plant in Tennessee with South Korea’s SK On. A final $5 billion is allocated for “program-related expenses.” Ford will spread this nearly $20 billion hit across its financial reports from the last quarter of this year through 2027.
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What Prompted This Sudden Strategic Pivot?
Two major forces collided to force Ford’s hand. First, U.S. sales of electric vehicles have dropped sharply. In November alone, EV sales fell roughly 40%. A key driver was the expiration on September 30th of a long-standing $7,500 federal tax credit for EV buyers, which had supported demand for over 15 years. Second, the Trump administration has actively rolled back supportive EV policies, including freezing penalties for automakers who violate fuel-economy rules. This policy shift reduces the financial pressure on companies to sell electric cars.
What Does This Mean for Jobs and Future Products?
Ford projects that its new focus on hybrid vehicles will eventually generate thousands of new jobs. However, the immediate consequence will be layoffs at the now-closing Tennessee battery plant. Company executive Andrew Frick framed the decision as a necessary reallocation of funds, stating the company would put money into “higher-returning areas” rather than unprofitable large EVs. This signals a future where Ford’s showrooms will feature more hybrid versions of popular models instead of new dedicated electric trucks and vans.
Key FAQs for Consumers and Investors:
Q: Is Ford stopping all electric vehicle production?
A: No. Ford is cancelling specific models like the F-150 Lightning and future electric trucks/vans, but it will continue selling some existing EVs and is pivoting investment to hybrid technology.
Q: Why did the $7,500 tax credit expire?
A: The tax credit was a federal policy in place for over 15 years. It expired on September 30th as part of a broader shift in the current administration’s energy and transportation priorities.
Q: What is an Extended-Range Electric Vehicle (EREV)?
A: An EREV is a type of hybrid where a gasoline engine acts only as a generator to charge the battery, which then powers the vehicle’s electric motor. It operates like an EV but with a gas engine for backup.
Q: Will this make Ford’s cars less environmentally friendly?
A: Ford’s strategy shifts focus from pure battery-electrics to hybrids, which typically have lower emissions than standard gas vehicles but higher emissions than pure EVs.
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