Ford no longer plans to make all-electric SUVs, saying drivers want hybrid vehicles
The Future of Three-Row Electric Vehicles: The Case for Hybrids and Plug-ins, and the Implications for Drivers and Consumers
Ford, which is the No. 2 U.S. EV company, had been working to produce an all-electric three-row SUV. But it tapped the brakes on that vehicle earlier this year, and now, Lawler and Ford say, it’s stalled. Instead, Ford will offer hybrid versions of the SUVs. The next EVs in its pipeline are now pickup trucks and commercial vans — areas where Lawler sees a competitive edge.
The best solution for those customers is a three-row SUV, hybrid or multiple propulsion technology, according to John Lawler, Ford’s vice chair and chief financial officer.
There is a lot of competition in the SUV segment. Most of the electric vehicles being planned for North America are two-rows and three-row SUVs, according to S&P Global.
These SUVs will be built as hybrids instead, leading to the company taking a non-cash charge of about $400 million for the sunk costs. The cancellation could result in an additional hit of over one billion dollars.
When it comes to electric vehicles, it’s all about the battery, according to the director of industry insights at Cox automotive. Depending on the variables, she added, batteries can account for up to 40% to 45% of a vehicle’s cost.
“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,” Lawler said. “Because … the cost of the battery is so outsized for vehicles like this.”
As battery technology improves the equation will change a bit. But she also says consumers may simply need to evaluate how much range they really need — and get used to the idea that a bigger battery means a bigger price tag.
“That’s why I think plug-in hybrids are a good option for consumers who want to go electric, but really need to have that option to [also use] gas if they need to go on a long trip,” she said.
The Future of the Automotive Industry: Where do we go from here? What are we going to do in the future of the auto industry? A comment on STREATY
STREATY said that Ford is not the only one changing its plans, noting that GM and other companies have also made reductions in production.
She said that car manufacturers like Ford have to be on the lookout for moving targets as they try to match consumer demand. It takes a lot to adapt to a different car ownership experience.
The CFO of Ford said in a call that the company was responding to market demand, and would be shifting away from its electric future and into other platforms.
“What we’ve learned is that customers want choice, and so we’re providing that choice, with a full lineup of EVs, hybrid, electric, gas and diesel products,” said Lawler.
The EV team Ford created is meant to be “Nimble” and take on China in a low-cost EV. Ford officials have revealed that a pickup will be the first vehicle from the Irvine, California, team.
He pointed out that they knew they had to change their approach after seeing what was happening in the market.
Being flexible, having a low cost and multiple low cost platforms, and being able to change as the industry grows, are what will make the difference between success and failure in this industry.
