Ford Motor Company (F) shares moved Tuesday after the automaker announced a significant strategic pivot on electric vehicles and unveiled plans for an entirely new business line focused on battery energy storage systems.
Here's what's happening: Ford is writing down $19.5 billion from its electric vehicle operations and scrapping plans to produce certain larger EVs. The reason? Lower-than-expected demand, stubbornly high production costs, and a shifting regulatory landscape that's making the economics of big electric vehicles look increasingly unappealing.
Instead of doubling down on the original playbook, Ford is redirecting its electric efforts toward smaller, more affordable vehicles that might actually turn a profit. The company is also leaning harder into hybrids, which have proven surprisingly popular with consumers who want some electrification without the range anxiety.
The New Target: 50% Electrified by 2030
Ford now expects that by 2030, roughly half of its global vehicle volume will consist of hybrids, extended-range EVs, and fully electric vehicles. That's up from just 17% this year. The company believes these strategic adjustments will finally make its Model e division profitable by 2029, while also boosting margins at Ford Blue and Ford Pro.
"The operating reality has changed, and we are redeploying capital into higher-return growth opportunities: Ford Pro, our market-leading trucks and vans, hybrids and high-margin opportunities like our new battery energy storage business," said Ford CEO Jim Farley.
Enter the Battery Storage Business
Speaking of that battery business, Ford is making an interesting bet on the infrastructure side of electrification. The new division will target demand for battery energy storage from data centers and electric grid infrastructure, both of which need massive amounts of storage capacity as power demands surge.
Ford plans to repurpose existing battery manufacturing capacity in Kentucky for this venture, creating what it hopes will be a diversified and profitable new revenue stream. The company intends to invest approximately $2 billion over the next two years to scale the operation.
Better-Than-Expected Guidance
The strategic shift came with some good news on the financial front. Ford raised its 2025 adjusted EBIT guidance to about $7 billion and reaffirmed expectations for adjusted free cash flow between $2 billion and $3 billion. The company noted that free cash flow is tracking toward the high end of that range.
Price Action: Ford shares initially jumped more than 1% following the announcement but later pulled back. At the time of publication, the stock was down 0.22% at $13.63.