Ford Motor Company recently warned that its profitability might considerably decline this year, predicting a decline of $2 billion or more this year. The announcement spooked investors, leading to a steep decline in share price. The company indicated that contributing factors to the anticipated decline are new tariffs imposed by the Trump administration, lower vehicle prices, and cratering EV demand.
America’s oldest automaker anticipates earnings before interest and taxes to fall between $7 billion and $8.5 billion this year, a notable decrease from $10.2 billion last year. According to Sherry House, the incoming chief financial officer, a decline in industry car prices coupled with the launch of new vehicle offerings will wipe out profit this quarter.
Furthermore, Ford Chief Executive Officer Jim Farley indicated that the company would reign in its massive bet on electric vehicles amid lackluster consumer demand. Ford’s lofty forecasts on its EV lineup overshot consumer interest and have contributed to steep losses. The Trump administration has also posed a political risk to EVs after pledging to suspend federal support for plug-in cars.
According to Farley, profitability in its EV sector won’t be attainable for at least two years. “We would rather grow profitably than grow,” he said. “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.” Many legacy automakers have struggled to reach profitability in their EV offerings over the past several years.
Ford has also urged the Trump administration to reconsider its position on tariffs. “There is no question that 25% tariffs on Mexico and Canada would have a major impact on our industry,” House recently explained to reporters. “That said, we believe the Trump administration intends to support the American auto industry,” she noted.
Farley also warned that the tariffs could cost Ford “billions and billions” in profit. The chief executive claimed “there are millions of vehicles coming into our country” that aren’t affected by the incremental tariffs from President Trump. “We can’t just cherry-pick one place or the other, because this is a bonanza for our import competitors,” he noted.
Last year, The American Tribune reported on a troubling forecast for Ford when it projected at the time that it would lose approximately $44k per vehicle in its EV lineup. The Tribune wrote at the time, “Ford is set to lose roughly $5 billion on its EV business this year. This figure amounts to a nearly $44,000 loss on every EV the Detroit-based auto manufacturer produces. To make matters worse, Ford’s EV sales experienced a 37% decline last quarter. Last week, in light of troubling financial information, Ford stock posted its worst daily performance since 2008.”
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“They have no choice. Tesla is such a leader in this space and the future is really electric, people are just not fully on board, but EV owners are the happiest drivers. No doubt about it. Fast, smooth, quiet, cool in style, and cool in heat. We have two EVs and two ICE. The EVs are far and away the better cars. Solid state batteries are coming on line now with 30-40% weight reduction,” one person on social media wrote, analyzing the space.
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