Ford’s EV Losses Shrink, But $7B in EV Strategy Charges Loom

Date of Call: Feb 10, 2026

Financials Results

• Revenue: $187 billion, grew for the fifth consecutive year
• EPS: $2.6 billion EBT for Ford Credit

Guidance:

• Company adjusted EBIT of $8 billion to $10 billion for 2026.
• Adjusted free cash flow of $5 billion to $6 billion.
• Capital expenditures of $9.5 billion to $10.5 billion.
• U.S. SAAR assumed at 16 million to 16.5 million with flat industry pricing.
• Ford Pro EBIT of $6.5 billion to $7.5 billion.
• Ford Model e loss of $4 billion to $4.5 billion.
• Ford Blue EBIT of $4 billion to $4.5 billion.
• Ford Credit EBT of about $2.5 billion.
• ~$7 billion in charges related to EV strategy update over 2026/2027.

Business Commentary:

Revenue Growth and Market Share Recovery:

• Ford Motor Company reported $187 billion in revenue, with U.S. market share climbing to 13.2%, its best performance in six years.
• This growth was driven by strong sales in trucks and SUVs, particularly in the F-Series and Ranger models, and effective management of supply chain disruptions.

Cost Management and EBIT Improvement:

• The company generated $6.8 billion in adjusted EBIT for the full year, with a $1 billion improvement in material and warranty costs.
• Cost reductions and tariff impacts were managed effectively, despite challenges such as the Novelis fires, contributing to improved profitability.

Ford Pro and Commercial Vehicle Strength:

• Ford Pro delivered $66 billion in revenue and $6.8 billion in EBIT, with a double-digit margin.
• The strong performance was supported by high demand for Super Duty and Transit franchises, and growth in high-margin software and physical services.

Model e and EV Strategy Adjustments:

• Ford Model e saw a 73% increase in revenue and 69% in volume, with EBIT losses improving to $4.8 billion.
• The improvement was due to cost reductions and higher volume in Europe, alongside strategic adjustments in the U.S. EV portfolio.

Capital Investment and Future Growth:

• Ford plans to invest $9.5 billion to $10.5 billion in capital expenditures, focusing on Ford Energy and higher-return growth opportunities.
• This strategic shift aims to enhance profitability and capitalize on emerging markets such as battery storage and energy solutions.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'We executed very well last year... delivered good results' and 'the earnings power of our business is accelerating'. CFO noted 'Our performance clearly demonstrated 2 things. Capital discipline and improved cost performance.' Outlook includes EBIT growth, cost improvements, and strategic progress.

Q&A:

• Question from Dan Levy (Barclays Bank PLC): Unpack the 2026 assumptions for market factors, mix benefits, and tariff impacts.
  Response: Novelis improvement of $1B YOY includes $2.5B-$3B non-recurring 2025 loss recovery offset by $1.5B-$2B temporary supply costs. Positive market factors include sunset of low-margin nameplates and $0.5B less U.S. regulatory credits. Costs are roughly flat with $1B lower tariffs offset by higher commodity prices and investments.

• Question from Dan Levy (Barclays Bank PLC): How are you ensuring new EV/AV investments are more capital-efficient given past experiences?
  Response: Customer demand dictates strategy: focusing on high-volume affordable UEVs in the U.S., hybrids where appropriate, and partnerships overseas (e.g., Renault) for cost-efficient, scalable solutions. The goal is a capital allocation that supports an 8% EBIT margin target.

• Question from Joseph Spak (UBS Investment Bank): Clarify the Novelis impact and its effect on underlying EBIT.
  Response: The $2B 2025 loss is largely non-recurring. 2026 improvement is $1B, but offset by $1.5B-$2B temporary costs for supply continuity. Net effect is a $1B headwind, implying underlying EBIT would be $10.5B-$11.5B without this.

