Ford Motor Company (F) exceeded expectations with its fourth-quarter earnings and revenue, and full-year profit slightly surpassed projections. However, the company’s subdued guidance for the full year 2025 sparked concern among investors, particularly in light of potential tariff impacts. This announcement follows competitor General Motors’ (GM) strong results, but with a similar cautious outlook.
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Ford projects adjusted earnings before interest and taxes (EBIT) between $7 billion and $8.5 billion for 2025, alongside adjusted free cash flow ranging from $3.5 billion to $4.5 billion. The company acknowledges that this guidance incorporates anticipated “headwinds related to market factors” such as pricing pressures. Notably, it excludes potential policy changes, including the possible loss of electric vehicle (EV) tax credits or the imposition of tariffs. During a call with reporters, CFO Sherry House emphasized that a 25% tariff on imported vehicles “would have a major impact on our industry.”
In comparison, Ford’s 2024 adjusted EBIT reached $10.2 billion on revenue of $185 billion, resulting in a net income of $5.9 billion. The company’s previous guidance for 2024 adjusted EBIT was approximately $10 billion. Following the announcement, Ford’s stock price declined by 4% at market open, reaching its lowest point since January 2021.
Ford anticipates a “roughly breakeven” adjusted EBIT for the first quarter of 2025, attributing this to lower sales volumes and an unfavorable product mix, influenced by new product launches at US Ford factories.
“In 2025, we expect to make significantly more progress on our two biggest areas of opportunity — quality and cost — as we enter the heart of our Ford+ transformation,” CEO Jim Farley stated in the earnings release. “We control those key profit drivers, and I am confident that we are on the right path to create long-term value for all our stakeholders.”
CFO House further indicated that Ford anticipates achieving $1 billion in cost savings.
Q4 Performance and Segment Breakdown
Ford’s fourth-quarter revenue reached $48.2 billion, surpassing the estimated $43.01 billion. This represents a 5% increase compared to the $46 billion reported a year ago and an improvement over the $46.2 billion from the previous quarter. Adjusted earnings per share were $0.39, exceeding the expected $0.32, with an adjusted EBIT of $2.1 billion.
Under the Ford+ plan, the company operates in three distinct segments: Ford Blue (traditional gas-powered vehicles), Ford Model e (electric vehicles), and Ford Pro (commercial and heavy-duty trucks). The Q4 performance for each segment is as follows:
- Ford Blue: $27.3 billion in revenue, $1.58 billion in EBIT
- Model e: $1.4 billion in revenue, -$1.38 billion in EBIT loss
- Ford Pro: $16.2 billion in revenue, $1.62 billion in EBIT
Ford reported a full-year EBIT loss of $5.1 billion for the Model e segment and expects similar losses in 2025. While acknowledging improved performance in the latter half of 2024 driven by higher EV volumes, Vice Chair John Lawler cautioned about “top-line pressure” throughout the year due to increasing supply and fluctuating demand. This mirrors industry trends, with analysts estimating a comparable EBIT loss for GM’s EV division.
US Sales and Electrification Trends
Ford reported an 8.8% year-over-year increase in US sales for Q4, largely driven by a 21.1% surge in F-Series sales. Total US sales for 2024 rose by 4.2%, reaching approximately 2.079 million vehicles. The “electrified” segment, encompassing both hybrid and fully electric vehicles, experienced a significant 38% growth, with 285,291 units sold. Hybrid vehicles constituted the majority of this growth, reaching a record 187,426 units sold, a 40% increase over 2023.
CEO Farley Advocates for Comprehensive Tariff Policy
CEO Jim Farley expressed concern over impending tariffs on Canadian and Mexican vehicle imports, stating that while Ford could manage short-term impacts, prolonged tariffs would have a “devastating impact” on the industry. He called for a more comprehensive tariff policy, pointing out that certain automakers, such as Hyundai-Kia and Toyota, currently import significant volumes into the US without facing these tariffs, creating an unfair advantage. Farley argued that a truly effective tariff policy should apply equally to all industry participants. He questioned the rationale behind the current system, highlighting the disparity in treatment between different automakers. This raises critical questions about the fairness and effectiveness of current trade policies in the automotive sector.
