American legacy automaker Ford disclosed plans to delay its planned electric vehicle investment worth approximately $12 billion due to high prices affecting customer demand, CNBC reports.
This enormous investment covers its battery factory joint venture with South Korea’s SK On.
“Demand for electric vehicles continues to increase in the U.S. but not at levels anticipated. To meet demand and ensure our success, BlueOval SK Battery Park in Kentucky will postpone production at its second plant, known as Kentucky 2.”
Ursula Madden, BlueOval SK external affairs director (via WDRB.com)
Pricing issues
North America-based customers reportedly got more cautious now in buying expensive electric vehicle models.
According to the report, buyers have resisted paying a premium for an electric car when they can access much cheaper gas-powered or hybrid models.
In effect, Ford struggled to hit its goal of boosting its EV production. Despite that, company executives clarified that there are no plans to reduce its planned investment for new EV models. However, it now aims to prioritize accelerating its production capacity.
“We’re not moving away from our second generation [EV] products. We are, though, looking at the pace of capacity that we’re putting in place. We are going to push out some of that investment.”
CFO John Lawler said in a media briefing Thursday
Ford postpones the second of the two planned battery factories in Kentucky
It is worth noting that the $12 billion planned investment includes Ford’s proposed second battery plant in Kentucky.
Nonetheless, CFO Lawler highlighted that Ford will still pursue the Blue Oval City’s development in Tennessee.
“The customer is going to decide what the volumes are. Ford is able to balance production of gas, hybrid and electric vehicles to match the speed of EV adoption in a way that others can’t.”
CFO John Lawler said in a media briefing Thursday
Ford Model e’s YTD performance
Ford released its Q3 2023 Earnings Report on Thursday, revealing a $1.3 billion loss in earnings before interest and taxes in its electric vehicle business unit.
Ford Model e’s significant loss represents about a twofold increase from its loss in the same period last year. Nonetheless, its revenue grew 26% YoY.
Moreover, Ford Model e’s operating loss reached approximately $3.1 billion in the first three quarters of the year. It aligns with the automaker’s previously set guidance of $4.5 billion operating loss for the entire year.
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Lexington Herald Leader reported that BlueOval will still pursue battery production in 2025 as planned. However., the official commencement date remains unclear.
Notably, Ford is not the only automaker to delay EV plans due to the ongoing waning demand caused by high sticker prices and surging interest rates.
