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Ford’s CEO Sees Trump Policies Cutting US EV Market in Half

(Bloomberg) -- Ford Motor Co.’s leader warned of a bleak outlook for electric vehicles as President Donald Trump’s policies breathe new life into gas-powered cars.

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The elimination of a $7,500 consumer tax credit and softening of emissions rules will sharply curtail EV demand in the US, according to Chief Executive Officer Jim Farley. He predicted the share of zero-emission vehicles — currently around 10% of the domestic market — could fall by half.

“I wouldn’t be surprised if EV sales in the US go down to 5%,” he said Tuesday in a speech in Detroit at a conference Ford is hosting on blue-collar jobs. The EV market will be “way smaller than we thought.”

The blunt assessment underscored the rapidly changing dynamics for the auto industry under Trump, with many major manufacturers delaying EV production plans and redeploying investment dollars to internal-combustion-engine and hybrid vehicles. Ford has emphasized consumer choice in fuel types while shifting its EV strategy to one around lower-cost vehicles.

Ford’s electric vehicle unit, Model-e, lost about $1.3 billion in the second quarter and the company has forecast that it could lose as much as $5.5 billion on EVs this year. Its US EV sales plunged 31% in the quarter, hurt by aging models and a temporary halt in sales of the electric Mustang Mach-e due to a safety recall.

Farley on Tuesday said he sees more opportunity in “partial electrification,” such as gas-electric hybrids. He believes pure EVs are best suited for commuter vehicles that make “short runs” and account for only 5% to 7% of the market.

He said Ford is looking to add hybrid production to its battery and EV plants.

“We have to make these partial electric vehicles in the factories that would have been EVs,” Farley said. “What do we do with all these battery plants? And we will fill them, but it will be more stress” because of policy changes from the Trump administration.

Ford has four battery plants under construction, including one in Kentucky with South Korea’s SK On that started production in August. The automaker also has two factories dedicated to building EVs, including its first all-new assembly plant in more than half a century. Ford is trying to determine what to do with those plants now that already sluggish EV demand is expected to falter further due to Trump’s effort to end what he calls the “EV mandate.”

“We have more decisions to make on those battery plants and assembly plants in the coming months and years with this change,” Farley said in an interview with Bloomberg TV Wall Street Week host David Westin. “These policies are real. They’re going to last for at least one administration. Now we have to decide.”

Farley said Ford intends to use some of that capacity to produce hybrids, but it takes 20 gas-electric vehicles to use as much battery power as one EV.

“The capacity we built for plants is so much larger than we would need,” Farley said. “So it doesn’t match. We have some choices to make.”

New types of plug-in hybrids, such as extended-range electric vehicles, need larger batteries, which could help utilize more capacity at Ford’s battery plants, three of which received a $9.2 billion loan from the US Department of Energy in 2023.

“They’re some of the best factories we’ve ever built, we’ve designed them flexibly,” Farley said of Ford’s EV and battery plants. “We’ll make the right decision for the company. We’re not gonna allow these to be mothballed.”

--With assistance from David Westin.

(Updates with CEO comments starting in the ninth paragraph.)