Ford to Increase Battery Production with Korean Companies... Cancels SUV Production Amid Electric Vehicle Market Slump

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U.S. automaker Ford has decided to expand battery production in the United States in cooperation with Korean companies to benefit from the Inflation Reduction Act (IRA) and to advance the production timeline. However, due to sluggishness in the electric vehicle market, the plan to produce electric sport utility vehicles (SUVs) has been withdrawn.

On the 21st (local time), Ford announced a revised plan for electric vehicle and battery production based on these points. As the growth of the electric vehicle market slows, the plan includes slowing down electric vehicle production while increasing battery production in the U.S. to qualify for IRA benefits.

The key focus is cost efficiency. First, Ford announced that it will cancel the production plan for the 3-row SUV electric vehicle, which had previously been postponed. Earlier, Ford had delayed the launch of the 3-row SUV electric vehicle from 2025 to 2027, but now the production plan has been completely withdrawn.

Ford also decided to delay the launch of a new electric pickup truck by one year to 2027. The annual capital expenditure ratio related to pure electric vehicle production will be reduced from 40% of the total budget to 30%.

Ford’s decision to slow down electric vehicle production comes amid an overall market slowdown and intensified price competition with Chinese electric vehicle manufacturers, leading to increased losses. Ford expects to incur a $5 billion loss in its electric vehicle business this year alone.

John Lawler, Ford’s Chief Financial Officer (CFO), stated, "We will change and adjust our business direction and make difficult decisions according to the market and customer conditions."

On the other hand, Ford plans to increase electric vehicle battery production in the U.S. and advance the production schedule to benefit from the IRA tax incentives under the Joe Biden administration.

To this end, Ford will move some battery production used in the Mustang Mach-E model from its plant in Poland to its plant in Holland, Michigan, U.S., next year. This is to meet the eligibility requirements for the electric vehicle tax credit of up to $7,500 as stipulated by the IRA.

Additionally, the BlueOvalSK joint venture with domestic SK On plans to start producing batteries for the current 'E-Transit' electric truck and 'F-150 Lightning' electric pickup truck at its Kentucky Plant 1 from mid-2025. The plan is to start production earlier than scheduled to improve costs. The BlueOvalSK plant in Tennessee will begin battery production for Ford’s new electric commercial van from the end of 2025.