Ford Shifts Focus to Hybrids and Energy Storage Amid EV Challenges

Ford Motor Company is making significant changes to its vehicle production strategy as it faces challenges in the electric vehicle (EV) market. The automaker has announced plans to ramp up hybrid vehicle production in response to a steep decline in EV sales. This pivot includes the introduction of an extended-range version of the popular F-series truck and new battery storage systems aimed at supporting the growing demand from artificial intelligence (AI) data center construction.

The shift comes after Ford’s EV division, known as Ford Model e, reported over $12 billion in losses over the past two years. In November 2023 alone, EV sales plummeted by more than 60 percent. Once ambitious about surpassing Tesla in the battery-electric vehicle sector, Ford is now adjusting its strategy, stating that hybrids will be the primary focus moving forward.

New Goals and Financial Impact

Ford aims for gas-electric hybrids, extended-range electric vehicles (EREVs), and smaller, more affordable battery-electric vehicles to represent 50 percent of its global volume by 2030, up from just 17 percent today. The company anticipates that its hybrid and EV business will achieve profitability by 2029.

Andrew Frick, president of Ford Model e and Ford Blue, emphasized the need for a new direction, stating, “Rather than spending billions more on large EVs that now have no path to profitability, we are allocating that money into higher returning areas.” This new focus will involve significant financial implications, with Ford expecting a charge of $19.5 billion in 2025, primarily affecting the fourth quarter. Additionally, the company forecasts $5.5 billion in cash effects, with most payments expected in 2026 and 2027.

Workforce Changes and Product Innovations

The transition will also bring major changes to Ford’s workforce. The company has agreed to dissolve its partnership with South Korean battery manufacturer SK On, resulting in Ford taking full ownership of the BlueOval SK battery factory in Kentucky. This facility will be repurposed to manufacture energy storage systems, as first reported by Bloomberg. It is anticipated that at least 1,600 employees will lose their jobs as a direct result of this restructuring. However, Frick mentioned that as many as 2,100 new jobs could be created over the coming years.

Ford is preparing to replace its first-generation F-150 Lightning with an extended-range version capable of traveling up to 700 miles on a single charge. This new model will be produced at Ford’s Rouge Electric Vehicle Center in Dearborn, Michigan, with additional details on timing and pricing to be announced later. The EREV will feature a small internal combustion engine designed to recharge the EV battery, addressing the concerns of truck owners regarding range and towing capacity.

Despite its initial promise, the F-150 Lightning has not met sales expectations. Factors such as high pricing, a heavy battery, and concerns about range and towing capabilities have contributed to its lukewarm reception. Frick noted, “It’s been a great truck for many people, and it has remained the bestselling electric pickup, but we also learned a lot from our first generation of EVs.”

The changing landscape of EV incentives, including the elimination of the $7,500 federal EV tax credit, has also impacted sales. Electric trucks face unique challenges, primarily due to their expensive batteries, which can deter cost-conscious consumers. Ford’s investment in a new EV platform for more affordable models has rendered the F-150 Lightning less aligned with its future product strategy.

As part of this strategic pivot, Ford plans to utilize its prismatic lithium iron phosphate (LFP) batteries for energy storage systems, catering to both commercial and, potentially, residential clients. Lisa Drake, vice president of technology platform programs and EV systems, remarked that energy storage “just made a lot of sense as a natural adjacency for us.”

This shift illustrates Ford’s response to evolving market demands and its commitment to adapting its business model in the fast-changing automotive landscape.