After a Lousy 2024, Can Ford Stock Turn Around its Fortunes in 2025?

Core Viewpoint - Ford is facing significant challenges in 2024, with a 15% decline in shares year-to-date, underperforming compared to peers like General Motors, which has gained nearly 45% [1][2]. Financial Performance - Ford's earnings in the first three quarters have been inconsistent, with one miss, one match, and one beat against estimates, while GM has consistently surpassed expectations [2]. - In the last reported quarter, Ford's net income dropped by 25%, and the company reduced its 2024 adjusted EBIT forecast due to weak EV performance, warranty issues, and high competition [3][6]. Electric Vehicle (EV) Business - The Ford Model e unit reported losses of $4.7 billion in 2023, with expectations for a full-year loss of around$5 billion in 2024 due to high investments and pricing pressures [6]. - Slower-than-expected EV adoption has led Ford to scale back production, while competition from Tesla and other automakers remains fierce [7][8]. Warranty and Quality Issues - Ford's warranty expenses have surged, with a reported increase of $800 million, totaling$2.3 billion in the second quarter of 2024, driven by quality issues with older models [9]. - The CFO noted that while material and manufacturing costs were reduced by $2 billion, these savings were offset by inflation and warranty costs, impacting overall financial performance [10]. Tariff Threats - Proposed 25$1.81, reflecting a 10% year-over-year decline, with further contractions expected in 2025 [15]. Outlook and Recovery - The outlook for Ford into 2025 is uncertain, with persistent EV losses, quality issues, and rising costs overshadowing potential recovery [18]. - Investors are advised to wait for signs of improvement in profitability and operational efficiency before considering investment in Ford [18].