Energy Musings - December 16, 2025

Ford has made its decision about the fate of the F-150 Lightning electric pickup truck. The company also disclosed a radical shift in its business, reducing EVs, increasing hybrids and ICE models.

Ford’s EV Decision Amplifies Yesterday’s Observations

Had we waited a day to write our EV article, we would have known about Ford Motor Company’s decision to definitively U-turn on the F-150 Lightning pickup and shift manufacturing focus to hybrids, cheap EVs, and traditional internal combustion engine (ICE) vehicles. In yesterday’s Energy Musings, we discussed Ford’s problem selling EVs. We noted that the company had lost more than $15 billion year-to-date through 2022-2025 and was considering ending production of the F-150 Lightning. That decision, along with other business realignment moves, will result in management taking a $19.5 billion write-down. Ford’s total EV loss is reaching $35 billion, which will undoubtedly draw attention to the company’s leadership.

While the Ford announcement was not a total surprise, the magnitude of the financial cost of the decision was. Ford’s CEO Jim Farley was an enthusiastic booster of the EV move, even overhauling his company to establish the Model e division in 2022. Farley wanted to highlight Ford’s embrace of EVs by making its business a standalone operation that investors and analysts could monitor directly. The new division embraced revamped plants with a new manufacturing platform, along with investment in battery manufacturing to better control costs. Farley may silently regret having established Model e, which he now predicts will reach profitability in 2029. On what basis will profitability be measured – pre-write down or post?

Ford’s problem was that the EV effort was driven by government mandates, which believed that only by eliminating ICE vehicles could the horrors of climate change be avoided. However, establishing a business based on government subsidies is a business risk that is one election away from a radical change. That change occurred on November 5, 2024, when Donald Trump won the election after campaigning against green energy subsidies, including the $7,500 tax credit for new EV sales.

In making the rounds of the business television shows, Farley set out his rationale for the Ford’s radical shift and write down. He told Fox Business’s anchor Larry Kudlow, “We think this is a better play for our company and for our shareholders.” Interestingly, Ford’s stock was up 2% on the open following the news, so investors applauded the move, which admittedly came quicker than most observers expected. Of course, the write-off and the operating losses for the first nine months of 2025 equal half of Ford’s stock market capitalization.

“Rather than spend billions more on these large EVs that we had planned that have no path to profitability, we’re going to pour our investments into higher margin areas — more American-built trucks, more American-built vans, hybrids across our lineup, and even affordable EVs built in Kentucky. And we’re going to go into the energy storage business in the Midwest, make our country stronger,” Farley added.

In contrast to his fellow Detroit automaker, General Motors, Ford was in the business of building hybrids. Therefore, when Farley saw that his hybrids were selling well (sales increased 13.6% in November), as overall auto sales for the month fell 0.9% compared to November 2024. Total sales were pulled down by the 60.8% decline in EV sales.

There is a market for EVs, but they have never been the solution for the entire automobile market. Just like not everyone should be driving pickup trucks or VW Beetles, EVs are not the perfect cars for all families. EVs are more appropriate for shorter distances (around town), where charging can be done at home, keeping electricity costs down.

Ford now anticipates addressing the EV market with smaller, less costly models. The company still plans to make a cheaper electric pickup than the F-150 Lightning, but it will likely not reach the market for at least three years. In the interim, the F-150 Lightning will transition to an extended-range model, with a range of 700 miles. The extended range is achieved by adding a gasoline-powered generator to the truck, which boosts battery power when the charge becomes too low.

For all its folly with its EV strategy, Ford will remain an automobile company to watch. Will the next presidential election result in another strategic shift in Ford’s EV strategy? We can only watch and wonder.

The last point we will make is that legendary investor Warren Buffett of Berkshire Hathaway has only owned one automobile company stock in his history. It is China’s BYD, which was only a lithium-ion battery manufacturer at the time Buffett purchased shares. That was before the company entered the EV manufacturing market, where it has captured a 20% share of the global market. Buffett built his empire by buying high-quality businesses at attractive valuations. His disdain for automobile company stocks should be a warning.