Ford to take $19.5 billion hit, scrap planned electric cars in strategy pivot amid Trump’s policies
In perhaps the most dramatic example yet of U.S. automakers moving away from electric vehicles (EVs) in response to the policies of the Donald Trump administration, Ford Motor announced on Monday that it was discontinuing several battery-powered models, incurring a $19.5 billion loss in the process.
According to a report prepared by ReutersThe Michigan-based company announced that it is ending production of the F-150 Lightning car in EV form and added that it will focus on making an extended-range electric model, a type of hybrid vehicle called EREV.
Additionally, Ford is scrapping planned electric commercial vans alongside the next-generation electric truck, effectively marking the end of the announced second-generation EV lineup.
Stating that it has moved away from fully electric vehicles, Ford said that it will now focus on gas and electric hybrids and predicts that thousands of jobs will be created as a result of this pivot.
But the company said there will be some layoffs at a jointly owned battery facility based in Tennessee in the near future.
“Instead of spending billions more on big EVs that no longer have a path to profitability, we’re allocating that money to higher-return areas,” said Andrew Frick, Ford’s president of gas and electric vehicle operations. Reuters.
Cost of policy compliance
Ford’s $19.5 billion loss has two primary components: losses from cancellations of EV models and costs related to the disbandment of South Korea’s SK On and its Tennessee battery plant.
Scrapping EV models is expected to cost the company $8.5 billion, while Ford expects liquidation to cost another $6 billion.
In addition, the company expects to pay another $5 billion in “program-related expenses.” Reuters.
Ford also said it would spread the nearly $20 billion in losses primarily into the fourth quarter and continue into next year and into 2027.
EV sales decline, Trump’s policy move
Ford’s move comes amid a sharp decline in electric vehicle sales in the United States.
EV sales fell nearly 40% in November alone after the $7,500 consumer tax credit for those looking to buy electric vehicles expired on September 30. The tax credit has been in place for more than 15 years to stimulate demand for electric vehicles and meet energy transition goals.
Beyond withdrawing federal support for EVs, Trump also eased tailpipe emissions rules by freezing the fines automakers pay for violating fuel economy regulations; This will likely encourage manufacturers to sell more fossil fuel-powered cars.
