Ford Mustang Mach-E GT compact sport utility vehicle on display at the 2022 New York International Auto Show on April 14, 2022 in New York.
Michael Nagle | Bloomberg | Getty Images
Detroit — ford motor Chief Executive Officer Jim Farley said Tuesday that the company is rethinking its electric vehicle strategy, including “reevaluating” the need for vertical battery integration.
The Detroit automaker had previously acknowledged plans to delay or reduce spending on all-electric vehicles by $12 billion, but comments made Tuesday come after Ford’s EV sales are growing at a slower pace than expected. It contains the most detailed information regarding the planned changes to the plan.
“One of the things we’re taking advantage of given the timing delays is rationalizing battery capacity levels and timing to meet demand, re-evaluating the vertical integration that we’re really relying on, and looking at new chemistries. We’re betting on the nature and capacity of the vehicle,” Farley said on the automaker’s fourth-quarter earnings call.
Farley reiterated that the company still believes EVs will grow, but noted that widespread adoption to mass-market consumers won’t occur until costs are more in line with traditional cars. EVs are typically several thousand dollars more expensive than gas-powered cars.
In addition to reevaluating vertical integration for new battery chemistries, Ford Chief Financial Officer John Lawler said the company could adjust installed capacity to meet demand and delay the launch of next-generation EVs. “We are considering the new market realities to ensure we meet our profitability criteria,” he said.
The company’s EV business, known as Model E, posted losses of $4.7 billion last year, including $1.57 billion in the fourth quarter of 2023, offset by gains from the company’s vehicles and traditional internal combustion engine units. . Both businesses each generated more than $7 billion in revenue last year.
Lawler said Tuesday that the force will have to become self-sustaining “sooner or later.”
He also said the company is on target for its EV division of 8% profit margin by 2026. The company had already set a goal of selling 2 million vehicles a year by then.
Ford is exiting and reevaluating its EV business and intends to focus on selling hybrid vehicles, especially trucks. The company expects hybrid sales to increase 40% this year. In 2023, it sold 133,743 hybrid vehicles in the United States.
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