Ford’s $19.5bn EV shock threatens its electric future: Liam Denning

Key topics:Ford retreats from battery EVs with a $19.5bn write-downPivot to hybrids and EREVs amid weak EV demand and policy shiftsEV strategy uncertainty raises long-term risks for Ford and rivals.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Liam Denning.For years after General Motors Co. took a bailout from Washington, it was scorned in some quarters of the population as “Government Motors.” While Ford Motor Co. lacks the requisite initials, the same epithet could be applied to its latest pivot on electric vehicles.Ford announced a broad retreat from EVs late Monday with an accompanying $19.5 billion write-down. It is a huge impairment by any measure; more than the company’s reported operating income for the past three years and a higher amount than the total assets on the balance sheet allocated to Ford’s Model e division. It is also more than 10 times larger than the impairment GM took in the third quarter, and about a quarter will cost in cash. That sound you hear is the kitchen sink smashing in the yard.Ford will dissolve its batteries joint-venture with SK On Co. Ltd., end production of the F-150 Lightning battery EV and cancel development of three new battery EVs. Instead, it will pivot hard to hybrid and extended-range EV powertrains — or EREVs, which use a small onboard engine to recharge the battery — with the next iteration of the Lightning being based on the latter, details to come. Ford will also effectively repurpose battery-making capacity in Kentucky and Michigan to serve grid-storage applications. Meanwhile, it maintains its effort to build midsize truck EVs, centered on a radical redesign of both the vehicle and assembly line led by a skunkworks in California..Read more:.Ford’s commercial Ranger derivatives: From Wildtrak luxury to Dropside practicality.As a result, Ford expects half its vehicle sales by 2030 to be some combination of EVs, hybrids and EREVs and for its loss-making Model e division to finally turn a profit by 2029. A down payment on the latter came in the form of Ford raising its guidance slightly for next year.Ford pitches all this as “following the customer” and that is true, up to a point. Battery EVs have been a tough sell in the US, where hard-to-electrify pickups and heavy SUVs dominate, and charging infrastructure is a mish mash of private and public initiatives. Hybrids and EREVs may offer a more palatable choice for the electric curious. But that nearly $20 billion hit also puts a number on the shocking whiplash of US vehicle and climate policy. Ford first unveiled the Lightning in 2021, when expectations of sweeping federal green legislation were at a fever pitch. Something of that nature arrived the following year with the Inflation Reduction Act, only for it to be mostly repealed once Republicans took back power in 2025. All of this happened in less time than one typical vehicle development cycle. Meanwhile, the European Union is on the cusp of diluting its effective mandate to end sales of combustion engine vehicles by 2035, albeit with nothing like the roll-back in the US.Ford is reconfiguring for changed political realities given that the environmental benefits of EVs, lower emissions, aren’t rewarded in the market but instead incented by regulation. That its shares barely reacted to the news shows how much all of this had been telegraphed well ahead of time by both the company and the Trump administration. Leaning back into Ford’s comfort zone of trucks and internal combustion engines — even if twinned with larger batteries — will help address its immediate problem: Stemming the bleeding in the Model e business. The sacrosanct dividend, paid not just to ordinary shareholders but also the controlling Ford family, is thus shored up. Strategically, things are murkier. Entering the grid-storage business is a neat way to repurpose existing investments but, apart from manufacturing capabilities, what does the Ford brand mean in that market? It smacks of mission creep brought on by Washington’s manic policymaking. Meanwhile, despite the re-pivot, Ford will keep plugging away at its $30,000 electric truck — as well it might, given that Chief Executive Officer Jim Farley touted that effort as a “model T” moment for the company only four months ago. Ford is following the customer and getting pushed by the government but still keeping its fingers in various pies, since nothing about the direction of cars is settled, no matter what politicians say.Ford, like other automakers, isn’t an innocent bystander, of course; it sets its own strategy and the sector’s lobbyists have pushed for a reset in Washington. The company has pivoted so often on EVs, one has to ask when u-turns become just spinning donuts. And from grid-storage to EREVs, Ford may have cleared the decks but still has much to prove..Read more:.Off-grid and on track: R100m boost for SA’s first EV charging network.Ford’s retreat also represents a more extreme version of various recalibrations among the legacy automakers. Others have fared better, notably Toyota Motor Corp. with its more cautious, hybrid-forward approach, or appear to be making more progress on EVs, such as Bayerische Motoren Werke AG. Yet the issue hanging over all of them is whether they can really make EVs work at scale in the way that fast-rising Chinese competitors — who can and do also compete in hybrid and engine-powered vehicles — seem to have done in their home market and in a widening range of export markets. That is an existential question for the EV transition in general, of course, but also for Ford and its fellow incumbents..© 2025 Bloomberg L.P.

Ford’s $19.5bn EV shock threatens its electric future: Liam Denning

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