In a context of strategic readjustment, Ford, the American automobile giant, is now directing its future towards smaller electric vehicles (EVs). The move follows a period of significant losses in its EV division, highlighting a notable shift in consumer demand and economic realities of the sector.
With a final quarter marked by an operating loss of $1.57 billion in the EV segment, compared to an operating profit of $1.8 billion in the utility vehicle sector, Ford recognizes the need for evolution. This pivot towards smaller, more affordable EVs represents a direct response to a customer base reluctant to pay a premium for electrification, while adjusting future investments to real market demand.
A strategic shift towards accessibility
Ford announces a change of direction by favoring the development of more compact EVs, a strategy which seems to align with a broader movement in the automobile industry. Jim Farley, CEO of Ford, emphasizes that this orientation towards less expensive vehicles is dictated by the preferences of consumers, who show an interest in electric without agreeing to pay the high price. This modulated approach promises to better meet market expectations, while paving the way for broader adoption of EVs in the long term.
An unshakeable conviction in electric
Despite the adjustments, Ford remains firmly committed to the transition to electric, a vision shared by its leader who considers electrification as inevitable. The COVID-19 pandemic initially inflated expectations for EV sales, forecasts that proved overly optimistic in the face of market reality. Nonetheless, the company anticipates gradual acceptance of EVs by a broader customer base, despite a longer-than-expected path to profitability.
Faced with international competition
Ford identifies Tesla and Chinese manufacturers as its main competitors in the EV space. Tesla’s more affordable business model, along with offerings from Chinese automakers, represent Ford’s most pressing competitive challenges. These players, who plan to expand their production in the coming years, are pushing Ford to rethink its strategy to remain competitive in a rapidly changing market.
In Germany, the EV market is showing signs of moderate growth, with an 11.4% increase in new EV registrations last year, a slowdown from the 30% growth seen the year before. Experts attribute the slowdown to high car prices and the sudden end of EV subsidies, highlighting the challenges Ford and other manufacturers face in a changing market environment.