Ford’s Financial Outlook: EV Struggles and Profit Gains
Ford Motor Company has projected up to $5.5 billion in losses from its electric vehicle (EV) and software operations for 2025, mirroring its 2024 performance and underscoring the challenges in reducing costs for battery-powered vehicles. Despite these setbacks, the automaker reported a net profit of $1.8 billion for the fourth quarter of 2024, a significant turnaround from the $500 million loss in the same period a year earlier. However, the company’s overall profitability forecast for 2025 remains below that of 2024, leading to a nearly 5% decline in Ford’s stock in after-hours trading. CEO Jim Farley is striving for more consistent results after a turbulent 2024, though ongoing U.S. policy uncertainties continue to present risks for the automaker.
Challenges in EV Strategy and Market Competition
Ford Motor Company has been contending with persistent quality issues and a declining stock price, which dropped 18% last year. Additionally, the automaker faces uncertainty due to potential tariffs threatened by former President Donald Trump on imports from Mexico and Canada. These tariffs could increase Ford’s raw material costs and dampen consumer demand. Farley acknowledged that while Ford could manage short-term tariffs, prolonged 25% duties would have a significant impact on industry profits and U.S. jobs.
Despite these hurdles, Ford exceeded analyst expectations with $48.2 billion in fourth-quarter revenue and adjusted earnings per share of 39 cents. The company has scaled back its EV ambitions, canceling a highly anticipated three-row electric SUV and delaying the next-generation F-150 Lightning truck. Instead, Ford is focusing on hybrid models and leveraging its California-based EV development team, with plans to introduce a mid-sized electric pickup in 2027.
Unlike General Motors, which is aggressively expanding its EV lineup, Ford is placing greater emphasis on hybrids. In 2024, Ford sold nearly twice as many hybrids (187,426) as EVs (97,865), a strategy analysts say could help mitigate the impact of potential policy changes, such as the possible removal of the $7,500 federal EV tax credit.
Tariff Uncertainty and Industry Ramifications
Ford is the first major automaker to report earnings following Trump’s executive order imposing a 25% tariff on goods from Mexico and Canada. While the decision has been temporarily delayed, its potential implementation remains a concern for the auto industry. The tariffs would impact Ford’s key models, including the Maverick pickup, Bronco Sport, and Mustang Mach-E, which are manufactured in Mexico. Analysts note that compared to rivals General Motors and Stellantis, Ford Motor Company has the least exposure to these tariffs, as it produces fewer high-margin vehicles outside the U.S.
Although Ford executives did not factor potential tariffs into their 2025 earnings forecast, they acknowledged the increasing pressure from industry pricing trends. The company has projected lower earnings before interest and taxes (EBIT) for 2025, ranging between $7 billion and $8.5 billion, compared to the $10.2 billion recorded in 2024. Executive Chair Bill Ford recently expressed confidence that Ford Motor Company will have a voice in policy discussions, following direct communication with Trump. As the automaker navigates a shifting economic and political landscape, it remains focused on cost-cutting measures and a multi-powertrain approach to sustain profitability.
