Ford’s Electric Vehicle Struggles Continue

Ford continues to incur significant losses on its electric vehicles, such as the F-150 Lightning and Mustang Mach-E. New tariffs on Mexico and China, as well as the elimination of former President Biden’s EV incentives, are unlikely to help the company. However, Ford remains profitable overall and can use its financial resources to fuel its continued pivot to electrification.

Ford’s Financial Performance

For the full year of 2024, Ford posted a net income of $5.9 billion on adjusted earnings of $10.2 billion. Its electric vehicle business, however, lost $5.1 billion, even worse than its loss of $4.7 billion the previous year. The company expects to lose even more, $5.5 billion, on EVs in 2025.

The Challenges of Electrification

Shifting to an entirely new type of automotive platform requires significant upfront research and development, supply chain, and marketing spend. Automakers must also contend with basic economies of scale. Ford needs to sell a large number of electric cars to recoup its investment and start making money on each vehicle. However, the cars must be affordable for people to buy them.

The Innovator’s Dilemma

In the past, there was concern that automakers like Ford and General Motors were only paying lip service to electrification. During President Trump’s first administration, GM supported his plan to eliminate California’s heightened emissions standards. The gas-powered vehicle business has been very profitable for a long time, so legacy automakers have not had an incentive to go electric. This is the classic "Innovator’s Dilemma" issue.

General Motors’ Progress

GM is in a different place in 2025, with a wide range of electric vehicles now on the market that have been well-reviewed, such as the Silverado EV. The automaker’s CEO, Mary Barra, has said that its EV business will turn profitable this year. EVs have reached a tipping point where they are inevitable, and most people who have driven an electric car recognize that they are just more fun and pleasant.

Charging Infrastructure

Similar to how gas-powered cars were supported by decades of investment, including President Eisenhower’s investment in an interstate highway network, it is taking some time for EV infrastructure to build out. Charging remains an issue but continues to improve.

Ford’s EV Commitments

Ford has walked back its most ambitious EV commitments more recently as investors have demanded the company improve its financial performance and sales growth in EVs slows. It canceled a three-row electric SUV and its F-150 Lightning has become a bit old in the tooth. Sales of the pickup fell 15.5% to just 1,907 last month, compared to 2,258 in January 2024. However, the Mustang Mach-E still performs well, with Ford selling 2,539 of the vehicles in January, up 172% from the 1,295 units sold in the same month last year.

New Platform and Hybrid-Electric Cars

Ford is developing a new platform that will enable it to release EVs that are more affordable to the average buyer. The company is also releasing more hybrid-electric cars and electric vehicles with small gas generators that can charge the battery and extend their range, offering up to 700 miles on a charge.

Tesla’s Politics

Tesla CEO Elon Musk has been supportive of President Trump’s plans to end EV incentives. Critics believe that this is in part because Tesla is already profitable on a per-car basis, so it does not need tax incentives as much as traditional automakers might. However, Musk’s politics are hurting Tesla sales, setting back the EV transition. Musk has recently supported the far-right Alternative for Germany (AfD) party, which has dismissed the country’s Nazi past.

China’s Electric Carmakers

China’s electric carmakers are running circles around the United States, entering Europe and markets like Brazil and Mexico with both affordable and premium electric cars that threaten the dominance of American automakers. China has plowed money into the electric vehicle sector to try and make its country more influential around the world, and it seems to be working. Meanwhile, President Trump and Musk are more focused on generative AI, so Americans will probably have to accept a slower EV transition for the next few years and a potential diminishing in U.S. automotive influence.