Is Ford About to Cancel This Popular Truck?

What was once a signal of Ford Motor Company's (NYSE: F) electric vehicle (EV) ambitions, and a core part of its EV sales strategy, might end up becoming one of the biggest early casualties in the EV market.

Ford is considering discontinuing the electric F-150 Lightning, according to a report from The Wall Street Journal. The potential pivot in strategy could be a big deal for investors who watched Ford lose $5.1 billion in its Model-e EV division last year. Here's what's going on, and what investors need to know.

What's going on?

Ford's decision regarding the F-150 Lightning's future follows an unfortunate development. Ford initially halted production of the F-150 Lightning in mid-October after a fire at an aluminum supplier, Novelis. This is expected to significantly disrupt production, with the automaker anticipating a partial recovery of lost production early next year.

Image source: Ford Motor Company.

Investors already had some idea that demand for the electric pickup wasn't in a great place after a memo obtained by Automotive News showed Ford telling suppliers of an expected rate of roughly 280 Lightnings a week beginning in February. That's down substantially from an average of about 950 per week before the plant was idled.

Despite reports that Ford is considering discontinuing the F-150 Lightning, the company is officially leaving its options open. "F-150 Lightning is the best-selling electric pickup truck in the U.S. -- despite new competition from CyberTruck, Chevy, GMC, Hummer and Rivian -- and delivered record sales in Q3," Ford said in a Nov. 6 statement, according to Automotive News. "Right now, we're focused on producing F-150 ICE and Hybrid as we recover from the fire at Novelis. We have good inventories of the F-150 Lightning and will bring Rouge Electric Vehicle Center (REVC) back up at the right time, but don't have an exact date at this time."

The road ahead

While Ford's consideration of discontinuing such a significant part of its EV strategy may be alarming at first glance, it's a decision that could make a lot of sense for the road ahead. That's because Ford recently went back to the drawing board on how it assembles vehicles and came up with a new system it calls the "Ford Universal EV Production System."

Essentially, the folks at Ford transformed the historical assembly line into a tree with three branches. Two will assemble the front and rear of the vehicle on separate lines before the third branch, the structural battery for EVs, is combined with all parts at the end.

The new process is expected to reduce costs and accelerate production. Just as important as that announcement was the news that Ford will debut a midsize electric truck on its new EV platform in 2027, with a price tag of about $30,000. The kicker is that Ford expects this electric truck to be profitable very early in its life cycle, which is likely why Ford can even consider discontinuing the F-150 Lightning in the first place.

What it all means

For investors, EVs will remain a hot topic simply because they are currently generating significant losses for most automakers. The faster Ford can build scale with its EVs and flip its billions in losses to billions in profits, the better for everyone. Because of that, Ford's potential decision to discontinue the F-150 might be alarming, since it was a core part of its initial EV strategy.

But with innovative production transformations and lower costs, Ford launching a new electric truck on a new platform might be the quickest route to profitability for an EV truck. That's just a little good news for long-term investors.

Daniel Miller has positions in Ford Motor Company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.