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    Earnings call· Dec 2025(Q4 FY25)

    FORD MOTOR Q4 FY25 earnings call F

    Feb 10, 2026 Source

    Executive summary

    Ford Motor Company Q4 FY25 — Strong Foundation for 8% EBIT Target by 2029

    Ford Motor Company closed FY25 with robust revenue growth and a strong foundation, despite significant headwinds from Novelis disruptions and unexpected tariff impacts. The company is strategically rebalancing its EV portfolio towards affordable, high-volume platforms and accelerating investments in Ford Energy, aiming for an 8% adjusted EBIT target by 2029. Management is focused on cost reductions, quality improvements, and leveraging its Ford Pro and Ford Blue strengths, while navigating a dynamic regulatory and competitive landscape.

    Highlights

    5

    • Full-year 2025 revenue grew to $187 billion, marking the fifth consecutive year of growth.

    • Adjusted EBIT for FY25 reached $6.8 billion, with a pro forma $7.7 billion excluding unexpected tariff impacts.

    • Ford Pro delivered over $66 billion in revenue and $6.8 billion EBIT with a double-digit margin, growing software and physical services by 10%.

    • U.S. market share climbed to 13.2%, the best performance in 6 years, and Ford maintained its #1 auto producer status for the seventh straight year.

    • Generated $3.5 billion of free cash flow and ended the year with nearly $29 billion in cash and $50 billion in liquidity.

    Concerns

    4

    • Full-year 2025 adjusted EBIT included a $2 billion headwind from Novelis fires and an unexpected $2 billion net tariff impact, $1 billion higher than previously communicated.

    • Model e reported a $4.8 billion loss for FY25, reflecting increased investment in Gen 2 products and start-up costs for the UEV platform.

    • Expected $1.5 billion to $2 billion in temporary costs in 2026 for aluminum supply continuity due to Novelis disruptions, including tariffs and premium freight.

    • Anticipates $7 billion in charges in 2026 and 2027 related to rebalancing the EV portfolio and the BOSK investment, with cash expenditures up to $5.5 billion.

    Guidance & targets

    17
    CategoryTargetConfidence
    Full-year adjusted EBIT
    $8 billion to $10 billion
    high materiality
    Medium
    Full-year adjusted free cash flow
    $5 billion to $6 billion
    high materiality
    Medium
    Full-year capital expenditures
    $9.5 billion to $10.5 billion
    high materiality
    Medium
    Ford Pro EBIT
    $6.5 billion to $7.5 billion
    medium materiality
    Medium
    Ford Model e EBIT
    Losses of $4 billion to $4.5 billion
    medium materiality
    Medium
    Ford Blue EBIT
    $4 billion to $4.5 billion
    medium materiality
    Medium
    Ford Credit EBT
    About $2.5 billion
    medium materiality
    Medium
    Model e breakeven
    Breakeven
    high materiality
    Medium
    Company adjusted EBIT margin
    8%
    high materiality
    Medium
    Q1 2026 EBIT
    Roughly flat sequentially
    medium materiality
    Medium
    Q2 2026 EBIT
    Approach a more normalized EBIT
    medium materiality
    Medium
    H2 2026 EBIT
    Hit underlying EBIT run rate level
    medium materiality
    Medium
    Full-year 2026 U.S. SAAR assumption
    $16 million to $16.5 million
    medium materiality
    Medium
    Full-year 2026 industry pricing assumption
    Flat
    medium materiality
    Medium
    Full-year 2026 industrial cost improvements
    Another $1 billion
    medium materiality
    Medium
    Full-year 2026 software and physical services profit growth
    About 6.5%
    medium materiality
    Medium
    Novelis hot mill restart
    Sometime between May and September
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Ford Pro
    Achieved strong results despite tariffs, production losses, and challenging macroeconomic conditions in Europe. Diversifying revenue streams and building high-margin service infrastructure.
    Software and physical services growth: 10%Software and physical services contribution to EBIT: 19%U.S. Class 1-7 market share: 42%+Europe commercial brand: #1 for 11th straight yearU.S. Transit sales growth: 6%U.S. Super Duty sales growth: 10%
    		$66 billion——$6.8 billion EBIT with a double-digit margin
    Ford Model e
    Revenue and volume growth driven by new product introductions in Europe. EBIT losses improved due to fewer losses on Gen 1 products, partially offset by increased investment in Gen 2 products and the UEV platform launch.
    Volume growth: 69%
    		—73%—($4.8 billion) loss
    Ford Blue
    Performance supported by industry-leading power of choice and strength of truck and SUV franchises. Lower warranty costs and other improvements were offset by planned/unplanned production loss and adverse exchange rates.
    Wholesale sales decline: 5%Raptor and off-road performance trims sales mix (U.S.): 20%+U.S. pickup market revenue share growth: 2 pointsU.S. pickup market volume share growth: 1.5 points
    		Roughly flat——$3 billion EBIT
    Ford Credit
    Improved financing margin and high-quality book. Recent approval of industrial bank application will expand capabilities and lower funding costs.
    EBT growth: 55%Distributions: $1.7 billionU.S. retail and lease FICO scores: Exceeding 750
    		———$2.6 billion EBT

    Operational metrics

    27
    Total Revenue
    $187 billionGrew for the fifth consecutive year
    FY25

    Company-wide revenue.

