Ford Revamps EV Strategy After Multi-Billion Losses

Ford Reshapes EV Strategy After Billions in Losses

Ford’s Early Momentum in EVs

Just a few years ago, Ford Motor appeared ready to challenge Tesla’s dominance in the electric vehicle market. In 2021, the company launched the sleek Mustang Mach-E electric SUV, followed a year later by an electric F-150 pickup and an electric van. These three models gave Ford an early lead over rivals like General Motors.

Market Slowdown and Financial Struggles

However, the rapid growth in EV sales began to slow, and Tesla responded by cutting prices aggressively. At the same time, rising material costs made it harder for established automakers to turn a profit on electric vehicles. Over the past two and a half years, Ford’s EV division has accumulated $12 billion in losses, including $2.2 billion in just the first half of this year. Sales of its electric models fell 12% during that period.

A New, Cost-Focused Plan

In response, Ford announced on Monday a revamped approach aimed at reducing production costs through new materials and manufacturing techniques. The company’s first product under this plan will be a mid-sized, four-door electric pickup truck with seating for five, a front trunk, and a $30,000 starting price. It is scheduled for release in 2027. A larger electric pickup will now arrive in 2028, a year later than planned.

Radical Shift in Manufacturing

CEO Jim Farley described the new manufacturing method as the most significant change since the Model T. Instead of the traditional continuous assembly line, the new process will have three separate lines — one for the truck’s front section, one for the rear, and one for the battery pack and cab — which will then be merged. Ford estimates this will cut assembly time by 15%.

Competition From China and Industry Challenges

Ford, along with G.M. and other Western carmakers, faces growing pressure from Chinese EV producers like BYD, which sell more electric vehicles at significantly lower costs. Matching this efficiency is now a top priority for Farley, who has already improved Ford’s performance in Europe and China, and ended unprofitable operations in India. Yet, challenges remain: Ford has also faced costly recalls and declining profits in its gasoline-powered vehicle division.

Comparisons With General Motors

While Ford pushed ahead quickly with EVs, G.M. took a slower but more cost-efficient route, developing standardized batteries and partnering in joint ventures to open two battery plants. This strategy has helped G.M. maintain strong profits and sell more than twice as many EVs as Ford in recent quarters.

Battery Investments and Technology Partnerships

Ford is banking on its new $3 billion battery plant in Marshall, Michigan, to boost competitiveness. This facility will produce lithium iron phosphate (LFP) batteries — a cheaper alternative to common EV batteries since they avoid costly nickel and cobalt. The technology is licensed from Chinese battery giant CATL. Additionally, Ford and South Korea’s SK On are building two more battery plants in Kentucky and Tennessee.

Changes to the Product Line

The company’s Louisville, Kentucky, plant will adopt the new assembly process with a $1.9 billion investment. As part of the shift, production of the Ford Escape and Lincoln Corsair SUVs will end next year, marking the end of the Escape’s run since its 2000 debut.