The Ford $ 5 billion EV thrust could be “terminal” for the brand if it fails: analysts

The Automobile Company announced on Monday a plan of $ 5 billion to invest in the way it manufactures its electric vehicles, in particular by paying $ 2 billion by transforming its Louisville factory, in Kentucky, which produced gas cars for seven decades – in a FE assembly plant. Ford will also delight its production process to make its electric cars more affordable, targeting an average four -door van from $ 30,000. The truck will be available for purchase by 2027, with a larger model available from 2028, said the company.

According to the CEO of Ford, the CEO of Ford, Jim Farley, can produce the new range of affordable Ford cars.

“We have torn the mounting chain in motion that you see here today, and we have proposed a whole new concept,” said Farley at the Louisville factory on Monday. “It is the most radical overhaul of how we make cars from the T model.”

Analysts, however, approach the high objectives of Farley EV with caution, warning Ford will have to keep its promises to have a chance to overcome billions of losses from its EV division “Model E”. He will have to compete not only with increasing American competition, but also the attention of consumers who have been hot and cold on electric vehicles.

“If the vehicles do not use due to the EV, then billions will be wasted,” said the Stratege of Morningstar Equity, David Whiston Fortune. “This is why you need an excellent product, a wide range and manufacturing techniques for lower battery and vehicle manufacturing.”

“The challenge is: do you have an excellent product or not?” He added. “(It’s hard to excite you for a vehicle that you cannot see yet.”

Ford did not immediately respond to FortuneComment request.

Ford model E challenge

Ford has lost $ 12 billion in the division since the start of 2023, including $ 2.2 billion in the first two quarters of this year. According to Whiston models, the company should lose $ 4 billion in its model Division by the end of the year.

In 2021, Ford announced a burden to an electric future, including plans to revise its European business and a commitment to go almost entirely electric on the continent by the end of the decade, as well as 50% of total sales of electric vehicles by 2030. The company has deployed the Mustang Mach-E and F-150 Lightning with an initial success, but as the vehicles have made the agitation and Ford, Ford’s production objectives with sales, vehicles have made the Ford production and production objectives.

Meanwhile, the American rival General Motors capitalized on Ford misfortunes, declaring in the last quarter an increase of 111% of sales of electric vehicles, slipping just behind Tesla as n ° 2 on the American market for electric vehicles.

GM sales were helped by the imminent expiration of a 7,500 EV tax credit in the United States, which stimulated the demand for electric vehicles, although the appetite for vehicles will probably decline after the expiration of the tax credit at the end of September, said Whiston. However, he calculated that, excluding Tesla, the overall sales of electric vehicles increased by 22% in annual sliding until July 2025. With Cadillac and Hyundai deploying new models, there is a decent hope for the future demand for electric vehicles.

Henry Ford’s vision update

Ford’s response to its past manufacturing problems is a three -part “assembly tree” rather than its singular mounting chain modernized by the eponymous founder of the company. Roger Atkins, founder of EV Consultancy Electric Vehicles Outlook, called this new manufacturing method – through the other three specialized manufacturing lines that will eventually converge in one – “undoubtedly the first and the only departure of the original vision of Henry Ford.” He applied that with a successful manufacturing plan, Ford could make his failed promises a half-receiver, although the risks are high.

“EV progress is exponential, so a strategy five years ago which may have disappointed is in a global context entirely different today,” said Atkins Fortune in an email. “If he fails, he could be terminal for the brand.”

Farley said society tried to break the cycles it has encountered in the past “inactive plants, relaxed workers and red ink”. It is well aware of the dangers associated with paying more money in the E model with little income to show so far.

“We are doing so much new things that I can’t tell you with 100% certainty that everything will be fine,” he said.