• Question from Joseph Spak (UBS Investment Bank): Discuss market impact from competitors in trucks and European LCVs, and Ford-specific mix factors.
  Response: Ford Blue maintains competitive pickup lineup with recent market share gains. For Pro, European demand is strong with competitive products and pricing holding up. Ford is optimizing portfolio mix (e.g., more V8s, hybrids) to balance stock and incentives while increasing revenue share.

• Question from Emmanuel Rosner (Wolfe Research): Explain the increase in capital expenditure and its relation to future savings.
  Response: CapEx up $1B+ to $9.5B-$10.5B driven by Ford Energy investment. Capital allocation shifted to higher-return areas (75% into trucks/multi-energy portfolio, 25% into Energy/Model e) to support 8% EBIT margin target over the next few years.

• Question from Emmanuel Rosner (Wolfe Research): What is the cadence for Model e reaching breakeven by 2029?
  Response: Steady improvement expected as UEV products launch in 2027 and become more profitable in 2028/2029, offsetting Gen 1 losses which are declining in volume.

• Question from Ryan Brinkman (JPMorgan Chase & Co): Clarify the late-year tariff credit change and its impact on 2025 EBIT.
  Response: A $1.9B credit for parts recovery became effective Nov 1 instead of May 3, creating a one-time $1B hit in Q4. This explains the $1.2B-$1.7B better-than-expected EBIT in Q4 2025, and no ongoing headwind is expected.

• Question from Ryan Brinkman (JPMorgan Chase & Co): Comment on European business performance and impact of EV changes/Renault agreement.
  Response: Pro business in Europe remains profitable. Passenger car profitability is a concern; using Renault's B-sized EV platform is key to reducing costs. The outlook is tied to EU/UK policies balancing CO2 reduction and job risks.

• Question from Andrew Percoco (Morgan Stanley): Provide context on energy storage capital allocation and customer feedback.
  Response: Ford Energy leverages LFP battery expertise and manufacturing scale for a fast-growing battery storage market. Early customer engagement is positive, with a focus on end-to-end solutions for grid and data center applications, not just contract manufacturing.

• Question from Andrew Percoco (Morgan Stanley): Why pursue in-house autonomy (Level 3) instead of partnerships?
  Response: Bringing Level 3 autonomy in-house allows Ford to control hardware/software costs (thousands per vehicle savings) and curate the safety-critical customer experience, unlike expensive supplier-based systems. It's a strategic choice to launch L3 on affordable UEVs.

• Question from Mark Delaney (Goldman Sachs Group): Update on the $7B cost gap with peers and progress toward it.
  Response: $1.5B cost improvement in 2025 and another $1B expected in 2026, primarily from material/warranty. The gap is closing rapidly, supported by next-gen products designed with embedded lower costs.

• Question from Mark Delaney (Goldman Sachs Group): Inventory assumptions for 2026 and sustainability of extra F-Series shifts.
  Response: Inventory to remain within 55-65 retail days supply range. F-150 supply will be on the low end in H1 2026 and rebuilt in H2, but overall within target. This balances restocking with demand.

• Question from Colin Langan (Wells Fargo Securities): Clarify the volume recovery for Novelis in 2026.
  Response: Plan to increase volume by 50,000-60,000 units in 2026, up from the original 50,000 forecast, but the $1B improvement is now $500M-$1B due to added temporary supply costs after the second fire.

• Question from Colin Langan (Wells Fargo Securities): Explain the drivers of the higher free cash flow guidance despite increased CapEx.
  Response: Higher automotive EBIT and a $1B receivable from the U.S. government for tariff credits drive the increase in free cash flow, partially offset by higher capital spending.

Contradiction Point 1

Tariff Impact for 2026

Contradiction on the expected 2026 net tariff impact versus a stated offset.