    Adjusted EBIT
    $6.8 billion
    FY25

    Includes $2 billion headwind from Novelis fires and $2 billion net tariff impact.

    Adjusted EBIT
    $7.7 billion
    FY25

    Pro forma figure if the unexpected $1 billion tariff impact had not occurred.

    Net Tariff Impact
    $2 billion$1 billion higher than communicated in October
    FY25

    Due to unexpected and late year change in tariff credits for auto parts.

    Novelis Headwind
    $2 billion
    FY25

    Impact from Novelis fires.

    U.S. Market Share
    13.2%Best performance in 6 years
    FY25

    Company-wide market share.

    TSR
    42%
    FY25

    Total Shareholder Return for the full year.

    Industrial Cost Improvements
    $1.5 billion
    FY25

    Achieved in material and warranty cost reductions.

    U.S. Gross Stocks Reduction
    16%
    FY25

    Reduction in inventory.

    Retail Days Supply
    56Low end of target range
    End of FY25

    Inventory level.

    Cash Balance
    $29 billion
    End of FY25

    Cash and short-term investments.

    Liquidity
    $50 billion
    End of FY25

    Total liquidity.

    Regular Dividend
    $0.15
    Q1 2026

    Declared for the first quarter.

    U.S. Regulatory Credits Reduction
    $0.5 billionLess than FY25
    FY26

    Expected benefit from changes in U.S. regulatory environment.

    U.S. Regulatory Credits
    $0.7 billion
    FY25

    Total credits in the U.S. in 2025.

    Lower Tariff Costs
    $1 billionLower year-over-year
    FY26

    Reflecting a full year's worth of credit expansion.

    Higher Commodity Prices Impact
    $1 billion
    FY26

    Expected increase driven by inflation and pressure on DRAM, absorbed by savings.

    Novelis Year-over-year Improvement
    $1 billion
    FY26

    Expected improvement in 2026, back half weighted, from non-recurrence of FY25 losses ($2.5B-$3B) offset by temporary costs ($1.5B-$2B).

    Novelis Temporary Costs
    $1.5 billion to $2 billion
    FY26

    Not expected to be repeated in 2027.

    Model e Gen 1 Products Improvement
    $1.6 billion
    FY26

    Expected improvement in Model e losses.

    Model e Gen 2 Costs
    $600 millionHigher
    FY26

    Offsetting Gen 1 improvements in Model e.

    Ford Energy Start-up Costs
    $400 million
    FY26

    Offsetting Gen 1 improvements in Model e.

    EV Strategy Charges
    $7 billion
    2026 and 2027

    Expected to be recorded.

    EV Strategy Cash Expenditures
    $5.5 billion
    2026 and 2027

    Most of this weighted in 2026.

    Tariff Credit Delta
    $1.9 billion
    Q4 FY25

    One-time hit in Q4 2025.

    Novelis Volume Loss
    100,000
    FY25

    Units lost due to Novelis disruptions.

    Novelis Volume Increase
    50,000 to 60,000
    FY26

    Planned increase in units after Novelis disruptions.

    Industry KPIs

    7
    MetricValueDetails
    Captive finance$2.6 billionEBT
    Warranty recall costsLower
    Dealer inventory days of supply56days
    Energy storage battery capacity20 GWhcapacity
    Tariff cost exposure mitigation$2 billionUSD
    US saar industry pricing assumption$16 million to $16.5 millionunits
    Ev unit volumes mix segment economics69%%

    Product announcements

    3
    ProductTypeDetails
    Universal EV Platformroadmap
    Next-generation F-150 and Super Dutyroadmap
    Bronco RTR and Mustang Dark Horse SClaunch

    Deals & partnerships

    3
    CATLLicensing agreement

    Partnership for LFP battery technology, enabling Ford to manufacture LFP batteries in its own plants.

    RenaultPartnership

    Agreement to cooperate on light commercial vehicles and utilize Renault's platform for Ford-branded EVs in Europe.

    ServiceTitanPartnership

    New partnership to deepen Ford Pro's competitive moat by specializing and investing in services.

    Risks & headwinds

    6
    Novelis fires and resulting aluminum supply chain disruptionsFY25, continuing into FY26 (especially H1 2026)

    $2 billion headwind in FY25 adjusted EBIT; $1.5 billion to $2 billion in temporary costs expected in FY26

    Mitigation: Contingency plans to secure sufficient supply; team working closely with Novelis on mill restart (expected May-September 2026); temporary costs for tariffs and premium freight to ensure continuity.

