In a surprising move, Ford announced on Thursday that it will be postponing approximately $12 billion in planned investment in electric vehicle (EV) manufacturing. The decision comes as buyers in North America appear to be increasingly hesitant to pay a premium for EVs, creating a roadblock for Ford's ambitious plans in the EV market.

Ford's CFO, John Lawler, highlighted that customers' reluctance to shell out extra money for EVs has complicated the company's efforts to significantly ramp up production of these vehicles. While overall sales of EVs in the industry are on the rise, they are not growing at the pace Ford had anticipated, causing the company to reassess its strategy.

Despite this setback, Ford executives stressed that the company still remains committed to its future electric vehicle models. However, they now plan to scale up their EV manufacturing capacity and spending more gradually than initially planned. Lawler stated in a media briefing, "We're not moving away from our second-generation [EV] products... We are going to push out some of that investment."

As a result of the changing landscape, Ford will delay investments in new EV manufacturing facilities, including a planned second battery plant at a Kentucky campus. However, construction of Blue Oval City, Ford's Tennessee-based EV manufacturing campus, will proceed as scheduled. Lawler emphasized that customer demand will ultimately determine production volumes, and Ford has the flexibility to balance the production of gas, hybrid, and electric vehicles accordingly.

In its third-quarter earnings report, Ford revealed that its electric-vehicle business unit, known as Ford Model e, recorded an operating loss of $1.3 billion for the period. This represents a significant increase from the previous year, despite a 26% growth in revenue. For the first three quarters of 2023, the Model e unit reported an operating loss of approximately $3.1 billion, aligning with Ford's prior guidance of a full-year operating loss of $4.5 billion for the business unit.

It is worth noting that Ford withdrew all of its 2023 guidance as a result of its tentative deal with the United Auto Workers labor union, signaling potential changes in the company's future plans.

The news of Ford's decision to postpone a substantial amount of EV investment points to the evolving dynamics in the automotive industry. As consumers weigh their options and demand for EVs reaches a crucial junction, automakers like Ford must recalibrate their strategies to meet changing customer preferences and achieve sustainable growth in the competitive market.