Ford to Divert from EPA’s Preference for EVs and Build More Hybrids

With most automakers struggling to sell battery electric vehicles (BEVs) amid a worldwide fall in EV demand, Ford is pivoting from pure electric vehicles to hybrids. In a move that goes against the U.S. Environmental Protection Agency’s (EPA) transport emission preferences, the Boston-based carmaker has announced that it will prioritize hybrid electric vehicles over all-electric cars.

Hybrids have been around for quite a long time, but policymakers have largely focused on BEVs as the next phase of carbon-free vehicular travel. While BEVs don’t require any fossil fuels and produce zero tailpipe emissions, hybrids combine both a combustion engine and an electric drive chain to benefit from the best of both worlds. As a result, the average hybrid still produces tailpipe emissions and doesn’t fit into the EPA’s vision of a fully carbon-free transport network.

On the other hand, hybrids tend to be more popular with consumers because they allow drivers to lower their emissions without completely making the jump to fully electrified vehicles. Combining an electric drive chain with a combustion engine grants a hybrid significantly more range than a BEV and helps to alleviate range anxiety. Consumers have shown that they are more than willing to buy hybrid electric cars; the vehicles have consistently sold as much and even more than BEVs in most major markets.

Even so, regulators won’t be happy now that Ford is focusing its attention on developing hybrids rather than pure electric cars. According to a statement from John Lawler, Ford’s CFO, the carmaker will also scrap an electric SUV that was set to launch next year as it shifts its focus away from all-electric vehicles.

Ford Model e, the Ford production line charged with manufacturing EVs, has recorded strong sales in recent months but also reports major losses ($1.3 billion in Q1 2024) as the division lost well over $100,000 for each electric car it sold. After going back to the drawing board and rethinking its EV strategy, the American entity had opted to focus on better-selling hybrids.

Lawler noted that Ford would work to create long-term value by developing a “competitive and profitable business” that focuses on electrified vehicles that achieve profitability within the first year of launch. He added that Ford will keep manufacturing the F-150 Lightning and Mach-E even as it focuses on hybrids. The downside of pivoting to hybrids is that Ford could potentially attract the wrath of the U.S. Environmental Protection Agency, which foresees 56% of all new cars on the road being electric by 2032 compared to just 16% being hybrid.

It remains to be seen how EV startups such as NIO Inc. (NYSE: NIO) will react to the dip in demand for electric vehicles since they don’t have a history of making ICE vehicles or even hybrids.

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