Revitalizing their vision: Ford’s avant-garde maneuver in the realm of cutting-edge Electric Vehicles. Unveiling a pioneering chapter: Factory battery investment takes a backseat as Ford reveals Gen 2 vehicles with lowered production costs.

During Ford’s Q4 2023 earnings call last week, CEO Jim Farley announced a strategic shift in the company’s electric vehicle (EV) investment strategy, delaying battery factory investments to adapt to the rapidly evolving EV market.

Farley explained that supply chain challenges during the COVID-19 pandemic resulted in chip shortages, causing EVs to sell regardless of the scale of production. Coupled with low financing costs due to low interest rates between 2021-2022, Ford misjudged customer intentions. Initially, Ford saw strong demand for its EV lineup, but once the early adopters bought in, the company discovered that the next wave of customers were reluctant to pay a premium for an EV. Tesla had faced this issue earlier than other companies, and Ford quickly had to adjust accordingly.

Looking at EV sales statistics in the second half of 2023 in the United States, it becomes apparent that while the number of EVs delivered increased, overall revenue decreased due to excessive inventory forcing significant price reductions. This problem was also seen in China and Europe.

The transformation of the EV market has resulted in Ford’s EV business (referred to as Model e) losing $4.7 billion in 2023 (while the company as a whole is still profitable by $4.7 billion). The company anticipates that EV sales will account for 40% of total sales by the end of 2024.

In this market scenario, Ford has postponed investments in several planned battery factories and adjusted the release of its Gen 2 electric vehicles until the actual cost is feasible for profitable sales.

An intriguing point to note is that Farley disclosed that Ford has secretly been building a new EV platform with a team of engineers for the past two years. This platform is specifically designed for low-cost, high-performance EVs, aiming to compete with Tesla’s upcoming models and affordable Chinese EVs.

Farley has yet to reveal which models will utilize this new platform and when they will be unveiled.

TLDR: Ford is adjusting its EV investment strategy due to supply chain challenges and changing customer expectations, delaying battery factory investments and the launch of its Gen 2 electric vehicles. The company has been secretly developing a new EV platform to compete in the next era of EVs, targeting affordability and performance.