Ford Expects Big Profit Drop as Trump Tariff, EV Threats Loom
[Stay on top of transportation news: Get TTNews in your inbox.]
Ford Motor Co. warned that profit may fall by $2 billion or more this year on lower vehicle prices and costly new-model launches, adding to risks posed by potential steep new tariffs under President Donald Trump and dimming demand for plug-in cars.
The second-largest U.S. automaker expects no more than $8.5 billion in earnings before interest and taxes this year, down from the $10.2 billion it generated in 2024. Sherry House, Ford’s incoming chief financial officer, attributed the drop to an anticipated 2% decline in industrywide prices and the expense of launching new Lincoln Navigator and Ford Expedition SUVs that will wipe out profit in the first quarter.
The forecast doesn’t factor in the effect of new levies or other policy changes adopted by the Trump administration, House said.
“There is no question that 25% tariffs on Mexico and Canada would have a major impact on our industry,” House told reporters Feb. 5. “That said, we believe the Trump administration intends to support the American auto industry.”
Farley
CEO Jim Farley is combating an array of challenges at a time when key federal policies that hold significant sway over the industry’s fortunes are in flux. He’s dialing back Ford’s huge bet on electric vehicles that overshot consumer demand and fueled steep losses. He’s also fighting to trim warranty repair expenses that have sapped profits.
RELATED: Ford Puts Ford Blue, EV Division Under One Leader
At the same time, Farley and rival automakers are contending with new threats posed by Trump’s pledge to gut federal support for plug-in cars and potential steep new tariffs on Canada and Mexico that could take effect next month.
Ford Q4 2024 Earnings Press Release
In a Bloomberg TV interview, Farley said a 25% levy on goods from those countries would cost the company “billions and billions” in profit and lead to industrywide layoffs in communities across the country. He called on the Trump administration to adopt a more “reasoned” approach to tariffs that doesn’t unfairly punish companies with a heavy footprint in North America while allowing foreign rivals to import more freely from Asia and Europe.
“There are millions of vehicles coming into our country” that aren’t subject to the incremental tariffs that Trump has proposed, Farley said later on Ford’s earnings call. “We can’t just cherry-pick one place or the other because this is a bonanza for our import competitors.”
Ford’s shares fell 5.2% as of 5:53 p.m. after regular trading in New York.
Broad Pressure
Farley is pushing to produce more affordable EV models that go farther on a charge, but those new offerings won’t arrive until 2027. The tumult has put pressure on Ford shares, which fell nearly 19% last year, while the stock of rival General Motors Co. soared 48%.
RELATED: GM Reports Q4 Loss on Charges Related to China
Farley suggested EV profits are at least two years off, when the company plans to launch a new line of plug-in models that start below $30,000.
“We would rather grow profitably than grow,” Farley told Bloomberg TV. “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.”
Host Seth Clevenger and TT's Connor Wolf discuss CES 2025 and the emerging technologies that could push the trucking industry forward.. Tune in above or by going to RoadSigns.ttnews.com.
Ford, America’s most recalled automaker, has struggled to reduce high warranty costs that Farley has said contribute to a $7 billion to $8 billion cost disadvantage compared to rivals. He has told executives that their performance bonuses are riding on successfully closing that gap. House said the company is targeting $1 billion in cost cuts this year.
“In 2025, we expect to make significantly more progress on our two biggest areas of opportunity — quality and cost,” Farley said in a statement. “We control those key profit drivers, and I am confident that we are on the right path.”
Ford’s fourth-quarter adjusted profit was 39 cents per share, topping the 32 cents analysts expected on average. For the full year, Ford reported earnings before interest and taxes of $10.2 billion, just above the $10 billion the company had forecast. Ford began 2024 by predicting it would earn as much as $12 billion on that basis.
Want more news? Listen to today's daily briefing above or go here for more info
Earnings are expected to decline at Ford’s profitable units selling commercial vehicles and models powered by traditional internal combustion engines. Ford said its Ford Pro commercial business, which has been a bright spot, should generate no more than $8 billion in earnings before interest and taxes in 2025, down from $9 billion last year.
Ford Blue, its traditional business that includes internal combustion engine vehicles and gas-electric hybrids, will similarly see EBIT decline to $3.5 billion to $4 billion compared to $5.3 billion last year.
Losses at Ford’s Model e EV business may expand further, even after sales of battery-powered cars gained 16% in the final three months of the year. The company expects the EV business to lose as much as $5.5 billion this year, which would top 2024’s record $5.1 billion deficit.
