Ford will defer about $12 billion in electric vehicle investments

Ford workers produce the F-150 Lightning electric pickup on Dec. 13, 2022 at the automaker’s Rouge Ford Electric Vehicle Center (REVC).

Michael Weiland | CNBC

As a result, it is delaying about $12 billion in planned spending on new electric vehicle manufacturing capacity.

Customers’ reluctance to pay extra for electric vehicles has complicated Ford’s ambitious and expensive plans to dramatically increase production of those vehicles. While Ford’s — and the industry’s — sales of electric vehicles are growing, they are not growing at the pace Ford expected.

Ford executives confirmed that the company is not reducing its spending on future electric car models. But it now plans to increase its electric vehicle manufacturing capacity, and its spending on that capacity, more gradually than previously planned.

“We are not moving away from our second generation [EV] Products,” CFO John Lawler said in a press conference Thursday. “We are, though, looking at the pace of the capacity that we put in place. We will pay back some of that investment.”

Ford Motor Co. said Thursday that many North American customers are no longer willing to pay a premium for an electric vehicle over an internal combustion or hybrid alternative.

Lawler said Ford will postpone about $12 billion in planned spending on electric vehicle manufacturing capacity, Including a second battery factory planned for the new Kentucky campus. But he noted that construction of Blue Oval City — Ford’s new electric vehicle manufacturing complex in Tennessee — will continue as originally planned.

“The customer will decide what the quantities are,” Lawler said. “Ford is able to balance production of gas, hybrid and electric vehicles to match the speed of electric vehicle adoption in a way that others cannot.”

As part of its third-quarter earnings report, Ford said Thursday that its electric vehicle business unit, called Ford Model E, lost $1.3 billion on an operating basis in the period. That’s nearly double its loss a year ago, despite a 26% increase in revenue.

Through the first three quarters of 2023, Model e posted an operating loss of about $3.1 billion, in line with Ford’s previous guidance calling for a full-year operating loss of $4.5 billion for the Model e business unit.

Ford withdrew all of its 2023 guidance on Thursday in light of its tentative agreement with the United Auto Workers union.