Ford Shifts Focus Toward Hybrids and Energy Storage Amid EV Market Challenges
January 9, 2026
Ford has announced a strategic pivot in its vehicle lineup, emphasizing increased production of hybrid vehicles and new energy storage solutions to address recent market challenges and declining electric vehicle (EV) sales.
Major Changes in Ford’s Vehicle Strategy
The automaker plans to prioritize hybrids—such as gas-electric hybrids and extended-range electric vehicles (EREVs)—alongside smaller, budget-friendly EVs. By 2030, Ford expects these categories to constitute 50% of its global sales, a significant rise from the current 17%. The company targets profitability in its hybrid and EV segments by 2029.
New Product Offerings
- Extended-Range F-150 Lightning: An upcoming version of Ford's flagship electric truck, capable of traveling up to 700 miles on a single charge, will be produced at Ford’s Rouge Electric Vehicle Center in Dearborn, Michigan.
- Battery Storage Systems: Ford aims to convert its Kentucky battery factory into a hub for energy storage solutions to meet expanding AI data center demands.
Market Challenges and Financial Outlook
The company's EV division, Ford Model e, has endured over $12 billion in losses over the past two years amid declining sales and rising material costs. For example, November EV sales dropped over 60% compared to previous months. These hurdles have prompted Ford to reevaluate its investments, halting further large EV manufacturing in favor of more profitable segments.
Significant Investments and Workforce Changes
Ford anticipates a $19.5 billion charge in 2025 to finance this transition, mostly impacting the fourth quarter, along with $5.5 billion in cash effects expected primarily in 2026 and 2027.
The company is also severing its partnership with South Korean battery maker SK On, taking full ownership of the BlueOval SK battery plant in Kentucky. This facility will focus on energy storage system manufacturing, potentially creating up to 2,100 jobs over time, though approximately 1,600 jobs are expected to be cut in the short term.
Product Evolution and Future Outlook
The next-generation F-150 Lightning will incorporate an extended-range version designed for longer trips and greater towing capacity, addressing the main concerns that limited its mass-market appeal. Despite initial high hopes for the original electric pickup, factors such as high costs, limited range, and declining federal tax credits hampered its success.
Energy Storage and Market Potential
In addition to vehicle production, Ford plans to leverage its lithium iron phosphate (LFP) batteries utilized in EVs for energy storage purposes, primarily targeting data centers initially. Lisa Drake, VP of EV systems, notes that "energy storage just made a lot of sense as a natural adjacency," with possible expansion into residential markets in the future.
Ford’s strategic shift highlights its response to the evolving electric vehicle landscape and market demands, focusing on affordability, utility, and new energy solutions.