Ford said it is moving some battery production from Poland to the United States as part of a cost-cutting strategy. The move will allow the company to access government incentives under the Inflation Reduction Act. The leading American manufacturer is also withdrawing plans to expand its electric car segment. The reason for the decision is said to be lower than expected demand for electric cars.
Ford said it will shift some battery production to qualify for incentives under the American Carbon Reduction Act. Inflation (IRA) and further reduce costs, a priority for Ford CEO Jim Farley.
The automaker will move some production of the batteries it makes with South Korean partner LG Energy Solution for its Mustang Mach-E cars from Poland to Holland, Michigan. “An affordable electric vehicle starts with an affordable battery,” Farley said in a statement.
Ford changes strategy
Ford Motors said on Wednesday it is scrapping plans to introduce an electric SUV with three rows of seats and is postponing the launch of a new electric version of its best-selling pickup truck, the F-150, Reuters reported. The automaker has decided to reduce the share of its annual capital expenditure devoted to electric vehicles from 40 percent to 30 percent.
Ford is the second largest car manufacturer in USA and the fifth largest in the world.
“Given price and margin compression, we have made the decision to adjust our product and technology roadmap and industrial footprint to achieve our goal of achieving positive EBIT (earnings before interest and tax) within the first 12 months of launch for all new models,” Ford Chief Financial Officer John Lawler said in a statement.
Ford also said it is adding a new electric midsize pickup and van to its future lineup, doubling down on a strategy it has used in recent years to focus on segments where it is already strong, namely pickups and commercial vehicles. Ford shares rose 1.1 percent on the news.
At the same time, the American carmaker based in Dearborn, Michigan, plans to increase investments in hybrid vehicles, which combine an electric engine with a gasoline engine, especially in the SUV segment, Reuters explains. Adding that this is due to the growth in sales of such cars on the automotive market. “Consumers have started to treat this technology as a cheaper equivalent of gasoline-powered cars and electric vehicles,” the agency estimates.
Ford said, as reported by Reuters, that it will provide an update on electrification, technology, profitability and capital requirements in the first half of 2025.
“The criticism Ford will face is why its product plan wasn't more flexible from the start, why it was slow to implement those changes and why investors will have to wait until next year for a comprehensive update,” said Bernstein analyst Daniel Roeska.
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