Ford’s Electric Vehicle Ambitions Encounter Steep Financial Headwinds: Unpacking the $3 Billion Loss and a Radical Strategic Pivot for Future Profitability

Ford Motor Company, one of America’s oldest carmakers, is hitting roadblocks in its push toward electric vehicles. Lately, numbers show big spending and early profits taking a hit due to going electric. With updated financial splits, it’s clear how much cash is being poured in – and how tough things are now. Even as Ford drives change in the EV space, pressure from buyers and costs keeps growing.

The first three months brought a big hit for Ford’s EV team, Model e, losing $1.3billion – about $132,000 per ride sold. That dent affected the brand’s total profit.

The latest earnings update showed a drop in car deliveries for the Model e group – down to units from the same quarter last year. Sales income took a hit, falling sharply to around $100 million. That slump came as prices across EVs have been sliding nonstop since early last year. The company pointed to tough rivalry and constant discounting as key reasons behind the dip.

R&D Investment and Long-Term Outlook

Ford’s big losses go beyond just making and shipping the cars they sell. Plus, a large chunk of that money covers hundreds of millions spent on R&D for their upcoming EVs. Although these bets take time to pay off, they’re key to staying in the game later. Still, the hope is those moves will bring profits down the road.

This bold move suggests losses keep piling up. So far, Model e is expected to lose $5 billion in EBIT this year. That comes after a total EBIT loss of $4.7bilion from EV sales last year, with each car bringing a deficit of $40,525 billion. While results lag, the push continues.

Ford’s finance boss, John Lawler, compares the Model e team to a small new business inside the bigger company. Because it’s growing fast, he says things like spending heavily or learning on the go are totally normal – just what happens when you’re trying to scale up. These early costs? They’re not failures – they’re part of setting down roots and getting stronger over time.

Profitability Targets and Cost-Cutting Measures

Ford’s trying to set EV prices high enough to cover build costs soon – though R&D spending isn’t counted – that price battle dragging things down. Mr. Lawler admits just hitting basic profit feels tough right now. Even after cutting $1k per Mustang Mach-E, he says income’s falling quicker than expenses can shrink, showing how tight it really is.

Ford’s plan for Model e wants profits before taxes down the line – eyeing a solid % gain. Bigger production will help, along with smarter designs and tweaks under the hood. Cheaper batteries play a part too, while things like government breaks or low material costs could boost results.

Still, Wells Fargo’s Colin Langan wasn’t sure about how big the needed cuts really were – figuring Ford must slash $15,000 per car just to hit its goal. In reply, Ford’s Lawler sketched out a fresh take on building cars, shifting toward better energy use, like smarter airflow shapes, so expenses drop while results climb.

Streamlined Manufacturing and Platform Innovation

Ford’s now focusing on simplifying how it builds cars – by using more shared pieces across upcoming electric models, unlike today’s versions that still rely heavily on old gas-powered frames. According to Mr. Lawler, starting fresh could lead to big cost cuts.

The third quarter made things worse for the Model e team. From July to September, the electric vehicle group lost $1.4 billion – pushing total losses since January up to $3.6 billion. That covers $800 million in Q1 and then $1.3 billion in Q2, showing ongoing spending without returns. In this latest period, the EBIT margin sat at negative 79%, while the figure across the past nine months edged up to negative 66.7%.

Even with those setbacks, Q3 had the most EV handovers ever – probably because buyers rushed before the Sept. tax break expired. Sales hit $1.8 billion then, up 50% from last year yet down 25 % since Q2, showing things are shaky. Between Jan and Sept, Model e brought in $5.4billion.

Major Investments and Production Adjustments

In August, Ford said it’d spend around 5 billion bucks on a fresh EV setup – also planning to roll out a midsize electric pickup with four doors before long, aiming for a pretty low entry cost. That move shows they’re serious about growing their electric lineup without making people empty their wallets.

The fresh EV setup changes how cars are built – it cuts part numbers by 20%, slashes fastener use by 25%, skips whole work areas compared to regular models. Most importantly, putting vehicles together speeds up by 15%, trims tricky steps plus lowers expenses, key for making money.

