| Company | Value | Change | %Change |
|---|
The second-largest US automaker on Wednesday said earnings before interest and taxes will fall to a range of $7 billion and $8.5 billion, down from the $10.2 billion profit it generated in 2024. Sherry House, Ford’s incoming chief financial officer, told reporters that earnings will drop this year due to industrywide prices falling by about 2% and the cost of launching the new Lincoln Navigator and Ford Expedition SUV, which will result in a “break-even” first quarter.
House said Ford’s guidance does not include the potential impact of policy changes by the Trump administration.
“I know tariffs are on everyone’s mind,” House said. “There is no question that 25% tariffs on Mexico and Canada would have a major impact on our industry. That said, we believe the Trump administration intends to support the American auto industry.”Ford’s shares fell 5.1% as of 5:02 PM after regular trading in New York.
The forecast underscores the challenges facing Chief Executive Officer Jim Farley as he overhauls Ford’s EV strategy to staunch losses and trim warranty repair expenses that have hurt profit. Farley and rival automakers are also contending with the threat posed by Trump’s pledge to gut federal support for plug-in cars and potential steep new tariffs on Canada and Mexico.
In a Bloomberg TV interview, Farley said a 25% levy on goods from those countries would cost the auto industry “billions and billions” in profit and lead to layoffs. He called on the Trump administration to adopt a more “reasoned” approach to tariffs that doesn’t unfairly punish Ford and other companies that have much of their manufacturing footprint in North America.
He also voiced support for other initiatives the new administration has set in motion, such as the resetting of stringent fuel-efficiency and pollution rules that effectively compel carmakers to sell EVs in greater numbers.
“The most important thing is having a productive discussion with the DC leaders — the Trump administration, Congressional leaders — about what this could do to our industry, what it means for US jobs,” Farley said. “They ran on a campaign of making the auto industry stronger and that is what we expect out of them as policymakers.”Farley is pushing to produce more affordable EV models that go farther on a charge, but those new offerings won’t arrive until 2027. The tumult has put pressure on Ford shares, which fell nearly 19% last year, while the stock of rival General Motors Co. soared 48%.
Farley suggested EV profits are at least two years off, when the company plans to launch a new line of plug-in models that start below $30,000.
“We would rather grow profitably than grow,” Farley told Bloomberg TV. “We really learned a lot from Tesla, from the Chinese, from a lot of people on how differently we need to design these EVs to be profitable.”
Ford, America’s most recalled automaker, has struggled to reduce high warranty costs that Farley has said contribute to a $7 billion to $8 billion cost disadvantage compared to rivals. He has told executives that their performance bonuses are riding on successfully closing that gap. House said the company is targeting $1 billion in cost cuts this year.
“In 2025, we expect to make significantly more progress on our two biggest areas of opportunity – quality and cost,” Farley said in a statement. “We control those key profit drivers, and I am confident that we are on the right path.”
Ford’s fourth-quarter adjusted profit was 39 cents per share, topping the 32 cents analysts expected on average. For the full year, Ford reported earnings before interest and taxes of $10.2 billion, just above the $10 billion the company had forecast. Ford began 2024 by predicting it would earn as much as $12 billion on that basis.
Earnings are expected to decline at Ford’s profitable units selling commercial vehicles and models powered by traditional internal combustion engines. Ford said its Ford Pro commercial business, which has been a bright spot, should generate no more than $8 billion in earnings before interest and taxes in 2025, down from $9 billion last year.
Ford Blue, its traditional business that includes internal combustion engine vehicles and gas-electric hybrids, will similarly see EBIT decline to $3.5 billion to $4 billion compared to $5.3 billion last year.
Losses at Ford’s Model e EV business may expand further, even after sales of battery-powered cars gained 16% in the final three months of the year. The company expects the EV business to lose as much as $5.5 billion this year, which would top 2024’s record $5.1 billion deficit.
