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FM

FORD MOTOR CO (F)·Q2 2025 Earnings Summary

Executive Summary

  • Record revenue of $50.2B; adjusted EBIT $2.1B as tariff headwinds ($0.8B net) and special items drove a small GAAP net loss; adjusted EPS of $0.37 beat consensus while revenue materially exceeded estimates .
  • Full-year 2025 guidance reinstated at adjusted EBIT $6.5–$7.5B, adjusted FCF $3.5–$4.5B, capex ~$9B, with an expected net tariff headwind of ~$2B; prior guidance (Feb) was $7.0–$8.5B before being withdrawn in May .
  • Ford Pro remains the growth engine: $18.8B revenue (+11% YoY), 12.3% EBIT margin; paid subscriptions up 24% to 757k and software/physical services now 17% of Pro EBIT on a TTM basis .
  • Model e doubled revenue to $2.4B but posted a $1.3B EBIT loss as tariffs, next-gen EV investment, and battery plant launch expenses weighed; Blue EBIT was $661M amid pricing gains and cost improvement offset by tariffs and non-recurrence of F-150 stock build .
  • Potential stock reaction catalysts: reinstated guidance despite tariffs, visible cost traction and Pro services mix uplift, and Aug. 11 event unveiling breakthrough EV platform ("Model T moment") .

What Went Well and What Went Wrong

What Went Well

  • Ford posted record quarterly revenue ($50.2B, +5% YoY) and delivered $2.1B adjusted EBIT despite ~$0.8B net tariff impact; operating cash flow was $6.3B and adjusted FCF $2.8B .
  • Ford Pro executed strongly: $2.3B EBIT, 12.3% margin; paid subscriptions +24% to 757k and services drove 17% of Pro EBIT TTM, improving cyclicality and margins .
  • Management highlighted sustained cost progress: “fourth consecutive quarter of year-over-year cost improvement, excluding the impact of tariffs,” and visible warranty/material cost reductions underpinning H2 improvement .

What Went Wrong

  • GAAP results were hit by special items (fuel injector field service action ~$0.6B, EV program cancellation ~$0.3B, BlueOval SK write-down ~$0.2B), yielding a small net loss and EPS of -$0.01 .
  • Model e EBIT loss widened to -$1.329B on tariff costs and strategic next-gen EV and battery plant spending despite revenue doubling; margin at -56.4% .
  • Tariffs remain a material headwind (net ~$2B expected FY), pressuring margins and elevating uncertainty; management only provided total company guidance due to segment variability .

Financial Results

Trend vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$48.2 $40.7 $50.184
Adjusted EBIT ($USD Billions)$2.138 $1.019 $2.140
Adjusted EBIT Margin (%)4.4% 2.5% 4.3%
GAAP Diluted EPS ($)$0.45 $0.12 -$0.01
Adjusted Diluted EPS ($)$0.39 $0.14 $0.37
Net Income Margin (GAAP, %)3.8% 1.2% -0.1%

Actual vs Wall Street consensus (Q2 2025)

MetricConsensusActual
Revenue ($USD Billions)$43.93*$50.184
Adjusted EPS ($)$0.333*$0.37
EBITDA ($USD Billions)$3.48*$1.97*

Values marked with * retrieved from S&P Global (Capital IQ).

Segment performance (Q2 2025 vs Q2 2024)

SegmentRevenue ($B) Q2’24Revenue ($B) Q2’25EBIT ($M) Q2’24EBIT ($M) Q2’25EBIT Margin Q2’24EBIT Margin Q2’25
Ford Blue$26.7 $25.8 $1,167 $661 4.4% 2.6%
Ford Model e$1.2 $2.4 -$1,150 -$1,329 -99.9% -56.4%
Ford Pro$17.0 $18.8 $2,562 $2,318 15.1% 12.3%

KPIs

KPIQ2 2025YoY
Wholesale Units (000)1,185 +4%
Cash from Operations ($B)$6.3 +$0.8 vs Q2’24
Adjusted Free Cash Flow ($B)$2.8 -$0.4 vs Q2’24
Cash ($B)$28.4 —
Liquidity ($B)$46.6 —
Ford Pro paid subscriptions757k +24%
Dividend (declared)$0.15/sh Q3 Maintained

