Ford is making a bold move by discontinuing its all-electric F-150 Lightning and other large electric vehicles (EVs) as part of an ongoing effort to discover a viable strategy for profitability in the evolving electric vehicle market, which has cost the company a staggering $19.5 billion. The renowned automaker, based in Dearborn, Michigan, announced on Monday that it will implement significant changes across its vehicle lineup and manufacturing facilities. This strategic pivot aims to prioritize the creation of more affordable vehicles that resonate with consumer preferences.
In a notable shift, Ford plans to halt the production of certain larger EVs, including the F-150 Lightning. Instead, this model will be reconfigured to function as an electric vehicle supplemented by a gas-powered generator. The company is also set to intensify its efforts in developing smaller, cost-effective vehicles, with plans for a midsize pickup truck debuting in 2027.
Ford's president and CEO, Jim Farley, expressed that this transition is driven by customer needs to build a stronger, more resilient, and profitable Ford. He emphasized that the landscape of operations has evolved, prompting the company to redirect its investments toward high-return growth areas, such as Ford Pro, their top-selling trucks and vans, hybrids, and lucrative ventures like the new battery energy storage business.
This strategic shift comes at a time when demand for electric vehicles has started to decline, particularly following the expiration of the federal tax credit in September. Ford has faced challenges in maintaining interest in its Model E line, with Farley cautioning that the elimination of the tax credit would likely slow down EV demand. He noted that sales of electric vehicles could drop to 5% of total auto sales, down from approximately 10% to 12%. Recent reports indicated that Ford sold 164,925 vehicles in November, reflecting a 0.9% decrease compared to the previous year, with EV sales plummeting by 61% to just 4,247 units. The company has incurred $3.6 billion in losses in the first three quarters of this year, contributing to over $13 billion in losses within the Model E division in less than three years.
In addition to facing regulatory hurdles, Ford cited the need to produce smaller, more affordable electric vehicles, as well as gas and hybrid models, due to persistently high battery costs and a crisis of affordability that is impacting consumer brand loyalty. In its announcement, Ford disclosed plans to introduce five new "affordable" vehicles by the end of the decade, with four of these models being assembled domestically. The automaker aims for 50% of its global vehicle production to consist of hybrids, extended-range electric vehicles, and fully electric cars by 2030, an increase from the current 17%.
To facilitate this transformation, Ford will repurpose some of its manufacturing plants, including converting its Tennessee Electric Vehicle Center into a facility dedicated to producing new Built Ford Tough truck models starting in 2029. The Ohio plant will follow suit by also focusing on gas and hybrid vehicle assembly in 2029.
Ford has committed to hiring thousands of workers for its American facilities in the coming years. After ceasing production of the 2025 F-150 Lightning, the company plans to allocate one-third of that workforce to the production of a gas and hybrid version of the F-150.
As part of this strategic realignment, Ford is expected to incur $19.5 billion in charges, primarily in 2026, which includes an $8.5 billion asset write-down associated with its Model E division. However, the automaker has raised its earnings before interest and taxes (EBIT) forecast for 2025 to approximately $7 billion, up from an earlier estimate of $6 billion, while reaffirming its adjusted free cash flow target of between $2 billion and $3 billion.
Despite Ford’s increased investment in its electric vehicle initiatives, it continues to struggle with achieving returns from its growing portfolio of EV models, even as the company experiments with various strategic options. The recent announcement follows Ford’s decision in August to invest $2 billion in upgrading its Kentucky factory to manufacture electric vehicles and adjust its production process to a "universal EV platform" for cost reduction.
Ford anticipates that its Model E division will become profitable by 2029, having previously forecasted profitability by 2026. Analysts have expressed caution regarding this outlook, arguing that without compelling products, the significant financial investments in factory modifications and new vehicle production could ultimately be fruitless, especially given the fluctuating demand for electric vehicles.
As Morningstar equity strategist David Whiston remarked, if the vehicles fail to appeal simply because they are electric, then billions could be wasted. He stressed the importance of offering an exceptional product, great range, and lower costs associated with batteries and vehicle manufacturing techniques. Ultimately, he posed a challenging question: does Ford truly have a great product in the works? It remains difficult to generate enthusiasm for a vehicle that isn’t yet visible.
