Ford Falls Short of Earnings due to Impact of Trump’s Tariffs

Ford Motor Company faced significant challenges in its recent financial performance, primarily due to increased costs from a fire at an aluminum supplier and President Trump’s tariffs. The company reported a core profit decline of approximately 50 percent, amounting to $1 billion.

Financial Overview

For the fourth quarter, Ford disclosed a net loss of $11.1 billion, largely attributed to major writedowns on its electric vehicle (EV) programs. The adjusted earnings per share were registered at 13 cents, falling short of analysts’ estimates of 19 cents per share.

Revenue and Profit Projections

• Fourth-quarter revenue: $45.9 billion, exceeding analyst expectations.
• Projected earnings before interest and taxes (EBIT) for 2026: Between $8 billion and $10 billion.

Impact of Tariffs

Ford estimates that costs associated with Trump’s tariffs could reach about $2 billion this year. This is largely due to sourcing aluminum for crucial models like the F-150 trucks.

Challenges Faced

The company missed its adjusted profit guidance for the year, reporting an EBIT of $6.8 billion against the revised target of $7 billion. Additionally, the fire at the aluminum plant near Oswego, New York, which suffered two major incidents, is expected to hinder operations until at least September 2023.

Electric Vehicle Strategy

Ford is prioritizing the development of high-tech models to remain competitive both in the U.S. and globally. A new electric pickup is set to launch next year, developed by a specialized team in California.

EV Losses

• Last year’s losses from the EV and software unit: $4.8 billion.
• Projected losses for this year: Between $4 billion and $4.5 billion.

Industry Partnerships and Initiatives

In an effort to manage costs, Ford has formed partnerships with other automakers. Collaborations include a partnership with Renault for EV production in Europe and talks with Chinese auto manufacturer Geely for technology sharing and production.

Stock Performance

Despite the hurdles faced, Ford’s stock has rallied about 47 percent over the past year, reaching approximately $14 per share. In comparison, General Motors experienced a 72 percent increase, with shares around $80, while Stellantis saw a decline of 42 percent, dropping to about $7 per share.

As Ford navigates these challenges, the focus remains on reducing costs and boosting profitability in a competitive automotive landscape.