Ford Motor Company announced a massive $19.5 billion write-down tied to its electric vehicle (EV) business, reflecting one of the largest-ever financial hits in the automotive sector and a dramatic strategic pivot away from earlier EV ambitions. The move marks a major shift for the legacy U.S. automaker as it grapples with rising costs, weakening demand for battery-only vehicles, and changing regulatory incentives.
📉 What the $19.5 Billion Charge Includes
According to company disclosures and detailed reporting, Ford’s $19.5 billion charge comprises multiple components tied to its EV operations:
- $8.5 billion for cancelling several planned all-electric models, including a large EV pickup and commercial electric vans.
- $6 billion from dissolving a joint battery venture with South Korea’s SK On, part of Ford’s EV supply chain plans.
- $5 billion in program-related expenses, covering development and tooling costs now deemed unrecoverable
Ford said only a portion of this charge — about $5.5 billion in cash outflows — will come through in the near term, with additional accounting impacts continuing through 2026 and into 2027.
🔄 Why the Write-Off Is Happening
📉 Weak EV Demand and Market Realities
U.S. electric vehicle sales have fallen sharply, with EV share declining as federal tax credits expired and consumer preference shifted toward more affordable, practical vehicles. Ford’s EV lineup — particularly large battery-only models — hasn’t resonated with buyers at expected volumes, prompting a recalibration.
🔁 Policy and Regulatory Changes
Changes under the current U.S. administration — including the end of the $7,500 EV tax credit and eased emissions requirements that favour gasoline vehicles — have further reduced incentives for EV purchases, directly affecting automakers’ strategies. mint
🚗 Strategic Business Shift
Ford is now shifting its focus toward hybrid vehicles, extended-range electric vehicles (EREVs), and affordable, smaller EV models, rather than large, premium battery-only vehicles. The company says this mix will better reflect actual consumer demand.
🚗 Key Changes to Ford’s EV Plans
- Ford is discontinuing the all-electric F-150 Lightning — one of its marquee EV models — replacing it with an extended-range version that uses an internal combustion engine to charge the battery
- Several next-generation EVs planned for future release have been cancelled entirely.
- The company plans to launch a $30,000 midsize EV pickup in 2027, developed by a smaller internal team, as its new core EV offering.
🧭 What This Means for Ford and the Industry
⚙️ Profitability Focus
Despite the large write-down, Ford raised its 2025 profit guidance to around $7 billion in adjusted earnings before interest and taxes (EBIT), signalling confidence that reducing EV losses and focusing on hybrids and gas models will support financial stability.
📊 Industry Trend
Ford’s move reflects a broader trend in the auto industry, with other major manufacturers also scaling back expensive EV initiatives amid slower than expected adoption and persistent high battery costs. mint
🔋 Battery Plant Repurposing
Ford plans to repurpose EV battery plants for energy-storage battery production, targeting growing markets such as AI data centres and utility storage — diversifying its business beyond passenger EVs.
