So Ford just took a $19.5 billion charge because they’re basically admitting they got the whole electric vehicle thing spectacularly wrong. CEO Jim Farley is spinning this as “customer-driven” strategy, but let’s call it what it is: an expensive lesson in not reading the room.
Here’s what happened: Ford went all-in on pure electric vehicles, assuming everyone would ditch gas cars faster than you can say “range anxiety.” Spoiler alert: they didn’t. Turns out people actually want hybrids – you know, cars that won’t leave you stranded when you forget to charge them overnight.
The company is now pivoting harder than a startup that just realized their app idea already exists. They’re canceling big EV programs, shutting down the F-150 Lightning production (RIP electric truck dreams), and basically admitting that maybe, just maybe, they should have offered customers what they actually wanted instead of what Silicon Valley thought was cool.
The Reality Check
Ford’s Model e division has been bleeding money like a punctured gas tank. Turns out making expensive electric trucks that cost over $50k isn’t exactly a recipe for mass adoption – who could have seen that coming? (Literally anyone who’s ever bought a car, but whatever.)
The new plan? Hybrids, extended-range EVs, and basically every powertrain option except maybe steam engines. Ford now says 50% of their sales will be electrified by 2030, which is the same target they had before this whole expensive detour. It’s like taking the scenic route to your destination, except the scenic route cost you nearly $20 billion.
The Bigger Picture
Ford isn’t alone in this electric face-plant. GM also scaled back their “100% EV by 2035” promise faster than you can say “market reality.” Both companies basically bet the farm on a future that consumers weren’t quite ready for, proving that sometimes the customer actually does know best.
The infrastructure just isn’t there yet, federal incentives are disappearing, and surprise – people don’t love paying premium prices for the privilege of planning their road trips around charging stations.
Should You Buy Ford Stock?
Ford’s stock is up about 40% this year, which sounds great until you realize it’s mostly because their truck business is solid, not because of their EV strategy genius. The stock is trading at higher valuations than usual (around 10x P/E vs. historical 7x), and now they’re taking this massive charge during what might be a softening economy.
Unless you’re really bullish on Ford’s ability to execute this pivot better than they executed their original EV strategy, this might not be the time to jump in. Sometimes the best investment strategy is watching other people learn expensive lessons and taking notes.
The moral of the story? Maybe next time, ask customers what they want before spending $19.5 billion assuming you know better. Just a thought.