Ford Motor Co. Faces Challenges with Earnings and Electric Vehicle Losses
Ford Motor Co. has recently updated its financial outlook, forecasting a decline in earnings growth for the current year and anticipating further losses in its electric vehicle (EV) sector. The automotive giant announced on Wednesday that it expects its full-year adjusted pretax income to fall between $7 billion (€6.8 billion) and $8.5 billion (€8.2 billion). This is a significant drop from the company’s adjusted pretax income of $10.2 billion (€9.8 billion) reported for 2024. The decrease in earnings is attributed to market headwinds that have impacted the company’s financial performance.
Ford has been dealing with persistent issues including high warranty expenses and a sluggish pace in its cost-cutting initiatives. Notably, in the third quarter (July-September), the company incurred $1 billion (€960 million) in accounting charges to write down assets related to a canceled three-row electric SUV project.
Electric Vehicle Sales Impacting Overall Performance
Ford’s Model e division, which focuses on electric vehicles, reported a staggering full-year loss of $5.08 billion (€4.9 billion) for 2024. This was accompanied by a 35% drop in revenue, which totaled $3.9 billion (€3.8 billion). Looking ahead, the company’s forecast suggests that the EV segment could face additional losses ranging between $5 billion (€4.8 billion) and $5.5 billion (€5.3 billion) this year. Ford attributes these losses to ongoing investments in future EV products and technologies, although the company has also reported $1.4 billion (€1.35 billion) in net cost improvements despite increasing expenditures to establish new battery plants and roll out new electric vehicle models.
Gloomy Outlook for Petrol and Hybrid Vehicles
The outlook does not improve for Ford’s other divisions, specifically Ford Pro, which handles commercial vehicles, and Ford Blue, the segment responsible for petrol and hybrid vehicles. Ford projects that Ford Pro will see its full-year pretax profit range between $7.5 billion (€7.3 billion) and $8 billion (€7.8 billion), a decline from $9.02 billion (€8.9 billion) in the previous year. Additionally, Ford Blue is anticipated to report pretax earnings between $3.5 billion and $4 billion, down from $5.28 billion this year.
Furthermore, Ford released its fourth-quarter financial results, which surprisingly surpassed Wall Street’s expectations. However, the bleak outlook has unsettled investors, leading to a 5.1% decline in the company’s shares during after-hours trading. The stock also ended the regular trading session down 1.5%.
