What's happened
On December 15, 2025, Ford announced it will cease production of the fully electric F-150 Lightning and cancel several EV models, including the next-gen T3 truck and electric vans. Instead, Ford will focus on extended-range electric vehicles (EREVs), hybrids, and gas-powered models, expecting 50% of its global sales to be electrified by 2030, up from 17% today. The company will take a $19.5 billion writedown primarily in Q4 2025 due to these changes. This shift reflects weakening US EV demand following the end of federal tax credits and relaxed emissions regulations under the Trump administration. Ford will repurpose battery plants to produce energy storage systems, targeting data centers amid rising AI infrastructure demand. Meanwhile, Chinese EV makers like BYD and Xiaomi continue to expand rapidly, capitalizing on Western automakers' pullback.
What's behind the headline?
Ford's Strategic Pivot Reflects Broader Industry Realities
Ford's $19.5 billion writedown and cancellation of key EV models mark a significant retreat from the all-electric future once promised by Detroit automakers. This move is not merely a reaction to short-term sales dips but a recalibration to a changed market landscape shaped by policy shifts and consumer behavior.
Policy and Market Forces Drive the Shift
The expiration of the $7,500 federal EV tax credit and the Trump administration's easing of emissions standards have undercut demand for fully electric vehicles in the US. Ford CEO Jim Farley acknowledged the "customer changing their decision," with US EV market share halving from 12% to 5%. This policy environment contrasts sharply with China, where government support and consumer uptake continue to fuel EV growth.
Battery Production and Energy Storage: A New Frontier
Ford's repurposing of its Kentucky battery plant to produce commercial energy storage systems for data centers aligns with the booming AI infrastructure demand. This pivot leverages underutilized EV battery capacity and mirrors Tesla's successful energy storage business, signaling a diversification strategy beyond vehicle electrification.
Competitive Pressure from Chinese EV Makers
Chinese companies like BYD and Xiaomi are rapidly advancing in EV technology and market share, benefiting from lower costs and strong domestic support. Ford's retreat opens a gap that these manufacturers are poised to fill, especially in affordable, smaller EV segments.
Future Outlook
Ford plans to focus on hybrids, extended-range EVs (EREVs), and smaller, affordable EVs starting in 2027, aiming for 50% electrified sales by 2030. This more cautious approach acknowledges the slower-than-expected EV adoption in the US and the need for profitable, scalable models. The industry-wide EV transition will continue but at a more measured pace, influenced heavily by policy, consumer preferences, and global competition.
What the papers say
The Guardian's Jasper Jolly highlights Ford's strategic retreat as a response to "waning demand for battery-powered models" and the Trump administration's rollback of EV incentives, noting the $19.5 billion writedown and cancellation of the F-150 Lightning and T3 truck. The Guardian also quotes Ford's Andrew Frick emphasizing reallocating capital to "higher-returning areas" like hybrids and energy storage. The Associated Press and The Independent provide similar coverage, underscoring the financial losses since 2023 and Ford's shift toward gas and hybrid vehicles, with some layoffs at battery plants.
Business Insider UK offers detailed insight into Ford's energy storage pivot, explaining the repurposing of the Kentucky battery factory to supply data centers amid a surge in AI infrastructure demand. It also reports CEO Jim Farley's comments on the US EV market shrinking from 12% to 5%, driving the company's change in direction. The Japan Times contextualizes this within the broader European Commission's rollback of combustion engine bans and Ford's $19.5 billion charges tied to its EV strategy retreat.
Ars Technica provides technical analysis of Ford's battery joint venture dissolution with SK On, explaining the shift of battery plant ownership and production focus toward energy storage systems, reflecting declining US EV prospects. Meanwhile, The Guardian and The Japan Times discuss Ford's new partnership with Renault to develop smaller, affordable EVs for Europe, aiming to compete with Chinese imports.
Together, these sources paint a comprehensive picture of Ford's strategic recalibration amid shifting market dynamics, policy environments, and intensifying global competition.
How we got here
Ford invested heavily in EVs early this decade, including a joint venture with SK On to build battery plants in Kentucky and Tennessee. However, US EV sales have slowed sharply after the $7,500 federal tax credit expired in September 2025 and regulatory support weakened. Ford's F-150 Lightning electric pickup underperformed sales expectations, prompting a strategic pivot. The Trump administration's rollback of EV incentives and emissions rules has encouraged automakers to reconsider their EV commitments, favoring hybrids and gas-powered vehicles in the near term.
Go deeper
- Why is Ford abandoning fully electric trucks like the F-150 Lightning?
- How will Ford's energy storage business impact the EV market?
- What role do Chinese EV makers play in this industry shift?
Common question
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Why is Ford reversing its EV plans now?
Ford's recent decision to scale back its electric vehicle (EV) ambitions has surprised many. With initial investments in EVs and plans for new models, the shift raises questions about market demand, policy impacts, and the company's future strategy. Below, we explore the reasons behind Ford's reversal and what it means for consumers and the EV industry.
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