A nearly $20 billion bombshell from Ford Motor Company (F 0.21%) might have been the shoe drop the automotive industry was waiting to see.
The Trump administration has been busy introducing tariffs, reducing support for electric vehicles (EVs), and of course, removing the $7,500 federal tax credit for EV purchases. In part due to that, among other factors, the U.S. EV industry is expected to see a significant slowdown during the fourth quarter that will almost certainly extend into next year.
Because of these drastic shifts in demand and market potential, Ford just announced a $19.5 billion bombshell about its future ambitions. Here's what investors need to know.
What's going on?
It's tough to make a living selling EVs in the current environment, and after touting massive EV investment figures in recent years -- like much of the industry -- the Detroit automaker decided it was better to redistribute some of that investment to higher-return opportunities. This week, Ford announced a number of actions that are intended to refocus its Ford+ plan and drive profitable growth.
Ford Mustang Mach-E. Image source: Ford Motor Company.
To take these actions, Ford expects to record roughly $19.5 billion in special items related to a restructuring and a pullback in its full-electric vehicle investments. For investors, it's important to note that most of the charges will take place during the fourth quarter, followed by $5.5 billion to be charged through 2027, with most of that to be paid next year.
These charges will impact the automaker's net results, but it won't alter the company's adjusted earnings before interest and taxes (EBIT), the figures Wall Street estimates are based on.
"This is a customer-driven shift to create a stronger, more resilient, and more profitable Ford," said Ford president and CEO Jim Farley in a press release. "The operating reality has changed, and we are redeploying capital into higher-return growth opportunities: Ford Pro, our market-leading trucks and vans, hybrids, and high-margin opportunities like our new battery energy storage business."
What's in it for investors?
Ford's new plans include an increased focus on hybrid vehicles, including plug-in models, rather than full-electric vehicles, and canceling a next generation of large all-electric trucks in exchange for smaller and more affordable EVs. By the end of this decade, Ford expects about 50% of its global volume to be hybrids, extended-range EVs, and fully electric vehicles, up drastically from 17% in 2025.
NYSE: F
Key Data Points
Here's what's of interest to investors hoping Ford can quickly reverse its billions in losses driven by its Model e EV business. These changes are expected to provide a path to profitability for Model e by 2029. According to Ford, investors can expect to see annual improvements beginning in 2026. Remember that in 2024, Ford's Model e losses topped $5 billion, and simply breaking even would boost the bottom-line.
Ford also threw a little curveball to investors with its next move. The automaker expects to repurpose its EV battery factory in Kentucky to build batteries to power data centers and energy infrastructure. As the artificial intelligence (AI) boom continues, and the strain on the electric grid from data centers and infrastructure, Ford sees opportunity to capture demand for battery energy storage systems (BESS) and plans to invest roughly $2 billion over the next two years to scale the business.
What it all means
Investors can't know for certain if this huge pivot is the right move, especially considering the next presidential administration could make substantial changes of its own, but they are logical with the market at the moment. These decisions from Ford are massive, and if executed as intended, should pay off for years.
Perhaps the largest takeaway for investors is the change in mindset. Decades ago -- whether you want to call it arrogance, stubbornness, or something else -- Ford likely wouldn't have adjusted its strategy, and could have even doubled down on EVs at the wrong time. Now, however, it's clear Ford is adjusting to land its business where the markets are going, not where we hoped it would be -- and that is a big win.
