The car maker is planning to postpone the construction of a second battery plant in its Kentucky campus due to slowing demand for electric vehicles (EV).
Ford has revealed it will delay about $12bn (£10bn) in EV investments.
During its third-quarter earnings call, the company’s executives said customers are unwilling to buy premium EVs, revealing that Ford’s Model e EV unit had lost about $3.1bn this year.
As a result, the company has decided to postpone its EV investments, including the construction of a second battery plant with joint venture partner SK. In contrast, the construction of its EV manufacturing campus in Tennessee will not be affected.
The company stressed that it wasn’t going back on its pledges, but said it now wants to increase its EV manufacturing capacity in a more gradual way.
“We’re not moving away from our second generation [EV] products,” said CFO John Lawler. “We are, though, looking at the pace of capacity that we’re putting in place. We are going to push out some of that investment.”
Ford ultimately hopes to reach an 8 per cent margin on EVs with a cost structure that reflects price parity with internal combustion engine (ICE) vehicles. However, in order to achieve this target, the company said it must reduce the price of EVs, meaning reducing operational costs and scaling quickly.
“Tesla actually gave us a huge gift with the laser focus on cost and scaling the Model Y,” said Jim Farley, CEO of Ford. “They set the standard and we are now making real progress on our second- and third-cycle EVs that are in the midst of being developed today.
“Great product is not enough in the EV business anymore. We have to be totally competitive on cost.”
Ford recently reached an agreement with the United Auto Workers union that would put an end to a six-week workers’ strike.