Ford changed plans after a blaze hit Novelis’ aluminum facility in New York – this mainly affects the F-Lightning. The company paused making the electric model for now, shifting supplies to boost output of gas and hybrid F-Series pickups instead, since those bring in more cash.

Ford Pro and Ford Blue: Strength and Weakness

Ford’s money situation gets a boost from its older divisions too. Instead, Ford Pro – handling big orders for companies and public agencies – led profits last quarter. Its earnings jumped to $3 billion, over twice what it made earlier, while income climbed 36% to hit $18 billion. On top of that, vehicle deliveries rose 21%, hitting ,units.

Ford Pro’s hold on work vehicles now covers electric models too. Strong interest shows up in their e-cars, like when the postal service ordered plenty of E-Transits. On top of that, Ecolab signed off on loads of F-Lightnings along with Mach-E crossovers. This hints at more businesses leaning into Ford’s electric fleet options.

Ford Blue, which handles gas-powered cars, had fewer sales – down a 11% to vehicles – and brought in less money, dropping a 13% to $21 billion last quarter. That pushed EBIT down by about 65%, landing at $million, showing that older engine models aren’t selling like before.

Net Income, Industry Context, and Tesla Comparison

Ford Blue and also Ford Pro made about the same profit as last year, even though Model e lost more money. Still, those bigger losses in Model e pulled total net income down by a 20%, landing at $1.3billion. Earnings per share, after adjustments, came in at cents – just above what analysts had expected, which was cents.

The bigger picture makes it clear Ford isn’t the only one struggling to make money on EVs. Even though GM’s targeting profits in North America by late this year, Stellantis managed to turn a profit in Europe already last season.

Even Tesla, the biggest electric car company around, hit rough waters – its adjusted profits dropped by 48% last quarter along with a 9% dip in income, showing the first sales decline since COVID times. According to CFRA’s Garrett Nelson, this shows harsh realities about the sector: right now, Tesla’s the only one actually earning from EVs, meaning most others will probably struggle financially with them for months or even years ahead.

Global Competition and Economic Headwinds

Ford boss Jim Farley pointed out how things aren’t fair in the worldwide electric car race – Chinese brands such as Nio, BYD, Xiaomi, or Geely get big help from their government, something Ford doesn’t have. Because of this gap, it’s tougher for Ford to make solid profits.

In its latest quarterly report, Ford brought in $23.8 billion – more than the $22.5 billion analysts predicted. Still, due to ongoing supply issues and outside pressures, it updated its earlier forecast that was on hold since May.

Ford thinks current U.S. tariffs will shape its upcoming performance, while last month’s blaze at Novelis’ New York aluminum facility adds more pressure. Because of these issues, the company lowered its full-year adjusted EBIT forecast, dropping it from $7–8.5 billion to $6–6.5 billion. Just the factory fire is expected to drag adjusted EBIT by $1.5–$2 bilion, along with shaving off $2–$3 billion from adjusted free cash flow.

Corporate Re-Founding and Long-Term EV Vision

Ford’s capital spending is now expected to hit $9 billion, higher than the earlier forecast of $8 billion. That updated figure, combined with around $1 billion in net tariff effects and about $1 billion saved through cost cuts, shows how fast-moving and expensive today’s global market really is.

Ford’s updated reporting setup splits the business into three parts: Ford Model e handling electric cars, alongside Ford Blue managing gas-powered models, while Ford Pro takes care of work trucks and vans. According to CFO John Lawler, this isn’t just about bookkeeping – it gives shareholders clearer insight, plus marks a deep change in how the automaker operates. “For years now,” he said, “we’ve basically rebuilt Ford from the ground up,” welcoming tech-driven changes, along with reshaping internal choices and daily management.”.

Ford’s push into electric cars isn’t easy – big money’s on the line, yet clear goals, heavy bets on new tech, while driving hard cuts in waste show they’re serious about change. Though the road ahead for Model e looks rough right now, Ford’s wider plan leans on strong truck and van sales that help steady the ship during shaky times. Restarting Ford from the ground up takes time, detail work, also a fresh take on what made them pioneers before.