Ford Scales Back EV Plans, Takes $19.5 Billion Hit Amid Trump-Era Policy Impacts

Ford is significantly altering its electric vehicle strategy, resulting in a $19.5 billion writedown and the discontinuation of several planned EV models. The automaker is shifting its focus back to gas-powered and hybrid vehicles, citing softening demand for EVs and changes in government policy. Ford now projects that hybrid, extended-range EV, and pure EV models will make up 50% of its global sales by 2030.

The company's announcement included the cancellation of the next-generation electric F-150 Lightning successor, along with electric commercial vans and the T3 electric truck. According to CEO Jim Farley, the recent shift in market conditions prompted the company to reassess its EV strategy.

While pivoting towards gas and hybrid models, Ford anticipates some layoffs at its Kentucky battery plant, a joint venture. That said, the reality is a bit more complicated. the company expects to hire thousands of workers overall. The $19.5 billion writedown will be spread out, primarily affecting the fourth quarter of this year and continuing through 2027. Approximately $8.5 billion is related to the cancellation of planned EV models, $6 billion to the dissolution of the SK On battery joint venture, and $5 billion to program-related expenses.

Despite these changes, Ford has raised its 2025 guidance for adjusted earnings before interest and taxes to around $7 billion, up from the previous estimate of $6 billion to $6.5 billion.

Ford's shift reflects a broader trend in the automotive industry, which is grappling with lower-than-expected EV sales after significant investments in electric vehicle technology. The policies of the Trump administration, including the rollback of federal support for EVs and the easing of tailpipe emissions rules, have further contributed to this trend. The expiration of a $7,500 consumer tax credit for EVs also impacted sales, which fell by roughly 40% in November.

The F-150 Lightning, which launched with considerable fanfare in 2022, saw sales decrease by 10% through November of this year, with 25,583 units sold. The T3 truck, intended as a core part of Ford's second-generation EV lineup, will now be replaced by gas-powered truck production at the Tennessee factory starting in 2029. Ford is now concentrating on more affordable EV models, developed by a dedicated team in California, with the first model expected to be priced around $30,000 and available in 2027. This midsize EV truck will be built at Ford's Louisville plant.

Other automakers are also adjusting their EV strategies. General Motors took a $1.6 billion charge in October, and Stellantis has scaled back some EV plans, including an electric Ram pickup truck, while focusing more on hybrid models. Ford now anticipates its EV business will be profitable by 2029. Additionally, a Ford subsidiary will independently own and operate its Kentucky battery plants, while SK On will own and operate a Tennessee battery plant, following the dissolution of their joint venture. Ford plans to use its battery plants in Kentucky and Michigan to produce energy storage system batteries, aiming to bring initial capacity online within 18 months. The Michigan factory will also produce batteries for Ford's $30,000 midsize EV truck.

In after-hours trading, Ford shares experienced a rise of approximately 1%.