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Ford Motor Co. (NYSE: F) is making strategic adjustments in its electric vehicle (EV) plans, leading to a positive reaction from investors.
On Wednesday, the automaker announced the cancellation of its planned three-row electric SUV launch and the delay of a new EV factory in Tennessee.
These changes reflect a broader trend in the automotive industry, where slower-than-expected EV adoption has prompted companies to reassess their strategies.
Ford’s decision to scale back on its EV ambitions comes as the adoption of electric vehicles has lagged behind expectations.
Contributing factors include supply chain constraints, inadequate charging infrastructure, and persistent concerns about vehicle range.
This announcement follows a similar move by rival General Motors (GM) last month, which also adjusted its EV production targets.
However, while GM stock has managed to stay in the green for the year, Ford’s shares have struggled.
Despite these challenges, Ford’s stock saw an uptick in premarket trading following the news.
Investors appear to be reacting positively to the company’s decision to pivot towards hybrid vehicles.
The demand for hybrids has remained strong, even as the EV market faces hurdles.
This shift in focus could position Ford more favorably in the near term as it balances innovation with consumer demand.
While Ford is slowing down its EV rollout, the company is not abandoning its electric ambitions entirely.
Ford has announced plans to introduce a new electric commercial van in 2026 and two electric trucks by 2027, which will be manufactured at the Tennessee plant.
However, production of battery cells at the Tennessee facility will begin in 2025, a timeline that remains unchanged.
This strategic pivot towards hybrids, coupled with a more cautious approach to EV production, reflects Ford’s intent to navigate the current market conditions effectively.
The company’s hybrid models have seen robust demand, making this a sensible focus area as it continues to develop its electric vehicle lineup.
Ford’s decision to delay its EV plans will incur additional costs, estimated to be up to $1.5 billion.
This includes a non-cash charge of approximately $400 million. The company has indicated that these expenses will be reported as a special item in the relevant quarter.
Despite the recent struggles of Ford’s stock, which has underperformed in recent weeks, it remains attractive to income-focused investors due to its lucrative dividend yield of 5.62%.
CEO Jim Farley reiterated Ford’s commitment to innovation and job creation in the US, emphasizing the company’s dedication to delivering new electric and hybrid vehicles that contribute to CO2 reduction.
Ford’s decision to adjust its EV strategy comes after a second-quarter earnings report that significantly missed Wall Street estimates.
Currently, analysts have a consensus “hold” rating on Ford shares, with an average price target of $13.42—suggesting potential for over 25% gains from the current trading levels.
As Ford recalibrates its strategy to align with market realities, its focus on hybrids and selective EV rollouts could offer a more balanced approach in the evolving automotive landscape.
The post Ford scales back EV plans, shifts focus to hybrids: What this means for investors appeared first on Invezz
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