DETROIT — During a busy investor day in Dearborn, Michigan, last year, ford Automakers have been full of praise for their upcoming three-row electric SUV, which they said would roll off the production line in 2025.
“We call it a personal bullet train. It’s beautiful and it’s unlike anything else in the segment,” said Doug Field, Ford’s chief EV officer and a former executive at Apple and Teslahe said at the May 2023 event.
Fifteen months later, the personal high-speed train officially derailed on wednesday The American automaker has already abandoned the technology before it even reached the market, a sign that the industry is becoming increasingly wary of electric vehicles, as consumers have been slower than expected to embrace battery technology.
“The reality is that the market has changed,” Marin Gjaja, Ford’s chief operating officer for the EV division, told Reuters on Thursday. “When we saw growth and adoption slowing down, we tried to catch up really fast.”
Ford executives said they would instead focus on hybrid Three-row SUVs, one of the most prominent EV product pivots yet — and one that could cost the company up to $1.9 billion.
Cutting a key vehicle from Ford’s electric future, one that executives had promised would differentiate the company in a crowded market segment, also means directors will have to revamp their presentation to investors about how they will turn the automaker’s flagging stock around.
“You’ve been in that box with all of us, and now’s the time to break out,” Ford CEO Jim Farley told investors at the May 2023 event, referring to the company’s stock valuation, after touting the three-row SUV. Ford shares have fallen 25% from their peak in July this year and are down about 5% from the 2023 investor day.
According to Gjaja, Ford’s change of course is a sign that the company is making the tough decisions needed to produce profitable electric cars, a challenge even for electric car giants like Tesla, he says.
“The real question here is how do we create enough scale with the right products, features and offerings so that we get to a level of scale where we can be profitable in both the vehicle space and the software services space,” Gjaja said.
Ford also said Wednesday it plans to delay another highly anticipated vehicle, the new electric version of its F-150 truck, until 2027, two years after it originally intended to launch. It said it will add an electric van to its future lineup, while doubling down on its strengths: pick up trucks And commercial vehicles.
Ford will provide an update on its EV plans in the first half of 2025.
Some industry observers wondered why it took so long for the automaker to change course.
“Ford will face criticism for not having a more flexible product plan from the start, for being so slow to implement these changes, and for requiring investors to wait until next year for a comprehensive update,” Bernstein analyst Daniel Roeska said in a research note.
‘START TO SEE THE FRUITS’
With the EV truck With electric vehicle development slowing, the three-row SUV dead and Ford forecast to lose $5.5 billion this year, investors are eagerly awaiting Ford’s affordable electric vehicles, developed by its “skunkworks” team of more than 100 engineers and software specialists in California.
Farley has said he is betting the company’s future on the success of this group. The first such product will be a mid-size electric pickup, Ford said Wednesday.
“The progress they’ve made in two years is nothing short of breathtaking, and we’re starting to see the fruits of that,” Gjaja said. Still, buyers will have to wait more than two years for that model to roll off the assembly line.
Ford’s decision to switch to building three-row hybrid SUVsinstead of EVs, offers analysts some reassurance about its near-term strategy. The automaker and many rivals are increasingly leaning toward hybrid technology that combines an electric motor with a gasoline engine as a bridge to EVs, and Farley has said hybrids are likely to be a significant part of Ford’s portfolio going forward.
The $1.9 billion cost of canceling the three-row SUV will be painful, but many analysts believe Ford ultimately made the right decision.
“There’s no point in further increasing the $1.9 billion in potential value by holding on to the vehicle even though you know you can’t make a profit from it,” said Morningstar analyst David Whiston.
Yet Ford’s city rival General Motors is behind plans to start production of a three-row electric SUV this year – the Cadillac Escalade IQwhich according to Whiston is the result of from GM previously started building electric vehicles from the ground up.