The 41-day United Auto Workers strike took a toll on Ford, leading to a $1.3 billion hit to its Q3 earnings, and forcing the automaker to reevaluate its electric vehicle (EV) strategy.
One significant development is the postponement of approximately $12 billion in planned EV investments. Ford is slowing down the construction of one of two joint-venture battery plants with South Korean manufacturer SK On. Ford said the decision was prompted by shifting market dynamics and a slower-than-expected adoption of EVs among consumers. Despite the delay, Ford remains committed to launching the next generation of EVs and continuing development on a third generation.
The company says it is also adjusting its plans to better align with market demand. This includes slowing down production of the Mustang Mach-E. According to Ford CFO John Lawler, “Given the dynamic EV environment, we are being judicious about our production and adjusting future capacity to better match market demand.”
Ford’s focus is on achieving price parity with internal combustion engine (ICE) vehicles. The company has recognized that consumers are reluctant to pay a premium for EVs, which has impacted profitability. To address this, Ford aims to reduce operational costs and offer more affordable EV options.
Ford has already introduced the F-150 Lightning Flash pickup, a more cost-effective version of the F-150 Lightning, and plans to launch second and third-generation vehicles at lower price points.
Ford isn’t the only automaker delaying its EV plans and also blaming them on the UAW strike. General Motors (GM) also announced this week it is scaling back its EV ambitions, deciding to slow the launch of several EV models and cut back on EV product spending in an effort to manage costs effectively. GM also abandoned its $5 billion plan to jointly develop affordable EVs with Honda.