Ford's EV Struggles: A Bumpy Road to Recovery

Ford Motor Company (F) shares took a 5% hit in pre-market trading after the automaker reported a disappointing outlook and high losses from its electric vehicle (EV) segment in 2024. As investors digest the news, it's essential to understand the factors contributing to Ford's struggles and the strategies the company is employing to improve its competitive position in the EV market.



Ford's EV segment, Model e, posted a full-year loss of $5.08 billion in 2024, with revenue falling 35% to $3.9 billion. The company expects the EV unit to lose between $5 billion and $5.5 billion in 2025. In comparison, General Motors (GM) is estimated to have posted a $5 billion EBIT loss in its EV business in 2024, with a projected $4.25 billion loss in 2025. However, it's important to note that GM does not break out the performance of its EV unit separately.

Tesla (TSLA), a leading EV manufacturer, reported a net income of $11.8 billion in 2024, with revenue of $86.5 billion. Tesla's strong financial performance is a testament to its dominant position in the EV market.



Ford's disappointing outlook and high losses from its EV segment in 2024 can be attributed to several specific factors:

1. Headwinds related to market factors: Ford cited "headwinds related to market factors" as a reason for its weaker earnings growth and further losses in its electric vehicles business. These market factors include a 2% industry lower pricing and slower sales (Ford's earnings call, 2025).
2. Warranty expenses: Ford has been grappling with stubbornly high warranty expenses, which have contributed to its losses. In the July-September quarter of 2024, the company took a $1 billion accounting charge to write down assets for a canceled three-row electric SUV (Ford's earnings call, 2025).
3. Lagging cost-cutting efforts: Ford has struggled with controlling costs, which has negatively impacted its EV segment's profitability. The company has been investing in future products and launching new battery plants and electric vehicles, but these investments have not yet translated into significant cost savings (Ford's earnings call, 2025).
4. Model e segment losses: Ford's electric vehicle business, Model e, posted a full-year loss of $5.08 billion for 2024, with revenue falling 35% to $3.9 billion. The company expects the EV unit to lose between $5 billion and $5.5 billion in 2025 (Ford's earnings call, 2025).

To improve its competitive position in the EV market, Ford can employ the following strategies:

1. Cost reduction and quality improvement: Ford has emphasized the importance of cost reduction and quality improvement in its EV segment. By focusing on these areas, Ford can make its EVs more affordable and appealing to customers.
2. Affordable platforms and commercial EV customers: Ford should continue to invest in affordable EV platforms and target commercial EV customers. This strategy can help Ford tap into the growing demand for EVs in the commercial sector and maintain a competitive edge.
3. Diverse powertrains: Ford should maintain a diverse range of powertrains, including both electric and internal combustion engine options. This approach can help Ford cater to a broader range of customers and adapt to changing market conditions.
4. Attracting top talent: Ford should focus on attracting top talent in the EV sector to drive innovation and improve its competitive position. By fostering a culture where quality and cost efficiency are paramount, Ford can create a strong foundation for its EV business.
5. Comprehensive tariff policy: Ford's CEO, James Farley, has called for a more comprehensive tariff policy that applies to all import competitors. This policy can help level the playing field for Ford and other domestic automakers, allowing them to compete more effectively in the global EV market.

By implementing these strategies, Ford can improve its competitive position in the EV market and better compete with its rivals, such as General Motors and Tesla. However, investors should remain cautious as Ford navigates the challenges and opportunities in the rapidly evolving EV landscape.