Ford Motor Company announced on Wednesday that it expects losses of up to $5.5 billion from its electric vehicle and software operations this year. This loss is similar to last year’s and highlights the significant challenges the company faces in cutting costs for battery-powered models.
While Ford forecasts overall profitability for 2025, the expected profits are lower than those projected for 2024. In the fourth quarter, Ford reported a net profit of $1.8 billion, a significant improvement from a loss of $500 million in the same quarter last year, which was impacted by pension-related costs.
After-hours trading saw the company’s shares drop nearly 5%.
CEO Jim Farley aims to build on a turbulent 2024 with more stable results. However, the year is already showing signs of volatility due to potential changes in U.S. policy.
The Dearborn, Michigan, automaker is addressing ongoing quality issues and trying to boost its stock price, which fell 18% last year. Ford is also navigating uncertainty regarding President Donald Trump’s proposed tariffs on Mexico and Canada. If these tariffs are enacted, they would likely increase Ford’s raw material costs and negatively impact sales demand.
Farley informed analysts during a conference call that Ford could endure a few weeks of tariffs. However, he cautioned that prolonged 25% duties on Mexico and Canada would severely impact the industry, wiping out billions in profits and adversely affecting U.S. jobs. He believes Trump aims to strengthen the auto industry rather than weaken it.
Ford’s fourth-quarter revenue reached $48.2 billion, exceeding analyst expectations of $43 billion. The company’s adjusted earnings per share of 39 cents also surpassed forecasts of 33 cents per share.
In response to challenges, Farley made significant cuts to the company’s electric vehicle plans last year. He canceled a highly anticipated three-row electric SUV and delayed the launch of the next-generation electric F-150 Lightning truck. Ford is now relying heavily on its California “skunkworks” team to develop EVs from scratch. The first affordable vehicle from this team, a mid-sized electric pickup, is set to arrive in 2027.
Unlike General Motors, which is launching several new models and ramping up sales of its Blazer and Equinox EVs, Ford will not introduce new EVs this year. Instead, the company is focusing on hybrids, which GM will not offer until 2027.
Ford’s losses in the EV sector stem from significant investments in future models. The company is increasing production while cutting costs by $1.4 billion, according to Sherry House, the incoming chief financial officer.
Last year, Ford sold approximately twice as many hybrids as EVs, with 187,426 hybrids sold compared to 97,865 EVs.
Analyst Garrett Nelson from CFRA Research noted that Ford’s multi-powertrain strategy should help mitigate potential sales impacts from the removal of the federal EV tax credit. This contrasts with GM, which has heavily invested in battery EVs. The Trump administration has considered eliminating the $7,500 consumer tax credit for certain EVs.
Ford projected lower earnings before interest and taxes (EBIT) of $7.0 billion to $8.5 billion for 2025. The company met its annual guidance for 2024 after narrowing it late last year, achieving annual EBIT of $10.2 billion.
Ford faces a tougher pricing environment this year, with House indicating an anticipated 2% decrease in industry pricing.
TARIFF TROUBLES
Ford is the first major automaker to report earnings since Trump signed an executive order on Saturday imposing 25% tariffs on goods from Mexico and Canada. This decision affects Ford and its Detroit rivals, GM and Stellantis (STLAM.MI). However, Trump postponed the decision for a month after discussions with the leaders of both countries.
Executives stated that the company did not include tariffs in its annual outlook.
Farley emphasized that any tariff policy must be “comprehensive for our industry,” noting that Asian competitors can import vehicles into the U.S. without additional tariffs.
Tariffs on Mexico would impact Ford’s popular Maverick pickup truck, the affordable Bronco Sport, and the Mustang Mach-E SUV, all assembled in Mexican plants. Analysts have indicated that among the Big Three Detroit automakers, Ford is the least exposed to tariffs. GM and Stellantis produce more profitable vehicles outside the United States.
Last month, Executive Chair Bill Ford shared that Trump reached out to him unexpectedly.
“He understands the importance of our industry and of Ford in the industry,” Bill Ford said, referring to Trump. The Ford chairman expressed confidence that Ford would have a voice and a seat at the table.
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