Ford workers produce the F-150 Lightning electric pickup truck at the automaker’s Ford Rouge Electric Vehicle Center (REVC) on Dec. 13, 2022.
Michael Wayland | CNBC
As a result, the company is postponing approximately $12 billion in planned spending on new electric vehicle production capacity.
Customers’ reluctance to pay more for electric vehicles has complicated Ford’s ambitious and expensive plans to sharply increase production of these vehicles. While electric vehicle sales are rising at Ford – and the industry – they are not growing at the pace Ford had expected.
Ford executives emphasized that the company is not cutting spending on future electric vehicle models. But the company now plans to increase its electric vehicle production capacity and spending on that capacity more slowly than previously planned.
“We are not moving away from our second generation [EV] products,” CFO John Lawler said in a media briefing on Thursday. “However, we are looking at the pace of the capacity we are building. We will displace some of that investment.”
Ford Motor said Thursday that many customers in North America are no longer willing to pay a premium for an electric vehicle over an internal combustion engine or hybrid alternative.
Lawler said Ford would postpone about $12 billion in planned spending on electric vehicle production capacity, including a planned second battery factory at a new campus in Kentucky. However, he noted that construction of Blue Oval City — Ford’s new electric vehicle manufacturing campus in Tennessee — will continue as originally planned.
“The customer will decide the quantities,” Lawler said. “Ford is able to balance production of gasoline, hybrid and electric vehicles to match the pace of electric vehicle adoption in a way that others cannot.”
As part of its third-quarter earnings report, Ford said Thursday that its electric vehicle unit, called Ford Model e, lost $1.3 billion on an operating basis in the period. That’s about double last year’s loss, despite a 26% increase in sales.
In the first three quarters of 2023, the Model e posted an operating loss of about $3.1 billion, on track with Ford’s previous forecast of a full-year operating loss of $4.5 billion the Model e division.
Ford on Thursday withdrew its entire 2023 forecast in light of its tentative agreement with the United Auto Workers union.