Equities

Ford Delays New EV Launch to 2027 Amid Industry-Wide Reevaluation

Ford delays new EV launch to 2027, reflecting industry's shift to balanced vehicle offerings amid slower-than-expected market growth.

By Athena Xu

4/4, 09:12 EDT
Ford Motor Company
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Key Takeaway

  • Ford delays its new EV launch to 2027, reflecting industry-wide reevaluation of EV strategies amid changing consumer preferences.
  • Despite the delay, Ford reports an 86% increase in EV sales and a 42% rise in hybrid vehicle sales in Q1.
  • U.S. EV market grew to 1.2 million units last year but faces challenges like higher interest rates and the need for better charging infrastructure.

EV Production Shifts

Ford Motor Co. has announced a delay in the launch of its new electric vehicle (EV), now set for 2027, a pushback from the initially targeted 2025. This adjustment reflects a broader trend within the automotive industry, where companies are reevaluating their EV strategies amidst changing consumer preferences and competitive pressures. Despite this delay, Ford remains committed to its EV ambitions, planning to convert its Oakville Assembly Plant in Canada from manufacturing gas vehicles to EVs. The company is also engaging with Unifor, a labor union, to minimize the impact on the workforce due to the delayed launch.

Jim Farley, Ford's Chief Executive, emphasized the company's dedication to scaling a profitable EV business, stating, "We are committed to scaling a profitable EV business, using capital wisely and bringing to market the right gas, hybrid, and fully electric vehicles at the right time." This strategy includes not only a focus on EVs but also an increase in the production of hybrid vehicles, with Ford reporting an 86% jump in EV sales and a 42% rise in hybrid vehicle sales in the first quarter of the year.

Industry-Wide Reevaluation

The automotive industry is witnessing a shift in its approach to electric vehicles, moving away from the previous "EV euphoria" to a more balanced offering that includes gas-powered, hybrid, and fully electric options. This change comes as automakers, including industry leaders like Ford, General Motors, and Tesla, face intensified competition, particularly from Chinese manufacturers such as BYD, and recognize that consumer demand for EVs has not met initial expectations.

Marin Gjaja, Chief Operating Officer for Ford’s EV unit, noted, "It’s still growing but not nearly at the rate we thought it might have in ’21, ’22." This sentiment is echoed across the industry, with companies like Volkswagen and Toyota exploring or expanding their hybrid offerings in response to market demands and regulatory pressures.

Consumer Demand and Market Realities

Despite the recalibration of EV strategies, the market for electric vehicles is still expected to grow, albeit at a slower pace than previously anticipated. U.S. EV sales hit a record 1.2 million units last year, accounting for 7.6% of the national market, with projections suggesting an increase to between 30% and 39% by the end of the decade. However, the transition to EVs faces challenges, including higher interest rates, increased raw material costs, and the need for a more reliable charging infrastructure.

The automotive industry's strategy adjustment reflects a pragmatic approach to meeting federal emissions and fuel economy standards while acknowledging the current state of consumer acceptance and technological readiness. Automakers are navigating these complexities by diversifying their vehicle offerings and adjusting their production plans accordingly.

Management Quotes

  • Jim Farley, CEO of Ford:

    "We are committed to scaling a profitable EV business, using capital wisely and bringing to market the right gas, hybrid and fully electric vehicles at the right time."