Ford plans to increase EV volume as it expects $5 bil loss for 2025 in segment

Ford Motor Company expects a $5 billion-$5.5 billion loss in its "Model e" electric vehicle segment this year due to cost challenges, executives said, as the company aims to increase its EV volume.

The expected 2025 EV losses are stable year over year, CFO Sherry House said during an after-hours earnings call Feb. 5. The EV segment reported a full-year EBIT loss of $5.1 billion in 2024.

"While continued industry pricing pressure remains, we plan to materially increase our global volume driven by the full year impact of European launches, and we significantly increased investment in our battery facilities and next-generation products, which are just two years away," House said.

Ford's "Gen 1" vehicles are "still not profitable," House said.

Ford is developing its next generation of EVs that will be "affordable, high volume and great for our business," CEO Jim Farley said. The company is investing further in its battery factory to help bring down production costs.

Farley said the company found a "sweet spot" in the market for small- and medium-sized trucks and utility vehicles, saying they require "much lower-cost batteries." Ford also identified potential for larger EVs, saying that customers are more willing to pay a premium compared with smaller electric cars.

But regarding larger retail electric utility vehicles, "the economics are unresolvable," he said.

"These customers have very demanding use cases for an electric vehicle," Farley said. "These vehicles have worse aerodynamics and they're very heavy, which means very large and expensive batteries."

"Retail customers have shown that they will not pay any premium for these large EVs, making them a really tough business case given the expense in the batteries," he added.

The EV segment delivered $1.4 billion in cost reductions in 2024, House said. These reductions are "particularly important given industry pricing pressure" that resulted in year-over-year declines in revenue and wholesales of 35% and 9%, respectively, she said.

New cost challenges lie ahead for Ford in 2025. For the EV segment, US President Donald Trump's moves to deconstruct EV incentive programs could widen the cost gap between electric and internal combustion engine vehicles, S&P Global Commodity Insights analysts say.

Also, the company could overall see significant adverse effects from any potential tariffs that are sustained for enough time, the executives said.

"There is no question" that tariffs from Canada and Mexico "would have a huge impact on our industry with billions of dollars of industry profits wiped out" if protracted, Farley said during the call. Persisting tariffs would have a "devastating impact," he said.

If tariffs are temporarily issued over just a few weeks, the company could "make sure nothing crosses the border" for the duration. But since over 80% of vehicles are made in the US and over half the company's engines, protracted tariffs would require "major strategy shifts."

Ford overall reported a fourth consecutive year of topline growth in 2024 with global revenue of $185 billion, 5% year-over-year growth. Wholesales increased 1% year over year in 2024.

Q1 2025 is expected to see adjusted EBIT to be "roughly breakeven" due to "lower wholesales and unfavorable mix, including launch activity at major US plants," Ford said in its earnings report.