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Alex Onea

Ford Delays EV Production to Focus on High-Demand Super Duty Trucks

In the ever-evolving landscape of the automotive industry, Ford Motor Company is making waves with its latest strategic shift. As the electric vehicle (EV) market continues to grow, Ford has made a surprising yet smart move that could significantly impact its profitability. Instead of pushing forward aggressively with EV production, the company is taking a step back to focus on what it does best: building highly profitable trucks. This decision, influenced by expert analysis and the current market climate, demonstrates Ford's ability to adapt and prioritize its strengths.

Recently, analysts like John Murphy from Bank of America have suggested that Detroit automakers, including Ford, should pivot their strategies. With recommendations to focus on highly profitable trucks and reduce their footprint in China, Murphy even suggested that automakers should delay their EV ventures until they can achieve similar profitability to industry leader Tesla. While halting EV production entirely isn’t feasible for Ford, the company is making significant adjustments to reduce its EV losses, which are projected to reach $5.5 billion in 2024.


Ford’s new strategy focuses on increasing the production of its highly profitable Super Duty pickup trucks at its Oakville, Ontario plant. This represents a major shift from the original plan, which was to convert the plant into a facility for making two three-row electric crossovers by 2025. Instead, due to strong demand and better profits from the Super Duty trucks, Ford has postponed the crossover production until 2027. This decision highlights Ford's commitment to refining its production approach to boost profitability and better meet market needs.


The rationale behind Ford's strategic shift is clear: to meet the high demand for Super Duty trucks and delay the production of less profitable EVs. In the first quarter alone, Ford's EV business unit, Model e, faced a loss of $1.3 billion. On the other hand, Ford Pro, which includes the popular Super Duty trucks, brought in $3 billion, with an EBIT margin of 16.7%. This margin is much higher than that of Ford Blue, the company’s gasoline-powered division, which had a 4.2% EBIT margin. By focusing on the more profitable Super Duty trucks, Ford hopes to improve its financial performance and carefully handle its move into the EV market.


Looking ahead, the future of the automotive industry clearly involves electric vehicles, but the expected rapid growth is likely to be slower than initially predicted. Ford is adjusting its strategy to meet this challenge by shifting its focus away from EVs until it can make them more profitable. As part of this plan, the company has already delayed several EV projects in order to cut spending by $12 billion. Investors should keep a close eye on Ford’s progress over the next 18 months, particularly on improvements in EV production efficiency and cost reduction. This strategic shift is designed to position Ford more favorably as it navigates the changing market.


In summary, Ford's decision to delay EV production in favor of increasing Super Duty truck production reflects a strategic shift designed to improve profitability and meet market demand. By focusing on its strengths and profitable trucks while delaying less profitable EV projects, Ford is positioning itself to better handle the changing automotive market. Investors should watch how these changes will affect Ford's financial health and future growth in the coming months.


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