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Automaker faces economic difficulties and discontinues classic vehicle; leadership recognizes need for strategic restructuring
Ford has announced the temporary halt to production of one of its most traditional models, affecting the pickup truck segment. Series F.
This pause will occur between November 18 and January 6 and reflects the financial challenges faced by the American automaker, which is trying to balance the development of electric vehicles (EVs) with high competition and pressures of costs.
Ford's financial structure and decisions
Since introducing the F-Series electric vehicles in 2021 with the debut of the Lightning model, Ford has experienced a series of setbacks.
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In 2024, the company recorded substantial losses on each EV launched, highlighting the difficulty in competing in a market where costs are high, especially with batteries, and public acceptance is still hesitant.
According to a statement from Ford to the Wall Street Journal, production adjustments are underway to try to balance sales and profitability. Since August, Ford had already begun to reduce EV production and recently postponed the goal of producing two million electric vehicles by 2026.
The new target does not yet have a set deadline, reflecting the company's caution in the face of high costs and competition.
Intense Competition in the SUV Sector
The electric SUV market, in particular, has become a highly competitive area. John Lawler, Ford's vice president and chief financial officer, noted that the company is struggling to compete in the three-row SUV segment due to rising battery costs and the arrival of several competitors.
Statistics from S&P Global show that around 143 new electric vehicle models are in development for the North American market, the majority of which are two- and three-seat SUVs. The pressure to stand out in such a competitive sector is a challenge that Ford has yet to overcome.
The pickup truck success story and the focus on hybrids
Despite the challenges, the F-Series remains one of the most popular pickup truck lines in the U.S., with more than 700.000 units sold through 2023. This success has kept the model as the best-selling pickup truck in the country for 47 consecutive years.
In addition, Ford has invested heavily in hybrid vehicles, which combine an electric motor and a gasoline engine. However, the financial return on these models has also fallen short of expectations. According to data from Reuters, Ford projects a loss of approximately $5 billion on its electric vehicle line by 2024.
External Pressures and the Impact on Ford's Results
The challenges go beyond production: external factors, such as rising raw material prices, also impact the company's operating costs. Lawler noted that Ford has already cut expenses, but competitors have been cutting their costs more aggressively, putting the automaker at a disadvantage.
The push to push the Lightning model has hit significant roadblocks, with sluggish sales and excess inventory at dealerships. Adding to the slump, Ford shares are down 6,7% in 2024, while other automakers including General Motors and Tesla have posted gains.
Comparison with competitors
In contrast to Ford, other U.S. automakers, including General Motors, which saw its shares rise 47%, and Tesla, which rose 4,7%, have shown stronger financial performance in the EV market. This suggests that while Ford is struggling to deal with rising costs and competition, other companies have found more effective ways to navigate this competitive space.
What to expect from Ford's future?
While Ford has a solid track record in the automotive market, especially with its pickup truck models, the challenges of competing in the electric vehicle sector are undeniable. With the interruption of production and the postponement of targets, the automaker signals a pause to reevaluate its strategies.
The company's stance reflects an attempt to remain competitive, but it faces the difficult balance between innovation and profitability.
I've always used Ford, but the automaker's latest decisions have been unfounded. I think Ford should start making shopping carts for supermarkets.
A company with no conviction about what it wants, only wanting to work for profits without presenting an innovative portfolio that attracts the attention of customers, without intelligent renovations and stuck in the last century, similar to the ideology of its patron Henry Ford.