The EV Market Will Be ‘Way Smaller’ Than Expected, Says Ford CEO. The Billions Being Invested Are in Jeopardy.

Ford President and CEO Jim Farley speaking at the Ford Pro Accelerate in Detroit on Tuesday. (Jeff Kowalsky/Bloomberg)

Key Points

• Ford CEO Jim Farley believes the U.S. market for all-electric cars will be significantly smaller than initially projected.
• Ford’s commercial division, Ford Pro, reported a second-quarter operating profit of $2.3 billion, while its Model e EV segment incurred a $1.3 billion loss.
• The elimination of the $7,500 federal EV purchase tax credit could halve EV sales in the coming months, impacting a market in which EVs were 10% of August sales.

Ford Motor CEO Jim Farley doesn’t sound sure about the future of fully electric vehicles in America. If he’s right, billions of dollars of investment are at risk.

Farley was speaking at his company’s Ford Pro Accelerate event in Detroit on Tuesday morning. The event brought business leaders together to discuss the “essential economy,” which is basically the manufacturing economy.

Manufacturing productivity improvement has lagged behind that of white-collar productivity for years. Farley cited red tape, manufacturing outsourcing, and underinvestment in trade education as key challenges. Improving the “essential economy” would be good for Ford, since it sells a lot of trucks to small businesses. Ford’s commercial division, called “Ford Pro,” reported second-quarter operating profit of $2.3 billion. Ford’s “Model e” electric-vehicle segment reported a $1.3 billion loss.

Reducing losses in the EV business will require selling more EVs, which is going to be a lot harder than Farley initially envisioned. He said on Tuesday that the U.S. market for all-electric cars will be “way smaller” than Ford initially thought.

Sales of all-electric cars accounted for roughly 10% of all new U.S. car sales in August, prior to the expiration of the $7,500 federal EV purchase tax credit Tuesday. The credit was eliminated as part of President Trump’s tax and spending bill passed on July 4. Farley said EV sales could halve in the coming months while the market adjusts.

In the longer term, “partial electrification” will be the more attractive market for the U.S., according to Farley. That includes hybrids, which plug in, and so-called mild hybrids, which don’t. That might be the case, but lower-than-expected all-battery electric penetration puts current investments at risk of write-downs.

The industry is spending hundreds of billions of dollars on battery plants and EV development. Ford, for its part, committed to spending approximately $50 billion between 2022 and 2026 to help produce 2 million EVs annually by 2026. Ford sold only about 60,000 all-electric vehicles in the second quarter of 2025—it’s not going to hit its goal of 2 million.

Exactly how small a “way smaller” EV market will be is up for debate. All-electric car sales account for roughly 15% of total car sales in Europe and more than 35% of new-car sales in China. It’s important to note that China and Europe have a wider range of cheaper EVs on sale. The average EV in the U.S. costs about $57,000, about $8,000 more than the average new car.

That’s another message the U.S. auto industry didn’t get while it was expanding EV capacity. Cheaper EVs might be the most important factor driving demand.

Ford stock lost 1.1%, closing at $11.96, while the S&P 500 and Dow Jones Industrial Average rose 0.4% and 0.2%, respectively.

Write to Al Root at allen.root@dowjones.com