Ford’s decision to cancel the three-row electric SUV that was expected to launch in 2025 signifies a retrenchment on EVs in the industry. Ford executives admitted that the market had changed and that consumer adoption rates were slower than anticipated. To adapt, Ford will now focus on hybrid three-row SUVs, which could cost the company up to $1.9 billion. This shift requires leaders to refresh their pitch to investors and address the slumping stock valuation. Ford shares have fallen 25% from their peak in July and 5% since the 2023 investor day.
Marin Gjaja, Ford’s chief operating officer for its EV division, emphasized that the pivot signifies the company’s commitment to producing profitable EVs. He noted that achieving profitability in both the vehicle side and software services is a challenge even for EV giants like Tesla. Gjaja stated that Ford aims to create enough scale with the right products, features, and offerings to achieve profitability.
In addition to canceling the three-row electric SUV, Ford also announced a delay in the launch of the new electric version of its popular F-150 truck until 2027. However, the automaker plans to introduce an electric van and double down on its strengths in pickup trucks and commercial vehicles. Ford will provide an update on its EV plans in the first half of 2025.
Critics wonder why it took Ford so long to switch gears and implement changes in its product plan. Bernstein analyst Daniel Roeska questioned why investors have to wait until next year for a comprehensive update. With the delay of the EV truck, the cancellation of the SUV, and potential EV losses of up to $5.5 billion this year, investors are eagerly anticipating Ford’s affordable EVs from its “skunkworks” team in California. Ford CEO Jim Farley has expressed confidence in the team’s success and has staked the company’s future on it. The first product from the skunkworks team will be a midsized electric pickup, although it will take over two years before it hits the assembly lines.
Ford’s decision to shift towards building three-row hybrid SUVs instead of EVs provides some reassurance to analysts about its near-term strategy. The automaker, along with its rivals, is increasingly leaning into hybrid technology as a bridge to EVs. Farley has emphasized that hybrids will likely play a significant role in Ford’s portfolio in the future. Although the cancellation of the three-row SUV will result in a $1.9 billion hit, analysts believe it was the right call to avoid further losses without a path to profitability.
Meanwhile, Ford’s crosstown rival General Motors remains committed to its plans to produce an electric three-row SUV, the Cadillac Escalade IQ, this year. Analysts attribute GM’s ability to stick to its EV plans to its earlier start in building ground-up EVs.
