US automotive giant Ford is focusing on hybrid production and delaying some electrification plans amid a downturn in battery electric vehicle (BEV) sales.

The company has discontinued production of a BEV three-row SUV to focus on hybrid models, due to “challenging” battery costs. It will instead shift to a new family of hybrid three-row SUVs, which is expected to cost $1.5 billion on top of a $400 million non-cash write-down.

Moving forward, Ford will only spend a third of its annual capital expenditures on BEVs, from 40% previously, Kallanish reports.

Moreover, production of the new BEV truck Project T3, initially scheduled for next year, has been delayed to 2027.

“Retiming the launch allows the company to utilise lower-cost battery technology and take advantage of other cost breakthroughs while the market continues to develop,” Ford says.

John Lawler, vice chair and chief financial officer, notes: “With pricing and margin compression, we’ve made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”  

The Michigan-headquartered group says it has “realigned” its battery sourcing plan in the US to cut costs and maximise capacity.

For example, Ford and LG Energy Solutions will move some Mustang Mach-E battery production from Poland to Michigan next year to qualify for IRA credits. Additionally, the BlueOval SK joint venture’s Kentucky 1 plant will bring forward cell production for the E-Transit and F-150 Lightning to 2025.

“We applaud Ford’s now 100% IRA qualifying battery sourcing strategy,” comments Tom Narayan, an analyst at RBC Capital Markets. “Expanding hybrids probably makes sense currently in the US given soft BEV demand, although we could envision a scenario where BEV demand recovers later in the decade thanks to better pricing, improved charging infrastructure, and lower battery costs.”

Shares rose by 1.59% on Wednesday.