Ford’s electric car bet in Europe

Ford now has just 3.4% market share in Europe and has long since sold its subsidiaries Jaguar and Volvo. After struggling to find a foothold, they have chosen to abandon internal combustion engine vehicles.

By last year, three models—the Mondeo, the C-Max and the best-selling car, the Ford Fiesta—had been discontinued. The popular Focus will also be discontinued by the end of 2025.

Ford’s restructuring in Europe has had a real impact. Sales in the first four months of the year fell 15% to 152,500 vehicles. Factories in Germany, the UK and Spain have announced plans to cut a total of 4,000 jobs.

For Ford, this is the price of going all-electric. The company has set a roadmap to selling only electric cars in Europe by 2030, five years ahead of the EU’s official plan to ban internal combustion engines altogether. To bet on this future, the company plans to produce 2 million electric cars a year by 2026 and achieve a profit margin of 10%.

Ford has already reduced its European lineup from 18 to six models to gradually transition to electric vehicles. But the process is not easy and takes time because they do not have their own platform to serve as the technical basis for electric vehicles at competitive costs.

So for a transitional solution, they turned to Volkswagen’s MEB electric vehicle technology platform to build electric cars. Ford hopes that this way it can expand its product line, which currently consists of the Mustang Mach-E, which has a strong personality but is not really for the masses.

The result is the Explorer, a 4.46-meter-long electric SUV designed specifically for the European market that is due to be launched soon, with the hope of selling around 10,000 units a year in France alone. It will be built at the company’s 1.87 billion euro factory in Cologne, Germany, using a Volkswagen platform but with a distinctly American exterior design. It is expected to start at 43,900 euros ($47,400).

A larger, sportier SUV based on the MEB platform, called the Capri, will be launched in a few months. An electrified version of the Puma, about the size of the Peugeot 208, is also planned for 2025. And Ford will not launch a hybrid vehicle based on its own technology until 2027.

Once selling products based on a long-standing brand, they are now willing to sell fewer cars at higher prices. “We are the only American brand from Detroit that is still present in Europe. To stay, we need to make money by offering more premium models,” argued Louis-Carl Vignon, president of Ford France.

In parallel with the production shift, Ford partnered with fast-charging network Allego in March to install fast-charging stations at its dealerships. Joerg Hofmeister, head of charging and energy for Ford Model e Europe, said the fast-charging stations will initially be focused on key markets such as the UK, Germany, the Netherlands, France, Italy and Spain, along with some smaller markets such as Norway. Ford has a total of about 1,800 dealerships in Europe.

Allego CEO Mathieu Bonnet said the first chargers will be installed in the first quarter of 2025, opening them up to all electric vehicles. “By allowing any electric vehicle driver to charge at a Ford dealership, we are helping to drive greater penetration of electric vehicles,” he said.

But while Ford is committed to electrification, the electric vehicle market is slowing. According to the International Energy Agency, global electric vehicle sales will reach nearly 14 million units in 2023, up 35% from 2022 and six times higher than five years ago.

In Europe, sales last year were over 1.5 million units, up 37% from 2022, helping pure electric vehicles reach a market share of 14.6%, according to data from the European Automobile Manufacturers Association (ACEA). However, in December 2023 alone, sales fell for the first time since April 2020, by 16.9%, to 160,700 units.

In March, electric car sales fell 11% across the EU and 29% in Germany. Lucien Mathieu, director of the Belgian NGO Transport & Environment, expects the electric car market to slow down in Europe this year.

Goldman Sachs points to three key factors that are slowing down the penetration of electric vehicles, including buyers’ concerns that electric vehicles depreciate faster than gasoline cars and the lack of fast charging stations that make it inconvenient to use. In addition, the uncertainty surrounding this year’s elections is making them hesitant because they don’t know what potential changes in policy will come.

The market is slowing, but Louis-Carl Vignon says this does not affect the ongoing strategy. “Depending on the level of optimism, forecasts for electric vehicle penetration range from 50-70% of sales by 2030. We are pursuing this outlook,” he said.

Lucien Mathieu also said that the EU’s electric vehicle growth is not linear. “It’s a series of waves, because the regulations that drive the deployment of electric vehicles only come into effect every five years. The next tightening of the rules is due in 2025, and many manufacturers are launching new, smaller, more affordable models to meet that deadline,” he said.