“We believe smaller, more affordable vehicles are the way to go for EV in volume.” So said Jim Farley, CEO of US automaker Ford as recently as late July, as he described his firm’s BEV strategy.
And he expanded that the target market for these new vehicles would be commuters, as the “use case for smaller, affordable vehicles means shorter trips, more urban locations”, arguing that such usage “fits the duty cycle of an EV”. So, a month later, when Ford offered up more details on a revised BEV product line-up, there was a lot more information on the new sub-$40,000, and even sub-$30,000, smaller commuter vehicles Ford will be making, right?
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Err, no. Farley instead trumpeted a commercial van and two e-pickups, one midsize and one large. “Other future affordable vehicles” warrant a passing mention, but no specifics. It is as if the firm cannot bring itself to trust what it knows to be true about the short-to-medium-term road to success in US BEVs, because it represents too much of a departure from what has been successful in its ICE strategy.
There are parts of Ford’s pivot that make a lot of sense. The new all-electric commercial van that will begin production in 2026 in Ohio is logical given that Ford sees that “commercial customers are transitioning more quickly to electric vehicles as they value the total cost of ownership and the productivity benefits that electric vehicles can provide”.
“For them, vehicles, software and charging solutions are tools, and they want the best tools for the job and their bottom line, whether it is an E-Transit or an F-150 Lightning Pro,” the firm says. It is often overlooked that the eye-catching red ink surrounding Ford’s Model e EV division tells far from the full story of the firm’s BEV economics — all fleet sales, be they BEV, hybrid or ICE, are covered off in the Ford Pro division.
So, while Ford is losing money on private sales of Mustang Mach-E and F-150 Lightnings, it is likely that the fleet management tools it can bundle in with BEVs sold to corporate customers makes for a different picture, albeit one on which there is little detail. Nonetheless, another all-electric van should further improve this aspect of Ford’s BEV business.
Skunkworks first
Nor is it any surprise that the next all-electric passenger vehicle, a midsize e-pickup launching in 2027, will be a product developed by the so-called ‘skunkworks’ team in California, rather than any of the second generation BEVs Ford has been developing in Detroit. Just a month after Farley revealed the existence of the project in early February — the official narrative is that it began work in early 2022, although the acquisition in November last year of AMP, a Californian maker of energy management systems for EVs, may have transformed the group’s capabilities — Ford CFO John Lawler was referring the skunkworks-developed products as ‘Gen 2A’.
So all Ford is doing with the official insertion of a new midsize truck built on the skunkworks platform ahead of the Gen 2 large e-pickup — which has been further pushed back from its revised 2026 target to the second half of 2027 — is confirming a pivot it had long been signalling. What is new, aside from the delay to the large truck — once described by Farley as “one of the most thrilling vehicles I have ever seen in my career” — is that the planned all-electric three-row SUV is now cancelled.
Ford will take a special non-cash charge of c.$400mn for the write-down of certain product-specific manufacturing assets on the project, while it plans a new family of electrified three-row SUVs which will include hybrid technologies.
But even this should not come as a major shock. Ford has been consistent on its messaging that it will likely make fewer large BEVs, not more.
So, in a segment where Ford would face challenges that Farley highlighted last month around affordability owing to battery size, without any compelling Ford USP to surmount that hurdle, a casualty is perhaps unsurprising.
“An affordable electric vehicle starts with an affordable battery. If you are not competitive on battery cost, you are not competitive,” Farley reiterates.
In contrast, Ford sees its Pro Telematics software for commercial buyers of e-pickups “increas[ing] the installed base for software and services — improving Ford’s mix of sticky, profitable revenue over time”, which may have merit as a strategy. But attempting, as Ford does, to suggest that its Bluecruise advanced driver assistance systems technology offers a similar opportunity among private truck buyers seems much more of a stretch.
Where Ford really falls down, though, is in the lack of any plans for smaller BEVs before 2028 at the earliest. Remember that last month Farley told analysts that “the true fitness test for EV profitability will be on these small vehicles”.
“The only way, we believe, to be enduring is to make money on small EVs and commercial. And that is our bet,” he continued. Ford is promising an update on its electrification, technology, profitability and capital requirements in the first half of 2025. More on additional BEV products beyond the van and trucks before then would be reassuring.
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