Ford is rethinking its electric vehicle strategy, putting the brakes on plans for an all-electric three-row SUV and shifting focus to hybrid models instead. This move comes as the automaker grapples with profitability challenges in the EV market, according to a report from NPR.

Hybrid Tech: Ford’s New Best Solution for SUVs

John Lawler, Ford’s vice chair and CFO, explained the company’s rationale during a recent conference call with journalists.

“When you look at the three-row SUV, hybrid technologies or multiple propulsion technologies, for those customers, is the best solution,” he said.

This strategic pivot reflects Ford’s new requirement for vehicles to become profitable within a year of launch – a tough ask for all-electric SUVs given current market conditions.

EV Market Cooldown and Fierce Competition

Ford’s decision comes amid a cooling EV market on the consumer side, despite businesses ramping up their offerings.

Lawler pointed out the intense competition in the SUV segment, citing S&P Global data that shows “about 143 EVs in the pipeline right now for North America – and most of those are two-row and three-row SUVs.”

The Battery Equation

The shift from full EV to hybrid for larger vehicles like three-row SUVs is largely driven by battery economics. Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told NPR, “With EVs, it’s all about the battery.” She noted that batteries can account for up to 45% of a vehicle’s cost.

Lawler elaborated on this point: “When you can take down the battery size, whether it’s a plug-in or some type of extended-range type vehicle – on these larger vehicles, like a three-row SUV, the profit profile is better. Because … the cost of the battery is so outsized for vehicles like this.”

Ford’s EV Future

While Ford is pivoting on SUVs, it’s not abandoning EVs entirely. The company will continue selling its current electric lineup, including the Mustang Mach-E and F-150 Lightning pickup. Future EV efforts will focus on pickup trucks and commercial vans, areas where Ford sees a competitive edge.

The company is also moving battery production to North America to take advantage of production and consumer incentives.

Industry-Wide Adjustments

Ford isn’t alone in recalibrating its EV plans. Streaty noted that GM and Tesla have also seen production cuts. “There’s still consumer demand,” she said. “We had a record quarter last year for EVs in the U.S., but the pace of growth is slowed down.”

EVXL’s Take

While Ford’s shift towards hybrids for larger SUVs might seem like a step back for EV enthusiasts, it’s important to view this in the context of the broader EV transition. As we’ve seen in our Tesla coverage, even industry leaders face challenges in scaling EV production profitably. Ford’s strategy to focus on hybrid tech for larger vehicles while continuing to innovate in the EV space with trucks and vans shows a nuanced approach to electrification.

This move could actually accelerate EV adoption in the long run by offering more affordable options to consumers who aren’t ready to go fully electric. As battery technology improves and costs decrease, we may see Ford and other automakers revisit all-electric options for larger vehicles. In the meantime, hybrid SUVs could serve as an important bridge technology, helping more drivers experience the benefits of electrification.

What do you think about Ford’s decision to prioritize hybrid SUVs over all-electric models? Share your thoughts in the comments below.

Foto cedida pela Ford