Ford EV Losses Projected to Hit $5.5 Billion This Year

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Ford Motor Company announced on Wednesday that it expects to incur up to $5.5 billion in losses from its electric vehicle (EV) and software operations in 2025. This projection mirrors last year's losses and highlights the challenges in reducing costs for battery-powered models. Despite achieving overall profitability for the fourth quarter of 2024, another year of Ford EV losses is on the horizon.

Ford EV Struggles Continue

The automaker’s fourth-quarter net profit of $1.8 billion was a turnaround from a $500 million loss in the same quarter of the previous year. However, its EV division remains hemorrhaging money and dragging down the company’s overall performance. Last year, Ford’s Model e electric vehicle business reported a $5.08 billion loss, and the company expects similar numbers for 2025. These Ford EV losses are causing concern among investors, with shares dropping nearly 5% in after-hours trading following the announcement.

CEO Jim Farley has faced mounting pressure to improve the company’s EV performance. Last year, Ford made significant cuts to its EV plans by canceling a highly anticipated three-row electric SUV and delaying the launch of the next-generation electric F-150 Lightning. Instead, the company now focuses on a mid-sized electric pickup set to debut in 2027, developed by its California “skunkworks” team.

Hybrid Sales Outpace EVs

It’s not entirely Ford EV losses for the company, however. Even as the company grapples with its EV challenges, its hybrid vehicles are performing better. In 2024, the company sold 187,426 hybrids, nearly double the 97,865 EVs sold the previous year. This multi-powertrain approach allows Ford to hedge against the volatility in the EV market, especially amid concerns over the potential elimination of the $7,500 federal EV tax credit under the Trump administration.

Analysts believe this diversified strategy could help Ford weather the current storm better than competitors like General Motors, which has heavily invested in battery EVs. However, the company still faces headwinds, including rising material costs and the looming threat of tariffs on Mexican and Canadian imports.

Tariff Concerns Can Potentially Increase Ford EV Losses

President Trump’s proposed 25% tariffs on goods from Mexico and Canada pose another significant challenge for Ford. The automaker relies on these countries for assembling key models like the Mustang Mach-E SUV and the Maverick pickup truck. While Trump has delayed the tariffs for a month, the uncertainty has already rattled the auto industry.

Farley acknowledged the potential impact of prolonged tariffs, warning that they could wipe out billions in industry profits and harm U.S. jobs. However, he remains cautiously optimistic, citing discussions with the Trump administration that suggest a commitment to strengthening the American auto industry.

Can Ford Turn Things Around?

Despite the heavy Ford EV losses, the company remains focused on cutting costs and improving quality. The company has planned a $1 billion reduction in material and warranty costs for 2025, following a $1.4 billion cut in 2024. However, unexpected quality and warranty issues continue to offset these savings.

Ford’s fourth-quarter revenue of $48.2 billion exceeded analyst expectations, and its adjusted earnings per share of 39 cents also beat forecasts. However, the company’s guidance for 2025 is less optimistic, projecting lower earnings before interest and taxes (EBIT) of $7.0 billion to $8.5 billion, down from $10.2 billion in 2024.

While Ford’s hybrid sales offer a glimmer of hope, the company must address its EV division’s persistent losses to secure long-term growth. The coming year will be critical for Ford as it navigates the challenges of tariffs, regulatory changes, and an increasingly competitive EV market.

Can Ford EV losses turn into wins soon? Tell us what you think!

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