Why Ford believes its $1.9 billion shift in EV strategy is the right choice for the company, investors

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The shifts in the automaker’s electric vehicle strategy will cost the Detroit automaker up to $1.9 billion in expenses and write-downs.

Ford Motor believes prioritizing smaller vehicles will help the company on its path to EV profitability.

"We're quite convinced that the highest adoption rates for electric vehicles will be in the affordable segment on the lower size-end of the range," he told CNBC on Thursday."We have to play there in order to compete with the entrants that are coming." Farley has said the weight and cost of battery packs needed for large vehicles such as a three-row SUV, which many families buy for road trips, towing and hauling, are a limitation for EVs due to current ranges and charging networks.UAW president slams Stellantis CEO over job cuts, alleged price gouging

"Overall, these changes will position Ford to benefit from growing demand for EVs, while also focusing on areas in which it has a Core competitive advantage," BofA's John Murphy wrote Wednesday in an investor note."Given the size of the charge, this is clearly a tough decision in the short-term, but we think makes sense in the medium to long-term given what will likely be subpar economics in the three-row CUV/SUV segment.

"As we've watched in the last 18 to 24 months, the emergence of incredible products and formidable competitors in China has really been, I think, the story for us," Gjaja said."And so now, when we look at the competitive landscape, we have to chin ourselves against the most competitive companies in China.

 

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