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."Those expected newcomers are largely Chinese automakers, such as Warren Buffett-backed BYD, that have been rapidly growing from their home market to Europe and other countries.up to $1.9 billion.

Ford's current EVs — the Mustang Mach-E crossover, F-150 Lightning and a commercial van in the U.S. – are not profitable overall. The Model e operations have lost nearly $2.5 billion during the first half of this year and lost $4.7 billion in 2023. Ford CFO John Lawler said Wednesday the company's future capital expenditure plans will shift from spending about 40% on all-electric vehicles to spending 30%. He did not give a timeline for the change, but it's a massive swing from when the company announcedThe hybrid plans include offering such options across its entire North American lineup by 2030, including three-row SUVs, to assist in meeting tightening emissions and fuel economy requirements.

GM's current lineup includes three all-electric large pickup trucks, a Hummer SUV, two recently launched Chevrolet crossovers and a luxury Cadillac crossover and $300,000 Celestiq car. Several more crossover models and an all-electricfor its EVs to be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.

 

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