What are the 2026 market factors, including the magnitude of benefits from mix and powertrain, how they offset declines in Escape, Corsair, and a more competitive environment, and your tariff assumptions? - Dan Levy (Barclays Bank PLC)

2025Q4: The $1 billion improvement from Novelis includes... offset by $1.5B-$2B in temporary costs (tariffs, premium freight) for aluminum supply continuity until the Novelis mill restarts (May-Sept 2026). - [Sherry House](CFO)

What is the 2026 tariff impact? Will it result in a $1 billion net headwind? - Gautam Narayan (RBC Capital Markets)

2025Q3: For 2026, the full-year impact is expected to be similar to 2025's $1 billion headwind. - [Sherry House](CFO)

Contradiction Point 2

Novelis Benefit Recovery in 2026

Contradiction on the size of the 2026 benefit from Novelis.

Was Novelis a $2B headwind in 2025, and is the 2026 $1B net improvement implying $10.5B underlying EBIT without temporary costs? - Joseph Spak (UBS Investment Bank)

2025Q4: The $2B 2025 loss is largely non-recurring in 2026, with a $0.5B-$1B volume recovery. This is offset by $1.5B-$2B in temporary sourcing/logistics costs, resulting in a net $1B year-over-year improvement. - [Sherry House](CFO)

Why is only $1 billion recoverable from the Novelis impact, and does the plant's recovery timeline (end of year) align with your outlook? - Joseph Spak (UBS Investment Bank)

2025Q3: Ford will lose about 90,000-100,000 units in Q4 2025. To recover, Ford is adding... expecting to make up roughly 50,000 units in 2026. - [Kumar Galhotra](COO)

Contradiction Point 3

Financial Tailwind from Regulatory Changes (CO₂ Credit Purchases)

Contradiction on the materiality of the near-term profit tailwind from reduced CO₂ credit purchases.

Could you detail the 2026 market factors, including the magnitude of mix and powertrain benefits offsetting declines from Escape, Corsair, and a competitive environment, as well as tariff assumptions? - Dan Levy (Barclays Bank PLC)

2025Q4: Positive market factors include... a ~$0.5B benefit from changes in U.S. regulatory environment (lower credits). Costs are roughly flat... - [Sherry House](CFO)

What were the prior expectations for 2025 and the profit impact beyond 2026 following the $1.5 billion reduction in CO₂ credit purchases? - Joseph Robert Spak (UBS)

2025Q2: Ford has expensed about $200 million so far, with a reasonable quarterly run-rate expected going forward—**not a significant near-term tailwind**. - [Sherry House](CFO)

Contradiction Point 4

Outlook for Ford Model e Profitability and Investment Cadence

Contradiction on the urgency and path to achieving breakeven for the Model e business.

What strategies and timeline are needed for Ford Model E to reach breakeven by 2029? - Emmanuel Rosner (Wolfe Research, LLC)

2025Q4: Improvement will be steady as UEV products launch in 2027 and become more profitable in 2028+. - [Sherry House](CFO)

What were the expected 2025 impacts and projected profit impacts for 2026 and beyond from the $1.5 billion reduction in CO₂ credit purchases? - Joseph Robert Spak (UBS)

2025Q2: The **bigger opportunity comes from changing the product mix** toward higher-demand Pro and non-electrified powertrains, which could unlock **multibillion-dollar benefits** once the final rule is set (expected by year-end). - [James Duncan Farley](CEO)

Contradiction Point 5

Tariff Impact and Mitigation Strategy

Contradiction in the magnitude and nature of tariff financial impact and the strategy to offset it.

How do 2026 market factors, including the magnitude of benefits from mix and powertrain, offset declines from Escape, Corsair, and a more competitive environment, and what are the tariff assumptions? - Dan Levy (Barclays Bank PLC)

2025Q4: The **$1.5B-$2B in temporary costs** (tariffs, premium freight) for aluminum supply continuity... offset by $2.5B-$3B of non-recurrence of 2025 losses. - [Sherry House](CFO)

Can you provide details on the $2.5 billion gross tariff headwind, including its breakdown into categories (e.g., complete vehicles vs. parts), whether the 3.75% offset is included, and the specifics of the $1.5 billion net impact and offset actions? - Emmanuel Rosner (Wolfe Research)

2025Q1: The **$1.5 billion net adverse EBIT impact** includes **about $1 billion in offsetting recovery actions**. - [Sherry House](CFO)