May 19, 2024

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Ford is slowing its push into electric vehicles

Ford is slowing its push into electric vehicles

Ford Motor Company on Thursday postponed production of at least two new electric vehicles and said it would focus on producing more hybrid vehicles. Its decision was the latest sign that major automakers were forced to rethink their electric vehicle strategy due to the slowdown in sales of those models.

The shift by Ford and automakers such as General Motors and Mercedes-Benz, which have also postponed their electric vehicle plans, has been largely driven by the difficulties companies face in making and selling enough electric vehicles and doing so profitably.

Sales of such vehicles are still growing, but their pace has slowed sharply in recent months, as automakers have tapped several early adopters who were willing to spend more than $50,000 on a new battery-electric vehicle. Because they are still learning how to make cars and their batteries at a lower cost, companies have not been able to introduce more affordable models.

Some consumers are also reluctant to purchase electric models because they can't charge vehicles at home or worry that there won't be enough public chargers when they want to travel more than a few hundred miles.

Many car buyers interested in electric vehicles appear to be opting for hybrids, which can cost just a few hundred dollars more than similar gasoline-only models, and in some cases offer much better fuel economy. It is also easy for consumers to get used to these cars because they do not need to be connected to electricity and are fueled with fuel like traditional models.

Ford said Thursday that it hopes to offer a hybrid version of every model it sells by the end of the decade. It already makes hybrid versions of two small cars — the Maverick and the F-150 — and the Escape crossover.

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The company said it now plans to start manufacturing a large electric sports car at its factory in Oakville, Ontario, in 2027, two years later than it had planned. The plant Ford is building in Tennessee will begin manufacturing an electric pickup truck in 2026, a year later than originally scheduled.

“We are committed to expanding our profitable electric vehicle business, using capital wisely and bringing the right gas, hybrid and all-electric vehicles to market at the right time,” Ford CEO Jim Farley said in a statement.

The slowdown in sales is also hurting the leading US electric model maker, Tesla. This week, it announced an unexpected 8.5 percent drop in sales of its electric cars in the first three months of the year.

Ford said on Wednesday that its electric vehicle sales increased by 86 percent in the quarter to 20,223 cars, but the total was far below the level the company had hoped to reach one day and came after it cut some prices.

The company sold more than 7,700 F-150 Lightning pickup trucks, its flagship electric model, during the three-month period. Last summer, Ford was hoping to be able to produce about 150,000 Lightnings a year. The company recently reduced Lightning production to one shift per day instead of two.

Two years ago, Ford, General Motors, Volkswagen and other automakers were planning to introduce dozens of new electric cars and trucks, anticipating that consumers would make a quick transition to electric vehicles from gasoline-powered vehicles.

But in the second half of 2023, electricity sales growth declined significantly, forcing manufacturers to scale back their ambitions. Ford and General Motors have also slowed work at factories that are supposed to supply battery packs for their new electric models.

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Ford's electric vehicle division lost about $4.7 billion last year before interest and taxes are taken into account. By contrast, its division that makes gasoline and hybrid vehicles for consumers made a profit of $7.5 billion.