11:32 AM EDT, 08/21/2024 (MT Newswires) -- Ford Motor ( F ) announced plans to reduce spending on pure electric vehicles on Wednesday in a move that could cost the car maker up to $1.9 billion as it adapts to shifting market dynamics and increasing demand for hybrids.

The company has scrapped production of its already delayed three-row all-electric sport utility vehicle, and plans to instead leverage hybrid technology to produce its three-row SUVs.

Ford will take a roughly $400 million write-down related to certain manufacturing assets for the previously planned electric SUV and may also see additional expenses of up to $1.5 billion. The charges will be recorded as special items in the quarter they are incurred in.

Altogether, Ford will reduce its annual capital expenditures dedicated to pure electric vehicles to 30% from about 40%.

"We're committed to creating long-term value by building a competitive and profitable business," Chief Financial Officer John Lawler said in a statement. "With pricing and margin compression, we've made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive (earnings before interest and taxes) within the first 12 months of launch for all new models."

A major part of this effort is adjusting the cadence of product launches and realigning battery sourcing. Accelerating the mix of battery production in the US that will qualify for the Advanced Manufacturing Tax Credit is an "important enabler to improve profitability," Lawler said.

The EV market is evolving as Chinese rivals "leverage advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences to expand their global market share," according to Ford. In addition, EV consumers are now more cost-conscious than early adopters.

Ford pushed back the launch of its electric pickup truck, code-named Project T3, to the second half of 2027 in order to utilize lower-cost battery technology. Ford previously planned to begin customer deliveries of the new truck in 2026. In addition, it plans to launch a mid-sized electric pickup in 2027, which it said will be the first affordable vehicle off the company's new electric vehicle platform in California, it said.

With commercial customers transitioning more quickly to electric vehicles, Ford will begin assembling a new electric commercial van in 2026. Battery cells for the new van will begin production in late 2025. Those same cells will then be sourced to power the Project T3 pickup, according to Ford. By sharing cells, the company will unlock "significant sourcing flexibility for manufacturing across multiple segments and electrified platforms," it wrote.

"An affordable electric vehicle starts with an affordable battery," Chief Executive Jim Farley said.

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