The company had earlier scaled down its EV strategy after suffering billions in losses.
Shares of automaker Ford declined by more than 8 percent after the company projected lower operating profits for 2025 and more losses in its electric vehicle (EV) division.
On Feb. 5, Ford
released its 2024 financial results in which the company said it expects 2025 adjusted earnings before interest and tax (EBIT) to be $7 billion to $8.5 billion. This is considerably lower than the $10.2 billion in adjusted EBIT the company reported for 2024. EBIT, also known as operating income, indicates the profitability of a company and is used to judge the performance of the business’s core operations.
Ford’s Model e, which sounds like a car model but is actually the company’s EV division, reported an EBIT loss of $5.1 billion for 2024, up from the $4.7 billion in
losses it reported in 2023. The company attributed the recent loss to its continued investment in “future products.” For 2025, Ford expects the trend to continue in its EV division, predicting the EBIT loss to be in the range of $5 billion to $5.5 billion.
Following the lower 2025 guidance and expectations of more electric segment losses, Ford
shares declined. At the close of Feb. 4, prior to releasing the financial results, Ford was trading at $10.16. Shares have fallen by more than 8 percent, to trade at $9.34 as of 10:10 a.m. on Thursday.
During the earnings call, Ford CEO Jim Farley
said that the Trump administration’s proposed tariffs could affect the company.
President Donald Trump had planned to impose 25 percent
tariffs on imports from Mexico and Canada from this month. However, he
paused the tariffs for a period of 30 days after discussions with Canadian and Mexican leaders.
“There’s no question that tariffs at 25 percent level from Canada, Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and adverse effect on the U.S. jobs as well as the entire value system in our industry,” Farley said. “Tariffs would also mean higher prices for customers.
“We believe based on our conversations in [Washington] D.C. with the Trump administration and congressional leaders that they are committed to strengthening, not weakening our nation’s auto industry. That is certainly our expectation.”
Ford Scaling Down EV Strategy
Ford
announced a significant pullback to its EV strategy in August 2024.
The company canceled plans for a fully electric three-row SUV, mostly due to the high costs of battery production and the challenges involved in making vehicles affordable to consumers. Ford has since pivoted to making the next three-row SUVs gas-electric hybrids.
The company also decided to delay the production of its next-generation electric pickup trucks. Originally slated for this year, the truck was pushed down to the second half of 2027.
At the time, John Lawler, Ford’s chief financial officer, said these moves were aimed at ensuring a more capital-efficient and profitable EV business.
Multiple polls have shown that interest in EVs among Americans is not robust. A September 2024
survey from IT consulting company EY showed that among U.S. consumers planning to buy a new vehicle over the next 24 months, just 34 percent intended to get an EV, down from 48 percent in 2023.
“Despite a focus on infrastructure and EV education, consumers cite expensive battery replacement (26 percent) and concerns about public chargers (25 percent) as major deterrents to buying an EV,” the survey said.
An earlier June 2024
survey from consumer services company AAA showed that Americans were losing interest in EVs. Greg Bannon, director of automotive research, said that early adopters who wanted an electric vehicle have already made their purchases.
“The remaining group of people who have yet to adopt EVs consider the practicality, cost, convenience, and ownership experience, and for some, those are big enough hurdles to keep them from making the jump to fully electric,” he said.
EV demand could take a hit under the Trump administration as the president recently
signed an executive order cracking down on policies favoring EVs over gasoline models.
The order defined U.S.
policy as being aimed at eliminating the EV mandate and promoting “true consumer choice,” which includes “considering the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies.”
