Ford to record $19.5 billion in special charges related to EV pullback

Ford Motor’s Strategic Shift: Refocusing on Hybrid Vehicles and Adjusting EV Investments

Ford Motor has announced a significant restructuring of its business priorities, which includes a substantial shift in its investments in electric vehicles (EVs). The company expects to record around $19.5 billion in special items related to this restructuring, with most of these charges occurring in the fourth quarter. Additionally, Ford will incur $5.5 billion in cash expenses through 2027, with the majority of these costs being paid out next year.

The decision to restructure its business priorities is largely driven by the changing market landscape and consumer preferences. Ford CEO Jim Farley stated that the company is “following customers to where the market is, not where people thought it was going to be, but where it is today.” This shift in strategy is part of the company’s “Ford+” restructuring plan, which has undergone several transformations since its inception in 2021 as an EV growth plan.

Impact on Ford’s Financials and Business Operations

The charges announced by Ford, including $8.5 billion in write-downs of EV assets, will affect the company’s net results but not its adjusted earnings. In fact, Ford has increased its guidance for adjusted earnings before interest and taxes to approximately $7 billion in 2025, which is in line with its earlier target. The company’s new plans involve refocusing investments on hybrid vehicles, including plug-in models, and canceling the next generation of large all-electric trucks in favor of smaller, more affordable EVs.

Ford also plans to rebalance its investments in core products such as trucks and SUVs. The company’s all-electric F-150 Lightning pickup will transition to an extended-range EV, which includes an electric powertrain and a gas-powered generator. Furthermore, Ford announced plans to utilize its battery plants in Kentucky and Michigan for a new stationary energy storage business, which is expected to produce and ship units by 2027.

Market Trends and Consumer Preferences

The EV segment has experienced a sales slump in the US market after the federal tax credit for EV buyers was terminated in September. Although this policy change was not the sole reason for Ford’s strategic shift, it did play a role in the company’s decision-making process. Ford CEO Jim Farley noted that the high-end EVs, priced between $50,000 and $80,000, were not selling well, which prompted the company to reevaluate its investments in the EV segment.

Ford expects the changes to its business priorities to provide a path to profitability for its Model e electric vehicle business by 2029, with annual improvements starting in 2026. The company also anticipates that the changes will improve profits in its traditional Ford Blue unit and Ford Pro commercial and fleet business over time, with early signs of benefits emerging in 2026. By 2030, Ford expects approximately 50% of its global volume to consist of hybrids, extended-range EVs, and fully electric vehicles, up from 17% in 2025.