Ford Motor Co. (F) is pausing production on electric vehicles and pivoting to gas-electric hybrids that the company says are more in demand among consumers.
The Detroit automaker is delaying or canceling $12 billion U.S. in planned spending on new electric vehicles due to shifting market conditions as well as difficulties in profitably building and selling the cars and trucks.
The shift in strategy to hybrid vehicles means that Ford is delaying production of a new all-electric large sport utility vehicle (SUV) at its manufacturing plant in Oakville, Ontario.
Ford had planned to start producing the three-row SUV in 2025 but now says that it won’t start making the electric vehicle until 2027.
Ford is also postponing production of a new fully electric pick-up truck it has codenamed “T3” to 2026.
The entire automotive industry is shifting to hybrid gas-electric vehicles and away from fully electric models as adoption has been slower than expected and production costs remain high.
The infrastructure needed for electric vehicles such as public charging stations has also failed to keep pace with the automakers’ production, further hurting consumer adoption.
Ford employs 2,700 workers at its Oakville plant. In 2023, the automaker announced plans to spend $1.8 billion to transform the manufacturing hub so that it could begin making the electric SUV and battery packs.
The Oakville plant will continue to be refurbished so that it can eventually make the fully electric SUV starting in 2027. However, the delay in production will result in layoffs, said Ford.
The automaker said it will work with Unifor, the union that represents 3,200 workers at Ford’s Oakville plant to mitigate the impact of layoffs.
For its part, Unifor said it wants Ford to consider all options to lessen the negative impact on workers.
Ford’s stock has risen 6% in the last 12 months and currently trades at $13.21 U.S. per share.
