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On Wednesday, August 21, Eastern Time, due to continued losses in Ford's electric vehicle business, Ford announced that it had adjusted its electric vehicle strategy and canceled the launch of an all-electric three-row SUV. This move may cost Ford approximately $1.9 billion.

In addition to canceling the already delayed three-row electric SUV, Ford has decided to further delay the launch of a new generation electric pickup truck and reduce the proportion of funds used for electric vehicles from the original 40% to 30%. In addition, Ford also announced on Wednesday that they will adjust their battery procurement plan to reduce costs.

The moves amount to a further retreat from Ford's electrification strategy by Chief Executive Officer Jim Farley, who accelerated Ford's shift to electric vehicles when he took over four years ago, but has incurred huge costs in increasing production as the market for electric vehicles slows, leading Ford to expect a $5.5 billion loss this year from its electric vehicle division.

Cancel SUV plan, focus on commercial vehicles and new pickup trucks

Ford originally planned to launch an all-electric three-row SUV, but now has decided to cancel the plan. The adjustment is expected to cause the company to lose about $1.9 billion, including about $400 million in non-cash asset write-downs. These assets were originally prepared for the production of this electric SUV. In addition, the company will also bear up to $1.5 billion in additional charges that may be incurred in the next few quarters.

Although the SUV plan has been shelved, Ford plans to launch a new all-electric commercial truck in Ohio in 2026. Then, in 2027, the company will launch two new pickup models. One is a mid-size pickup truck, whose design platform is led by the former engineering director who was responsible for Tesla Model Y; the other is a next-generation electric pickup truck, which is planned to be produced in Tennessee, two years later than originally planned.

Ford has decided to increase production of hybrid models in the face of slowing demand for electric vehicles, believing that these models are more popular with consumers. At the same time, Ford plans to use hybrid technology in its next three-row SUV to meet market demand.

In addition, to reduce costs, Ford has also readjusted its battery procurement plans in the United States. The company plans to start producing a lower-cost lithium iron phosphate (LFP) battery in Michigan in 2026. This will be the first LFP battery plant in the United States, and Ford expects these batteries to enable consumers to receive tax credits of up to $7,500. However, Ford had cut the planned production capacity of the plant by nearly half at the end of last year.

Farley said that in the future, medium-sized pickup trucks powered by this LFP battery will bring about a major change in the cost of use, and will be cheaper and more economical than traditional fuel vehicles or hybrid vehicles.

Despite the unsatisfactory performance of the electric vehicle division, Farley is confident in the company's new strategy. He said: "We did a lot of homework before making this decision to make sure this is the right plan. I am very confident in this."

Farley also stressed that Ford's attitude towards new electric models is very clear: "If these vehicles are not profitable in the first year, we will not approve them for production."

Ford expects its electric vehicle division to lose as much as $5.5 billion this year. The company plans to update its electrification strategy in the first half of next year, when it may have a more specific timeline for profitability.

Ford's shares rose more than 2.7% overnight Wednesday after the company announced the changes, but later pared gains. As of Tuesday's close, Ford's shares were down 12% this year.