Auto giant Ford has reported a staggering net loss of $8.2 billion for 2025, marking its most significant quarterly earnings decline in four years and the largest loss since the 2008 recession. Contributing significantly to this deficit is the company’s electric vehicle (EV) division, which alone suffered a loss of $4.8 billion during the year. The challenges facing Ford and the wider automotive industry this year are partly attributed to the Trump administration’s controversial decision to reduce the $7,500 federal EV tax credit, initially enacted under former President Biden in 2022.
As Ford grappled with diminished electric vehicle sales and shattered corporate goals, the company decided to shift its focus from a fully electrified future to a model of partial electrification. This pivot was publicly announced in December, alongside a substantial reduction of its EV plans, including the cancellation of its electric variant of the popular F-150 Lightning pickup truck. CEO Jim Farley encapsulated the situation during an earnings call, stating, “I think the customer has spoken. That’s the punchline.” The outlook remains grim, with company executives forecasting additional losses of $4 to $4.5 billion in 2026 and no anticipated breakeven point until approximately 2029.
In the wake of the tax credit reduction, Ford and other automakers, including General Motors, are looking toward two key strategies to drive customer demand in the United States: affordability and advancements in autonomous driving technology. Central to this approach is the development of a $30,000 electric vehicle equipped with “eyes-off” driving capabilities, which Ford plans to unveil in 2028. This vehicle would be competitively priced, falling below Tesla’s entry-level offerings that currently start around $36,000, making it an attractive alternative given the absence of federal tax incentives.
However, the landscape is markedly different outside the United States. Farley expressed concern about the impact of Chinese automakers on the global market, noting, “I think the real question that I ask myself is ‘how will the Chinese change the game?'” While American companies struggle, Chinese electric vehicle manufacturers benefit from government subsidies that allow them to offer products at strikingly competitive prices. Although Chinese EVs are not permitted for import into the U.S., their affordability makes it challenging for American manufacturers to compete internationally. In a significant policy shift, Canada has recently allowed imports of Chinese EVs, widening the competitive gap for Ford and its peers.
In a notable development, the earnings report indicated that Chinese EV giant BYD surpassed Ford in global vehicle sales for the first time in 2025. In response to this competition, Ford is exploring potential partnerships with Chinese manufacturers, with discussions reportedly ongoing with Geely.
Additional factors complicating Ford’s financial landscape include tariff policies. An unanticipated change in tariff provisions late last year resulted in the company receiving less relief than expected, ultimately doubling its tariff-related costs to $2 billion.
Despite the current turmoil, Ford executives express cautious optimism for the upcoming year. Farley articulated a hopeful outlook, suggesting an anticipated shift toward a more stable policy environment for partnerships with the administration, particularly in light of recent resets in emission standards. This shift refers to the rollback of stricter Corporate Average Fuel Economy (CAFE) standards put forth by the previous administration, a move that some automakers and oil industry stakeholders welcomed while sparking condemnation from environmental advocates. Farley himself joined Trump in announcing these changes in December, indicating a strategy focused on navigating the evolving automotive regulatory landscape.
