Ford Exceeds Earnings Expectations but Predicts a Challenging Year Ahead.

Key Highlights:

• Ford beat Wall Street’s expectations for Q4 revenue and earnings.

• The company anticipates headwinds in 2025, impacting profits and growth.

• CEO Jim Farley is focused on improving vehicle quality and reducing costs.

• Shares fell 5% in after-hours trading.

Strong Q4 Performance, But a Cautious Outlook Ford Motor Co. wrapped up 2024 on a high note, exceeding analysts’ predictions for both revenue and profit. However, the automaker is bracing for a tougher 2025, with financial guidance that falls in line with or below market expectations.

Ford projects adjusted earnings before interest and taxes (EBIT) of $7 billion to $8.5 billion for 2025, with free cash flow expected between $3.5 billion and $4.5 billion. Capital expenditures are forecasted at $8 billion to $9 billion.

For 2024, the company reported:

• Adjusted EBIT: $10.2 billion

• Net Income: $5.9 billion

• Total Revenue: A record $185 billion

• Free Cash Flow: $6.7 billion

What’s Driving Ford’s Conservative Outlook? Ford attributes its cautious 2025 forecast to industry-wide pricing declines and slightly lower wholesales. However, the company is not factoring in potential new tariffs under the Trump administration. CFO Sherry House stated that Ford is taking a wait-and-see approach regarding trade policies.

Ford is also aiming for a $1 billion reduction in material and warranty costs after cutting $1.4 billion in 2024. Despite these efforts, the first half of 2025 is expected to be weaker, with Q1 EBIT projected to break even due to lower vehicle production and ongoing plant launches in Kentucky and Michigan.

Breaking Down Ford’s Business Segments Ford’s core operations delivered strong profits, but its electric vehicle (EV) division continues to struggle:

• Ford Blue (gas-powered vehicles): Earned $5.28 billion in 2024 (-$2.2 billion YoY)

• Ford Pro (commercial vehicles): Earned over $9 billion, including $1.63 billion in Q4

• Model e (EV division): Lost $5.08 billion in 2024, including $1.39 billion in Q4

For 2025, Ford expects:

• Ford Pro EBIT: $7.5 billion - $8 billion

• Ford Blue EBIT: $3.5 billion - $4 billion

• Model e Loss: $5 billion - $5.5 billion

• Ford Credit Profit: $2 billion

Competitive Pressure & Future Plans Ford faces added pressure from General Motors, which outperformed expectations and issued a more optimistic 2025 outlook. Ford’s struggles last year stemmed from costly recalls and warranty issues, which CEO Jim Farley has vowed to address.

As the company navigates 2025, it remains focused on cutting costs, improving vehicle reliability, and strengthening its position in the evolving automotive market.