Ford's EV Business Losses Exceed $16 Billion
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 7 hours ago
0mins
Source: Fool
- EV Business Losses: Ford has incurred over $16 billion in losses on its electric vehicle business since 2022, with a slight improvement to $4.8 billion in Q4 2023, yet it still anticipates losses of $4 billion to $4.5 billion in 2026, highlighting the high costs of its EV strategy amid an unprepared market.
- Shareholder Return Comparison: While Ford returns most value to shareholders through dividends, General Motors has initiated a $10 billion stock buyback in 2023, with an additional $6 billion authorized for both 2024 and 2025, reflecting differing capital allocation strategies between the two automakers.
- Future Outlook: Ford plans to launch a new midsize electric truck priced around $30,000 by 2027, utilizing its new
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Analyst Views on F
Wall Street analysts forecast F stock price to fall
14 Analyst Rating
3 Buy
10 Hold
1 Sell
Hold
Current: 14.130
Low
11.00
Averages
13.65
High
16.00
Current: 14.130
Low
11.00
Averages
13.65
High
16.00
About F
Ford Motor Company is an automobile company. The Company develops and delivers Ford trucks, sport utility vehicles, commercial vans and cars, and Lincoln luxury vehicles, along with connected services. The Company’s segments include Ford Blue, Ford Model e, Ford Pro, and Ford Credit. The Ford Blue segment primarily includes the sale of Ford and Lincoln internal combustion engine (ICE) and hybrid vehicles, service parts, accessories, and digital services for retail customers. The Ford Model e segment primarily includes the sale of its electric vehicles, service parts, accessories, and digital services for retail customers. The Ford Pro segment primarily includes the sale of Ford and Lincoln vehicles, service parts, accessories, and services for commercial, government, and rental customers. The Ford Credit segment consists of the Ford Credit business on a consolidated basis, which is primarily vehicle-related financing and leasing activities. Its vehicle brands are Ford and Lincoln.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Ford's Strategic Shift to New Electric Pickup Platform
- Electrification Challenges: Ford faced $19.5 billion in losses on its first-gen EVs, and despite demand falling short of expectations, the company is pivoting to develop a new universal electric vehicle platform, planning to launch a midsize electric pickup priced around $30,000, aiming for profitability from the outset.
- Manufacturing Efficiency Gains: The new platform reduces total parts by 20% and cuts 40% of process workstations on the factory floor, allowing Ford to lower production costs through streamlined manufacturing processes, thereby enhancing overall profitability.
- Battery Cost Control: Ford opts for lithium iron phosphate (LFP) batteries, which are cheaper and safer, as batteries account for over 40% of an EV's total cost; reducing battery costs is crucial for Ford to achieve profitability in its electric vehicle lineup.
- Market Risks and Opportunities: Although EV penetration in the U.S. is only 6%-8%, Ford remains optimistic about the midsize electric pickup's market potential, believing it meets consumer demand for affordability and utility, potentially filling a market gap and driving sales growth.
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- Fuel Economy Calculation: The rescinded 'fuel content factor' allowed automakers to calculate fleetwide fuel economy by assigning higher efficiency figures to EVs, thus lowering overall fuel consumption metrics, and its removal will diminish the competitive edge of EVs.
- Court Ruling Basis: The DOE cited a September appeals court decision as the basis for this policy reversal, indicating that the legal environment is increasingly influencing EV policies, which may lead to more adjustments in similar regulations in the future.
- Market Reaction Expectations: With this policy change, major automakers like GM and Ford may need to reassess their EV strategies to navigate the increasingly challenging market environment and policy hurdles.
See More
Ford's EV Business Losses Exceed $16 Billion
- EV Business Losses: Ford has incurred over $16 billion in losses on its electric vehicle business since 2022, with a slight improvement to $4.8 billion in Q4 2023, yet it still anticipates losses of $4 billion to $4.5 billion in 2026, highlighting the high costs of its EV strategy amid an unprepared market.
- Shareholder Return Comparison: While Ford returns most value to shareholders through dividends, General Motors has initiated a $10 billion stock buyback in 2023, with an additional $6 billion authorized for both 2024 and 2025, reflecting differing capital allocation strategies between the two automakers.
