Ford will take a $19.5bn (£14.5bn) hit after cutting back electric vehicle (EV) production because of a slump in demand from drivers.
The US car giant said it was scrapping plans to invest significant sums into EVs in future, including the production of large battery-powered pickup trucks, after “lower than expected” uptake cost the Detroit carmaker billions in losses.
Instead, it will plough more into building conventional trucks and vans, and cheaper EVs, as well as launching a new battery energy storage business.
The $19.5bn writedown, announced to Wall Street on Monday, is one of the largest financial hits suffered by a carmaker to date as bets on EVs turn sour in the face of plummeting demand.
Ford’s writedown includes $6bn to close a joint venture with South Korean company SK Group. The duo had planned to build a massive battery factory in Kentucky to propel Ford’s EV vision but the plan has now been scrapped.
Jim Farley, Ford’s chief executive, said: “This is a customer-driven shift to create a stronger, more resilient and more profitable Ford.
“The operating reality has changed and we are redeploying capital into higher-return growth opportunities”
The move comes amid a major regulatory shift with Donald Trump, the US president, further weakening rules on carmakers to cut emissions.
Mr Trump has also ended generous $7,500 tax credits for drivers who buy EVs, with demand down across the US.
The president has claimed that pro-EV policies brought in by Joe Biden, the former US president, have driven up costs and prices while making cars “much worse”.
Ford said the majority of changes will take place in the fourth quarter, with a payment of about $5.5bn in cash to be paid mostly next year and the remainder being covered in 2027.
The company said it will continue to produce smaller, more affordable EVs instead of larger models.
Despite the move, Ford said it was raising its guidance for earnings this year to about $7bn, which is in line with a target set earlier in the year.
“Rather than spending billions more on large EVs that now have no path to profitability, we are allocating that money into higher-returning areas,” said Andrew Frick, head of Ford’s EV unit.
Still, the carmaker foresees about 50pc of its global volume to be in hybrid vehicles, extended-range EVs and fully electric vehicles by 2030 – up from 17pc this year.