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Ford Motor Co. posted an unexpected net loss of $36 million for the first quarter ended June, even as it reported record revenues of $50.2 billion, up 5% compared to the year-ago period. In contrast with a profit of $1.9 billion in the same quarter last year, the second-quarter loss arrives amidst increasing tariff overhangs, expensive vehicle recalls, and worsening losses in its electric vehicle (EV) business.
The automaker has now reduced its full-year earnings forecast and raised its estimate of total 2025 tariff expenses to $3 billion from $2.5 billion.
One of the most significant drags during this quarter originated from increasing import tariffs. The automotive giant indicated that new and improved trade restrictions had cost the company nearly $800 million for the quarter alone. It attributed most of this increase to rising tariffs on components imported from China and Mexico, which are central to Ford’s international production network.
Chief Financial Officer Sherry House recognized the pressures as a ‘real cost challenge,’ and said the company is focused on ‘improving cost discipline and profitable growth.’
Beyond tariffs, the company booked $570 million in special charges. Those included expenses related to:
A recall of nearly 700,000 SUVs includes Bronco Sport, Escape, and Kuga models.
A cancellation of a three-row electric SUV that had previously been announced.
Field service activities and warranty-related spending.
The one-off expenses erased the profits from a strong quarter for Ford’s profitable pickup trucks and commercial vehicles.
Ford’s Model e division, the automaker’s electric vehicle unit, posted a more profound operating loss of $1.3 billion, even as revenue doubled to $2.4 billion. The automaker blamed higher battery plant expenses, significant R&D investment, and pricing pressure in a growing, crowded EV segment.
The losses have compelled the automotive leader to reconsider its EV launch plans. Though hybrid sales were robust, the company has suggested it may reduce or postpone some all-electric models to preserve margins.
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All was not gloom. The commercial vehicle and services division, Ford Pro, kept contributing, reporting operating income of $2.3 billion. Its finance subsidiary, Ford Credit, recorded an 88% increase in earnings and added $645 million in pre-tax profit.
Operating at a cash flow of $6.3 billion and an adjusted free cash flow of $2.8 billion in the quarter, the company showed its financial stability despite a margin crunch.
The company has reduced its full-year adjusted EBIT estimate to $6.5 billion to $7.5 billion based on continued tariff and recall uncertainty. The company is still focused on disciplined capital investment and a healthy dividend.
As macroeconomic headwinds gain momentum and EV bets remain unpaid, Ford's path forward looks anything but smooth.
