Ford Motor Company F is scrapping plans for a large electric sport-utility vehicle and expects to take $1.9 billion in related write-downs on the move as the automobile giant adjusts to softer-than-expected demand for electric vehicles.
Ford instead plans to offer hybrid gas-electric versions of three-row SUVs for models that include Explorer and Expedition, the Wall Street Journal reported.
Ford also delayed launching a new electric pickup truck by a year, until 2027, and said it would lower capital spending on fully electric vehicles from 40% to about 30% of its budget.
Ford has said its EV business is expected to lose about $5 billion in 2024, having lost about $44,000 on every EV sold in the second quarter.
As Ford plans to include more hybrids in its EV offerings, it also has several full EVs in the works, including an electric commercial van that it expects to start making in 2026 and two new pickup trucks set for production in 2027.
Ford is not alone in adjusting its EV plans as consumer demand for battery-powered vehicles came in less than expected.
In June, General Motors Company GM delayed opening a suburban Detroit factory being renovated to build electric pickups and delayed the release of a Buick EV.
Ford Chief Executive Jim Farley has said that China's EV companies have the advantage of a lower-cost supply chain and Ford needs to find ways to lower its costs to compete.
Ford said it would take a special, noncash charge of $400 million to write down expenses related to canceling the electric SUV and possibly an additional expenses of $1.5 billion to be reflected as special items in future quarters.
EV sales rose 6.8% during the first six months of 2024, marking a sharp decline of nearly 50% growth last year, Motor Intelligence data showed.
Price Action: Ford gained 1.59% to close at $10.85 on Wednesday, while exchange-traded funds that follow the stock also tracked upward.
- First Trust Nasdaq Transportation ETF FTXR rose 0.91%
- Invesco S&P Ultra Dividend Revenue ETF RDIV went up 0.15%
- IShares U.S. Manufacturing ETF MADE picked up 1.02%
- Brookstone Dividend Stock ETF BAMD edged up 0.60%
- Invesco S&P 500 Pure Value ETF RPV moved up 0.57%
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