Ford anticipates significant losses in electric vehicle division again

In the United States, on February 7, 2025, Ford Motor Company provided insights regarding its financial outlook for its electric vehicle division, officially called Model E. The automaker reported a staggering loss of $5.1 billion for the 2024 fiscal year, an increase from the $4.7 billion deficit of 2023. Moreover, Ford now expects these losses to escalate further, estimating a shortfall between $5 billion and $5.5 billion in 2025 as the company seeks to navigate challenges in the electric vehicle market. Despite these heavy losses, Ford's overall financial performance has been improving, highlighted by a net income of $5.9 billion in 2024 due to the robust sales of its gas-powered vehicle models. This mixed financial performance has generated concern among investors, leading to a decrease in Ford's share prices following the announcement of their EV division's outlook. The weak earnings forecast for the electric vehicle unit is attributed to several factors, including high warranty costs and inadequate progress in cost-cutting measures. Ford has made significant investments in electric vehicle production and also relies on a supply chain that includes components sourced from Mexico and Canada. However, uncertainty looms regarding potential changes in U.S. government policies that could further affect profitability. The administration's plan to potentially eliminate electric vehicle tax credits and impose a 25% import tariff from neighboring countries may hinder growth for Ford's EV sector. Despite these difficulties, Ford is optimistic about future prospects, claiming that the launch of cheaper electric car models and advancements in battery technology may enhance profitability in the long run. While the company's gas-powered vehicles have provided vital income, the persistent losses in the Model E segment illustrate the ongoing struggle to balance investments with market realities. As part of its financial strategy, Ford announced plans to cut costs but maintain spending for new battery plants and electric vehicle launches. This tension between investment and return is reflective of the broader industry pressures Ford faces. Overall, Ford's actions and projections reflect a significant commitment to electric vehicles. While they have achieved some success financially with their traditional vehicles, the lack of profitability in the EV sector poses ongoing challenges. The company's initiatives to develop competitive electric models will be pivotal in fighting against industry pressures and improving margins in the future. Investors and analysts will need to remain vigilant as Ford navigates these tumultuous waters ahead.