Ford’s renewed investment into its electric vehicles has the potential to either breathe new life into a division hemorrhaging money from past failed endeavors, or be a death knell for the American auto brand, analysts warned.
The auto company announced on Monday a $5 billion plan to invest in how it manufactures its EVs, including pouring $2 billion into transforming its Louisville, Ky., factory—which produced gas-powered cars for seven decades—into an EV assembly plant. Ford will also rejig its production process to make its electric cars more affordable, targeting a medium, four-door pickup truck starting at $30,000. The truck will be available for purchase by 2027, with a larger model available beginning in 2028, the company said.
At the foundation of Ford’s new line of affordable cars is its new “universal EV platform,” which can produce higher-quality cars with less expensive parts, according to Ford CEO Jim Farley.
“We tore up the moving assembly line that you see here today, and we came up with a brand-new concept,” Farley said at the company’s Louisville factory on Monday. “This is the most radical redesign of how we manufacture cars since the Model T.”
Analysts, however, are approaching Farley’s lofty EV goals with caution, warning Ford will have to deliver on its promises to have a shot at overcoming billions of losses from its “Model E” EV division. It will have to compete not only with growing American competition, but the attention of consumers who have been hot and cold on EVs.
“If the vehicles don’t appeal due to being EVs, then billions will be wasted,” Morningstar equity strategist David Whiston told Fortune. “That’s why you need a great product, great range, and lower battery cost and vehicle manufacturing techniques.”
“The challenge is, do you have a great product or not?” he added. “[It’s] hard to get excited about a vehicle you can’t see yet.”
Ford did not immediately respond to Fortune’s request for comment.
Ford’s Model E challenges
Ford has lost $12 billion from the division since the beginning of 2023, including $2.2 billion in the first two quarters of this year. According to Whiston’s models, the company is on track to lose $4 billion from its Model E division by the end of the year.
In 2021, Ford announced a charge toward an electric future, including plans to overhaul its European business and commitment to go nearly fully electric on the continent by the end of the decade, as well as get 50% of total sales from EVs by 2030. The company rolled out the Mustang Mach-E and F-150 Lightning with initial success, but as the vehicles aged and Ford slashed production targets with no new models coming out, sales slowed.
Meanwhile, American rival General Motors capitalized on Ford’s misfortunes, reporting last quarter a 111% increase in EV sales, slotting itself right behind Tesla as the No. 2 in the U.S. EV market.
GM’s sales were helped by the looming expiration of an $7,500 EV tax credit in the U.S., which boosted EV demand, though appetite for the vehicles will likely wane after the tax credit expires at the end of September, Whiston said. Still, he calculated that excluding Tesla, overall EV sales are up 22% year-over-year through July 2025. With Cadillac and Hyundai rolling out fresh models, there’s decent hope for future EV demand.
Updating Henry Ford’s vision
Ford’s answer to its past manufacturing woes is a three-pronged “assembly tree” rather than its singular assembly line modernized by the company’s eponymous founder. Roger Atkins, founder of EV consultancy Electric Vehicles Outlook, called this new manufacturing method—through which three more specialized manufacturing lines will eventually converge into one—“arguably the first and only departure ever from Henry Ford’s original vision.” He posited that with a successfully updated manufacturing plan, Ford could make good on its failed promises from half a decade ago, though the risks are high.
“EV progress is exponential, so a strategy five years ago that may have disappointed is in an entirely different global context today,” Atkins told Fortune in an email. “If it does fail, it could be terminal for the brand.”
Farley said the company is working to break the cycles it has encountered in the past of “idle plants, laid-off workers, and red ink.” He is well-aware of the perils associated with pouring more money into the Model E with little revenue to show for it thus far.
“We are doing so many new things I can’t tell you with 100% certainty that it will all go just right,” he said.