Ford Motor Co. is revising its electric vehicle (EV) strategy amid a slowdown in the plug-in market and significant financial losses within its EV unit. The automaker has started reducing orders from battery suppliers, including South Korea’s SK On Co., LG Energy Solution Ltd., and China’s Contemporary Amperex Technology Co. Ltd. (CATL), to mitigate escalating losses in the EV sector.
The company is reportedly facing a challenging period, with projected losses for its EV unit potentially neutralizing the profits from its traditional internal combustion engine division, Ford Blue. Bloomberg Intelligence analysts Steve Man and Peter Lau noted the company's situation is prompting questions about the wisdom of heavy investment in the EV market.
John Lawler, Ford's chief financial officer, acknowledged the financial challenges during an April 24 earnings call, stating, "We’ve seen prices coming down quite dramatically and that’s why we haven’t been able to keep up from a cost reduction standpoint."
The downturn in the EV market is not only affecting Ford but also causing ripples across the industry. U.S. automakers are encountering weaker EV demand than anticipated, and battery manufacturers in Asia are grappling with excess inventory. This has consequently impacted the commodity market, depressing prices for essential metals like lithium, cobalt, and nickel to multiyear lows, causing project delays and mine closures.