- Future Outlook: Ford plans to launch a new midsize electric truck priced around $30,000 by 2027, utilizing its new
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- Electrification Challenges: Ford faced $19.5 billion in losses on its first-gen EVs, and despite demand falling short of expectations, the company is pivoting to develop a new universal electric vehicle platform, planning to launch a midsize electric pickup priced around $30,000, aiming for profitability from the outset.
- Manufacturing Efficiency Gains: The new platform reduces total parts by 20% and cuts 40% of process workstations on the factory floor, allowing Ford to lower production costs through streamlined manufacturing processes, thereby enhancing overall profitability.
- Battery Cost Control: Ford opts for lithium iron phosphate (LFP) batteries, which are cheaper and safer, as batteries account for over 40% of an EV's total cost; reducing battery costs is crucial for Ford to achieve profitability in its electric vehicle lineup.
- Market Risks and Opportunities: Although EV penetration in the U.S. is only 6%-8%, Ford remains optimistic about the midsize electric pickup's market potential, believing it meets consumer demand for affordability and utility, potentially filling a market gap and driving sales growth.
See More
Trump Administration Rescinds EV Incentive Rule
- Policy Rescission Impact: The Trump administration's Department of Energy has rescinded a rule that incentivized automakers to produce more EVs, which could further pressure the EV market already affected by the rollback of the 2009 EPA Endangerment Finding.
- Fuel Economy Calculation: The rescinded 'fuel content factor' allowed automakers to calculate fleetwide fuel economy by assigning higher efficiency figures to EVs, thus lowering overall fuel consumption metrics, and its removal will diminish the competitive edge of EVs.
- Court Ruling Basis: The DOE cited a September appeals court decision as the basis for this policy reversal, indicating that the legal environment is increasingly influencing EV policies, which may lead to more adjustments in similar regulations in the future.
- Market Reaction Expectations: With this policy change, major automakers like GM and Ford may need to reassess their EV strategies to navigate the increasingly challenging market environment and policy hurdles.
See More
Ford's EV Business Losses Exceed $16 Billion
- EV Business Losses: Ford has incurred over $16 billion in losses on its electric vehicle business since 2022, with a slight improvement to $4.8 billion in Q4 2023, yet it still anticipates losses of $4 billion to $4.5 billion in 2026, highlighting the high costs of its EV strategy amid an unprepared market.
- Shareholder Return Comparison: While Ford returns most value to shareholders through dividends, General Motors has initiated a $10 billion stock buyback in 2023, with an additional $6 billion authorized for both 2024 and 2025, reflecting differing capital allocation strategies between the two automakers.
- Future Outlook: Ford plans to launch a new midsize electric truck priced around $30,000 by 2027, utilizing its new
See More
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- Google's AI Potential: Google's Gemini generative AI platform is rapidly growing, with analysts expecting revenue and EPS to grow at CAGRs of 15% and 12% from 2025 to 2028, highlighting its strong potential in the digital advertising and cloud infrastructure markets.
- Amazon's Market Advantage: As the world's largest e-commerce and cloud infrastructure company, Amazon leverages AWS profits to expand its retail business, with analysts projecting revenue and EPS growth at CAGRs of 12% and 18% from 2025 to 2028, indicating robust future growth.
- Investment Recommendation: Analysts view both Alphabet and Amazon as evergreen stocks worth investing in, and Robinhood investors' choices reflect confidence in these stocks, especially amid current market volatility, showcasing their long-term investment value.
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- Alphabet's Diversification: With a robust ecosystem that includes a search engine, cloud services, and a generative AI platform, Alphabet is expected to grow its revenue and EPS at CAGRs of 15% and 12% from 2025 to 2028, demonstrating its ongoing expansion capabilities in the digital advertising and cloud markets.
- Amazon's Market Leadership: As the world's largest e-commerce and cloud infrastructure company, Amazon's AWS business supports its retail operations, with projected revenue and EPS growth rates of 12% and 18% from 2025 to 2028, showcasing its potential in the rapidly growing AI market.
- Investment Value: Despite market volatility, analysts still view Alphabet and Amazon as evergreen stocks worth investing in, indicating that Robinhood investors are leaning towards stable blue-chip stocks rather than more speculative ones.
See More
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