Ford takes $19.5B hit, cancels planned electric vehicles
What's the story
Ford has announced a major shift in its strategy, taking a massive $19.5 billion writedown and discontinuing several electric vehicle (EV) models. The decision is seen as a direct response to the Trump administration's policies and the declining demand for EVs in the US market. The company will replace its fully electric F-150 Lightning with an extended-range electric model that uses a gas-powered engine to recharge its battery.
Model changes
Ford's EV model discontinuation and future plans
Along with the F-150 Lightning, Ford is also scrapping its next-gen electric truck, the T3, and planned electric commercial vans. The company's CEO Jim Farley said that these decisions were made in light of recent market changes. Despite this shift away from EVs, Ford still plans to hire thousands of workers in the long run. However, some layoffs are expected at a Tennessee-based battery plant in the near term.
Market shift
Ford's future EV mix and writedown distribution
Ford anticipates its global mix of hybrids, extended-range EVs, and pure EVs will reach 50% by 2030, up from the current 17%. The company plans to spread out the $19.5 billion writedown over several years—mostly in Q4 this year and into next year through 2027. About $8.5 billion of this is related to canceling planned EV models while another $6 billion is tied to dissolving a battery joint venture with South Korea's SK On.
Financial outlook
Ford's adjusted earnings guidance and stock performance
Ford has raised its 2025 guidance for adjusted earnings before interest and taxes to about $7 billion, up from a previous range of $6 billion to $6.5 billion. Following this announcement, Ford shares rose by about 1% in after-hours trading. This shift comes as the auto industry grapples with declining demand for battery-powered models after investing heavily in EVs early this decade.
Sales decline
US EV sales and federal support
US sales of electric vehicles fell by nearly 40% in November, following the expiration of a $7,500 consumer tax credit on September 30. The Trump administration also froze fines for automakers that violate fuel-economy regulations as part of a massive tax and spending bill passed in July. These measures have further impacted the demand for EVs in the country.