Ford Motor Company is embarking on a significant restructuring of its electric vehicle (EV) strategy, indicating a reduction in orders from battery suppliers due to escalating losses in the EV sectorAccording to insiders, the company has notably decreased its expectations amidst a rapid slowdown in the demand for plug-in vehiclesThis strategic shift reflects the company's response to broader challenges in the electric vehicle market, showcasing a proactive approach to controlling costs and reassessing growth trajectories.

Despite the cutbacks, Ford continues to maintain partnerships with key battery suppliers, including South Korea's SK On, LG, and China's CATLThis collaboration remains integral to Ford’s long-term vision for electrification, and while the financial pressures mount, the partnerships signal an intent to navigate the complexities of the EV market together.

This order reduction is part of a tortuous journey that Ford is currently traversing, as the company aims to slash its expenditures by as much as $12 billion on battery-powered models

Such a monumental figure underscores the seriousness with which Ford is addressing the current challenges sweeping through its electric vehicle businessRecent plans have unveiled a delay in the launch of new electric models, signifying a careful recalibration of product development timelines and market entry strategiesFurthermore, Ford is exploring price reductions on its electric vehicles to invigorate demand and enhance competitiveness in a tightening marketplace, seeking to leverage price advantages amid rising competition.

In a bid to control costs from the ground up, the automaker has also decided to postpone the construction of planned battery factories and shrink their scaleThis move represents an acknowledgment of the financial burdens inherent in ambitious scaling-up of production capacities in an uncertain market landscapeFord has projected an alarming $5.5 billion loss for its EV segment this year alone, a staggering figure that casts a long shadow over the overall financial health and strategic direction of the corporation

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CEO Jim Farley has openly stated that the Model e division, which focuses on electric vehicles, is the primary drag on the company’s performance, an assertion indicative of the severe pressures facing Ford's electric ambitions.

In light of these challenges, a Ford spokesperson has clarified that the company generally does not comment on specifics regarding supplier relations or contract termsCATL has stated that its partnership with Ford is proceeding as normal, albeit without elaborating furtherBoth SK On and LG confirmed that their contracts with Ford remain valid.

The plummeting prices of electric vehicles, combined with diminishing consumer demand, have resulted in more than $100,000 in losses per unit for Ford's EVs during the first quarter—more than double the losses experienced the previous year, according to a sourceThis dramatic increase has raised eyebrows across the industry and prompted analysts to reconsider the sustainability of heavy investments in the electric vehicle sector.

Estimates from Bloomberg Intelligence suggest that the expected losses within Ford's electric division could nearly offset the profits earned from its traditional internal combustion vehicle segment, dubbed Ford Blue

This segment is responsible for producing popular gasoline models like the Bronco SUV and the Maverick truck, which have enjoyed stable market reception.

The decline in order volumes reflects a new reality for the automotive industry, where U.Smanufacturers are grappling with ongoing lower-than-anticipated consumer demand for electric vehiclesConcurrently, battery manufacturers in South Korea, China, and other regions are confronting gluts of unsold inventory—an issue that further complicates the supply chainThis scenario creates a ripple effect impacting the prices of essential raw materials needed for EV production, such as lithium, cobalt, and nickelThe prices for these metals have plummeted to multi-year lows this year, stymying investment decisions for new mining projects and, in some cases, leading to the closure of mines altogether.

Amidst shrinking margins and intensifying competition, Ford officials have taken steps to curb costs associated with its electric vehicle lineup

However, they face the dual challenge of reducing prices to keep pace with market leader Tesla, which has slashed prices across its model range significantlyCFO John Lawler remarked during a recent earnings call that the dramatic price reductions observed in the EV space have outpaced Ford's cost-reduction strategies.

“We are seeing prices drop significantly, which is why we are struggling to keep up from a cost perspective,” Lawler explained to analysts“However, our goal is to reduce Model e costs as much as possible this year, and all of these efforts are aimed at fostering a positive trend in profit margins.”

Lawler has recently been promoted to vice chairman, where he will focus on long-term strategy while seeking solutions to mitigate electric vehicle lossesThe journey ahead is fraught with challenges, but finding a pathway to profitability for EVs is vital for the company’s future viability.

“Model e needs to stand on its own,” Lawler emphasized in a recent interview