Ford shifts focus from electric vehicles to hybrids and energy storage after initial setbacks.

Ford has unveiled a strategic shift in its vehicle production, focusing on ramping up hybrid models as electric vehicle (EV) sales slow down. This plan includes launching new products, such as an extended-range electric version of its F-series truck and battery storage systems to cater to the rising demand from AI data centers.

This announcement follows a challenging period for Ford’s EV sector, which has faced significant financial losses. The company, with over a century of history, once aimed to outpace Tesla in the battery-electric vehicle market. However, rising material costs and declining demand have turned that ambition into a financial burden. Over the last two years, Ford Model e, the company’s EV division, has incurred losses exceeding $12 billion, with a staggering 60 percent drop in EV sales reported in November alone. Now, Ford is ready to change course.

The automaker has stated that hybrids will take center stage moving forward. Ford anticipates that gas-electric hybrids, extended-range electric vehicles (EREVs), and smaller, more affordable battery-electric vehicles will account for 50 percent of its global sales by 2030, up from just 17 percent today. The company aims for its hybrid and EV operations to become profitable by 2029.

“Instead of pouring billions into large EVs that lack a clear path to profitability, we’re redirecting those funds into more lucrative areas, including trucks, vans, hybrids, EREVs, affordable EVs, and new ventures like energy storage,” said Andrew Frick, president of Ford Model e and Ford Blue.

This transition will come at a cost. Ford expects to incur a $19.5 billion charge in 2025, primarily in the fourth quarter, along with $5.5 billion in cash effects, mostly in 2026 and some in 2027.

Significant workforce changes are also on the horizon. Ford has decided to end its partnership with South Korean battery manufacturer SK On, allowing the company to take full control of the BlueOval SK battery factory in Kentucky. This facility will be repurposed for energy storage systems, leading to an estimated loss of 1,600 jobs, although Frick mentioned that up to 2,100 new positions could be created over time.

“This is a positive development for jobs and for maximizing the use of our plants,” Frick noted.

On the product front, Ford plans to replace its first-generation F-150 Lightning with an extended-range model capable of traveling up to 700 miles on a single charge. This new EREV truck will be manufactured at Ford’s Rouge Electric Vehicle Center in Dearborn, Michigan, with details on timing and pricing to be revealed later.

EREVs feature a small internal combustion engine that recharges the EV battery, alleviating range anxiety and addressing towing capacity concerns for truck owners. The F-150 Lightning was initially seen as a key player in promoting EV adoption in the U.S., but its high price, heavy battery, and range issues have hindered its success.

“It’s been a great truck for many, and it remains the bestselling electric pickup,” Frick said. “However, we’ve learned a lot from our first generation of EVs, and we understand that for many truck owners, the ability to tow heavy loads over long distances is essential. That’s why our next-generation F-150 Lightning will be an extended-range EV.”

The removal of the $7,500 federal EV tax credit also impacted sales, and electric trucks have always faced challenges due to their costly batteries, which push prices beyond what many consumers are willing to pay. With Ford now heavily invested in a new EV platform for more affordable models, the F-150 Lightning seems less aligned with the company’s future direction.

Additionally, Ford plans to leverage its previous EV investments by focusing on energy storage. With fewer EVs in production, the company intends to utilize its prismatic lithium iron phosphate (LFP) batteries for energy storage systems, targeting data centers and other applications. Lisa Drake, vice president of technology platform programs and EV systems, stated that energy storage “makes a lot of sense as a natural adjacency for us,” with plans to eventually expand into residential battery storage, although commercial customers will be prioritized initially.