    Unexpected and late-year change in tariff credits for auto partsQ4 FY25 (one-time hit)

    $2 billion net tariff impact in FY25 adjusted EBIT ($1 billion higher than previously communicated); $1.9 billion delta due to credit timing

    Mitigation: The credit will be usable going forward, making the impact one-time.

    Challenging macroeconomic and regulatory landscape in EuropeFY26 onwards

    Dampening Ford Pro results in 2026; impacting profitability of passenger car business

    Mitigation: Leveraging VW scale for 1-ton vans; using Renault's platform for B-sized EVs to reduce costs and improve profitability; careful play in specific segments for passenger cars.

    Higher commodity prices (e.g., DRAM)FY26

    About $1 billion of higher costs expected in FY26

    Mitigation: Expected to be absorbed by material and warranty cost reductions.

    Chinese market pricing power and competitive subsidized realityOngoing

    Chinese market down 25% year-over-year in January

    Mitigation: Future-proofing cost structure around pricing reality; opportunistic approach with PHEVs and hybrids for export business.

    Charges related to rebalancing EV portfolio and BOSK investment2026-2027

    About $7 billion in charges (non-cash) in 2026 and 2027; cash expenditures up to $5.5 billion (mostly in 2026)

    Mitigation: Strategic decision to optimize EV strategy and focus on multi-energy platforms.

    Q&A highlights

    7

    Seeking clarification on positive market factors in the 2026 outlook, specifically the magnitude of benefits from mix and powertrain, offsetting volume declines and competitive environment, and tariff assumptions.

    Sherry House detailed the $1 billion Novelis improvement for 2026, noting $2.5-$3 billion non-recurrence of 2025 losses offset by $1.5-$2 billion temporary costs for supply continuity. Positive market factors include sunsetting low-margin nameplates (e.g., Escape) and $0.5 billion less in U.S. regulatory credits. Cost is expected to be flat, with $1 billion in industrial cost improvements and $1 billion lower tariff costs, offset by higher commodity prices and investments.

    “That assumes $2.5 billion to $3 billion, reflecting the nonrecurrence of 2025 losses and capacity actions at Dearborn and Kentucky truck plants.”

    asked by Dan Levy · answered by Sherry House

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Shift to Affordable EVs

    Ford is reorienting its EV strategy towards high-volume, affordable segments, focusing on a cost-efficient universal EV platform (UEV). This platform, starting with a midsized pickup, aims to attract younger and more diverse customers and provides a scalable hedge against future regulatory changes. This move is a direct response to market realities and customer preferences, ensuring profitable growth in the lower-price EV market.

    02

    Ford Energy Initiative

    The company is investing significantly in Ford Energy, a strategic start-up focused on battery storage for data centers and grid stability. This initiative leverages Ford's manufacturing expertise and LFP battery technology (licensed from CATL) to diversify revenue, derisk the core automotive business, and capitalize on exploding demand in the energy storage market, with a short payback period. Ford Energy is expected to incur $400 million in start-up costs in FY26, with $1.5 billion of capital expenditures allocated for it in FY26.

    03

    Cost and Quality Improvements

    Ford made substantial progress in lowering material and warranty costs in 2025, achieving $1.5 billion in improvements, and targets another $1 billion in 2026. This focus extends to modernizing the company's talent, IT tools, and culture, alongside embedding lower costs into next-generation products. The goal is to close the cost gap with competitors and drive towards the 8% adjusted EBIT target, absorbing about $1 billion of higher commodity prices in 2026.

    04

    Strengthening Core Businesses

    Ford Pro continues to be a key profit pillar, with strong global demand for Super Duty and Transit, achieving over 42% market share in U.S. Class 1-7. Ford Blue leverages its diverse truck and off-road lineup, with Raptor and performance trims accounting for over 20% of U.S. sales mix. Both segments are diversifying revenue through high-margin software and physical services, which grew 10% for Pro in FY25 and are expected to grow 6.5% overall in FY26.

    05

    Capital Allocation Discipline

    Ford maintains a disciplined approach to capital allocation, prioritizing its balance sheet and investment-grade rating while aiming for top-quartile shareholder returns. The company is shifting capital towards higher-return growth opportunities, with approximately 75% of planned capital going into larger truck and multi-energy portfolios, and the remaining 25% into Ford Energy and Model e investments like UEV and EREV. Total capital expenditures are guided at $9.5 billion to $10.5 billion for FY26.

    06

    Navigating External Headwinds

    The company faced significant challenges in 2025, including a $2 billion headwind from Novelis fires and an unexpected $2 billion net tariff impact🌐. For 2026, Ford anticipates $1.5 billion to $2 billion in temporary costs related to aluminum supply continuity due to Novelis disruptions. Management is actively mitigating these impacts through contingency plans and expects a net year-over-year improvement of $1 billion from Novelis in 2026, primarily in the second half, with the hot mill expected to restart between May and September.

    AI-generated summary of the company’s earnings call. Not investment advice.