Ford's Cramer Praise: A Tactical Setup After the EV Write-Down?

The immediate setup is a classic event-driven tension. On one side, we have a massive, one-time accounting hit: Ford announced it will take a $19.5 billion write-down, including an $8.5 billion charge for its EV business. This stems from killing several EV models after federal tax credits expired, a move that drove pure EV sales down 52% in Q4. On the other side, we have a prominent market voice shifting gears. Jim Cramer, who earlier in the year focused on Ford's warranty costs, has recently become bullish on the company's hybrid strategy and even recommended buying the stock.

This creates the core tactical question: does this event create a temporary mispricing? The company's own guidance suggests a strong underlying business. Despite the EV pain, Ford raised its 2026 operating profit guidance to $7 billion. The stock has already rallied 37.9% year-to-date, but the recent charge and Cramer's comments are a fresh catalyst that could be driving a new wave of sentiment.

The mechanics are clear. The $19.5 billion charge is a non-cash, one-time hit that will pressure Q4 earnings. Yet, the company is simultaneously pivoting capital to what it sees as higher-return areas: hybrids, trucks, and Ford Pro. Cramer's praise for the hybrid segment, which saw sales rise about 18%, aligns perfectly with this strategic shift. The event-driven opportunity hinges on whether the market is overreacting to the EV write-down while underestimating the near-term profitability boost from this pivot.

The Mechanics: From EV Losses to Hybrid & Gas Resilience

The operational pivot is stark and immediate. After the federal tax credit expired in September, pure EV demand collapsed. In the final quarter, Ford's pure EV sales declined by about 52% to just 14,513 units. That's a sharp reversal from the 30,176 units sold a year earlier. The company itself acknowledged the business case had eroded, leading it to kill several EV models and take a $19.5 billion write-down.

Yet, the customer base didn't vanish-it shifted. Gas vehicles remained the favorite, with sales growing 4.8% to 475,329 units. More importantly, hybrids stepped into the gap. Sales there rose about 18% to 55,374 vehicles. This resilience in the "power of choice" lineup is the core of the new strategy. The company is now aggressively redeploying capital away from the struggling EV segment toward these higher-return areas.

The capital shift is happening on the production floor. Ford is retooling the F-150 Lightning, a flagship EV, into a gas-powered generator model. It's also repurposing its Tennessee Electric Vehicle Center into a truck plant for new "Built Ford Tough" pickups. The goal is to fill its U.S. plants with affordable new models and focus on Ford Pro, trucks, and hybrids. As CEO Jim Farley stated, the company is moving capital into higher-return growth opportunities: Ford Pro, our market-leading trucks and vans, hybrids and high margin opportunities. This isn't just a product change; it's a fundamental reallocation of manufacturing capacity and investment toward what's proving profitable today.

Valuation & Risk/Reward Setup

The stock's positioning is now a classic high-stakes bet. After a 37.9% year-to-date rally and a 39% gain over the past 12 months, Ford trades at a premium. The recent $19.5 billion write-down is a massive, one-time hit that will distort Q4 results. Yet, the company's raised 2026 operating profit guidance to $7 billion suggests the underlying business is stronger than the headline implies. The tactical setup hinges on whether the market is punishing the stock for a strategic retreat while ignoring the near-term profitability boost from the pivot.

The primary risk is that the charge is a symptom of deeper structural issues, not just a policy-driven dip. The collapse in pure EV sales-a 52% drop in Q4-highlights a fundamental shift in demand that may be harder to reverse than Ford's management admits. The company is redeploying capital, but the question is whether it can successfully scale its new focus on hybrids and trucks fast enough to offset the lost EV momentum. The stock's premium valuation leaves little room for error.

The key near-term catalysts are clear. First, Q1 2026 earnings will show execution against the raised $7 billion operating profit target. Second, the upcoming Bronco launch, which Cramer recently highlighted as a potential catalyst, will test the strength of the new product lineup. For now, the event-driven opportunity is defined by this tension: a stock that has already rallied hard on a strategic pivot, now facing the test of delivering on its new guidance while navigating a volatile market.