
Ford’s move into electric vehicle manufacturing to enhance revenue faces obstacles due to declining demand for EVs.

In response, Ford has cut back on its battery supply orders. This strategic adjustment is anticipated to have positive results eventually but may bring challenges for Ford’s EV efforts.

Reports indicate Ford suffered losses exceeding $100,000 per EV in the first quarter of 2024, a significant rise from the previous year.

The EV market in the U.S. saw a decline in 2024, with electric vehicle sales growing only 3.3% in the first quarter, contrasting sharply with the 47% growth in the previous year.

The market share of EVs in total U.S. sales dropped from 7.6% to 7.15% year-over-year in the same period.

This slowdown raises concerns among automakers who may have rushed into expanding EV production, as highlighted by the Associated Press report.

In response to the conditions of the electric vehicle (EV) market, Ford is revamping its EV strategy. The U.S. automaker has opted to slash its expenditure on battery-powered models by $12 billion, as outlined in a report by Bloomberg.

Ford has already projected losses of up to $5.5 billion solely from EV operations this year. CEO Jim Farley acknowledged that Ford’s EV division, referred to as Model e, currently presents a significant challenge for the company as a whole, as reported by Bloomberg.

CFO John Lawler, speaking to analysts on the company’s earnings call on April 24, highlighted the considerable price reductions observed in the market, impacting Ford’s cost-cutting efforts on the Model e.

Ford has pivoted towards prioritizing the production of smaller, more affordable EVs. Accelerating the release of new EV models slated for a 2026 debut, these models are anticipated to have a starting price of $25,000.

Farley expressed confidence that these upcoming EVs have the potential to turn a profit in their inaugural year, according to Bloomberg. With this strategic move to reduce prices, Ford aims to position itself as a prominent player in the EV market if the plan unfolds successfully.

Ford’s experience serves as a cautionary tale on the difficulties of steering the market towards the future preemptively.

Two years ago, Ford restructured into two divisions: the Model e division for electric vehicles (EVs) and the Ford Blue division for internal combustion vehicles.

Initially seen as a move towards success, setbacks have emerged for the Model e division due to lagging EV market demand, making the transition from gas-powered to electric vehicles challenging for traditional automakers.

Ford’s EV lineup, previously expensive, saw price reductions. The electric Mustang Mach-E started at nearly $40,000, while the entry-level F-150 Lightning priced at $62,995, significantly higher than the conventional F-150 starting at around $37,000.

The weight and size of EV batteries contribute to increased vehicle wear and tear, leading to more frequent mechanical problems.
