Ford Faces $1.9 Billion Write-Down Citing Cancellation of Ford Mega SUV Plan.

Ford Struggling to Continue its Sport Utility Vehicle Plan Citing low EV Demand. For Cancelling the Mega SUV Plan it Expects to Face Extra Cost of $1.9 Billion. Jim Highlighted, "Demand is what demand is… we are not going to go into the market and discount for market share...,” 

United States based Multinational Car Brand Ford recently made a big announcement on Wednesday. Ford declared that it is cancelling its large electric sports utility vehicle plan citing lower than expected demand for electronic vehicle.

Ford Cancelled Ford Mega SUV Project Citing Lower than Expected Market Demand 

Ford has canceled its plans for electric vehicles at a time when major car brands in the market have already slowed down the pace of EV projects due to the lack of demand for electric vehicles — In fact, few companies have even abandoned it.

However, Ford is fully aware that if the Mega Electronic Project is shut down, the company will have to bear more loss in the present. But surely in the further, this decision will contribute to the company's profit. 

Expected Extra Cost stands at 1.9 Billion which Include Shut Down of Ford F-150 Lightning 

The company has estimated the Extra Cost to be around $1.9 Billion which is related to their EV production adjustments, including the F-150 Lightning. 

Ford has discontinued its Ford F-150 Lightning model which was launched in 2021. F-150 Pickup Truck has an all electric version and its price starts from Rs 30-35 lakhs. Due to low demand, the company had to do price adjustment and production scaling but finally its production was stopped in mid 2023. 

Apart from Ford, many big companies have already taken this step which includes well established brands like Honda, Toyota and General Motors. 

Car Companies are Focusing more on Hybrid Technology, Citing Higher than Expected Demand

Seeing the low demand for EV in the market, Ford has started focusing on Hybrid Technology. Last year in July the owner of Ford Jim Farkey While addressing to the Challenging in the EV market said, 

"Demand is what demand is… we are not going to go into the market and discount for market share,” indicating that Ford would not chase sales at the expense of profitability. 

"Our hybrid customers are growing almost 40 percent this year… We are a leader in that area, and that is going to be a big part of our strategy,”. Highlighting that Ford is Focusing more on Hybrid Technology alongside Electronic Vehicles.

Honda and General Motors Shut Down Production of Electric Vehicles 

Honda launched an EV named as "Clarity Electronic" in 2017 after which the company had to discontinue it in 2020 as it was Struggling with low sales, only a few thousands units of it were sold in the US.

Not only Ford but General Motors also suffered a loss of $1.5 billion by discontinuing the production of Chevrolet Bolt EV and Bolt EUV. This loss is associated with higher production cost and Shifting to new platforms. 

Electric Vehicles Surge: 10.6 Million Sold in 2022, Projected to Reach 30-40% Market Share by 2030

As of 2022, a total of 10.6 million electric vehicles have been sold, in which an increase of 55% has been reported as compared to 2021. By the end of 2022, there were approximately 26 million electric vehicles on the road globally. It is Expected that by 2030, the Global share of Electronic Vehicles will increase significantly to 30-40%. 

If we focus on southern State of the United States like Alabama, the contribution of electric vehicles in total car sales in 2022 is only 0.1%, whereas the national average is approximately 5-6%.

Even after the government's push towards EV, the contribution of electronic vehicles as of Total Car sale in India is positioned at only 1.3%.