Ford Slows Down $12 Billion EV Investment Due to Electric Vehicle Cost Challenges

Ford is delaying $12 billion in EV factory construction, including plans for a battery factory in Kentucky. The main reason behind this decision is that customers are not willing to pay extra for electric vehicles (EVs). With their high cost, Ford’s transformation into an EV company will take longer than anticipated.

Ford’s EV business continues to experience financial losses, with a $1.3 billion loss in adjusted earnings for the past quarter alone. So far this year, Ford has lost $3.1 billion on its EV investments and expects to end the year with a total loss of $4 billion.

The Kentucky plant, known as a “mega campus” for manufacturing lithium-ion batteries, will be postponed. However, Ford’s Blue Oval City project in Tennessee is still progressing as planned.

Ford is not the only company facing these challenges. General Motors has also delayed the production of its new electric trucks and SUVs. Tesla CEO Elon Musk expressed concerns about interest rates during their recent earnings call. The current situation in the industry is tough.

Customers share a similar sentiment. Early adopters have already embraced EVs, but the next group of potential customers find the high prices discouraging. Ford attempted to address this by introducing new models like the F-150 Lightning Flash, a mid-priced trim of its electric truck. The company believes that customer demand will determine the production volume of EVs, and currently, this means slowing down major projects.

However, it’s not all negative news. Ford recently reached a tentative agreement with the United Auto Workers, making it the first of the Big Three US automakers to do so. Despite incurring a cost of approximately $1.3 billion due to the strike and withdrawing its guidance for 2023, Ford remains committed to its goals.