Guidance Changes

MetricPeriodPrevious Guidance (Feb 5, 2025)Current Guidance (Jul 30, 2025)Change
Adjusted EBITFY 2025$7.0–$8.5B $6.5–$7.5B Lowered
Adjusted FCFFY 2025$3.5–$4.5B $3.5–$4.5B Maintained
CapexFY 2025$8–$9B ~$9B Maintained/high end
Tariff headwind (net)FY 2025N/A (not quantified in Feb guide)~$2B net (gross ~$3B; ~$1B recovery actions) New inclusion
DividendQ3 2025Regular $0.15/sh (ongoing policy) Regular $0.15/sh declared Maintained

Note: Guidance was suspended in May due to tariff uncertainty and reinstated on Jul 30 .

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Tariffs & tradeEarly assessment; warned 25% tariffs could be significant; focus on level playing field Suspended guidance; gross tariff ~$2.5B, net ~$1.5B; mitigation plans detailed Reinstated guidance including ~$2B net headwind; ~$0.8B net in Q2; ongoing policy engagement Clarity improving; still headwind
Cost & quality“Multibillion” cost upside; pipeline of design cost reductions; warranty improvements Fourth straight quarter of YoY cost improvement ex tariffs; $1B net cost target Cost improvement ex tariffs continues; H2 back-half weighted gains expected Improving
Ford Pro software/servicesSubscriptions near 650k; services 13% of Pro EBIT Paid subscriptions 675k; ARPU +40% in telematics Paid subs 757k; services 17% of Pro EBIT TTM; services mix rising Expanding
EV strategy & next-gen platformSkunkworks platform; focus on affordable EVs and hybrids; capital discipline Mix shift; PTC importance; BOSK battery JV later in 2025 Aug 11 “Model T moment” reveal; reallocating capital to Pro; improved Model e margins YoY Pivot to affordable EVs/hybrids
ADAS/autonomyBlueCruise adoption, Level 3 under development; pragmatic approach to L4 Level 3 “major moment”; internal team; evaluating L4 service opportunities Level 3 “high-speed highway” ambition; L4 fleet service opportunity via Pro Advancing
Pricing & inventoryNormalize inventories; protect pricing discipline SAAR modeling; pricing moderation; inventory reductions planned Q1–Q2 Retail pricing up ~1%; van segment pressure stabilizing; inventory disciplined Mixed but stable

Management Commentary

  • “Our second-quarter performance shows the power of the Ford+ plan and continued execution on cost and quality… Ford Pro is a unique competitive advantage… Ford Blue delivered profitable market share gains, and we continue to improve the efficiency of our Ford Model e business.” — Jim Farley, CEO .
  • “We recorded our fourth consecutive quarter of year-over-year cost improvement, excluding the impact of tariffs… We are remaking Ford into a higher-growth, higher-margin and more durable business.” — Sherry House, CFO .
  • “On August 11… we will share more about our plans to design and build breakthrough electric vehicles in America… This is a Model T moment for us.” — Jim Farley, CEO .
  • “Ford Pro’s paid subscriptions climbed 24% to 757,000… software and physical services contributed 17% of Ford Pro’s EBIT on a trailing 12-month basis.” — Earnings release .

Q&A Highlights

  • Guidance drivers: CFO detailed that guidance was lowered by ~$1B largely due to net tariffs while FCF and capex remained intact; underlying cost improvements are tracking ahead of plan (manufacturing efficiency, negotiated parts) .
  • Policy/tariffs: Management expects a net ~$2B headwind FY; pursuing simplification of parts tariffs and recovery actions; sees opportunity from competitors’ import exposure; ongoing constructive dialogue with administration .
  • Pricing dynamics: Retail pricing expected ~+1%; van segment pressure stabilizing; inventory discipline central to protecting brand pricing power .
  • EV capital allocation: Pivot toward affordable EVs/hybrids; leveraging LFP battery in Marshall, MI; reallocation of spend to Pro services; August 11 platform reveal .
  • Warranty/recall: Half of recalls are software; OTA fixes ~95% cheaper than physical repairs; excluding one special item, recall costs not worse than expected; coverage costs improving .

Estimates Context

  • Q2 2025 adjusted EPS of $0.37 beat consensus $0.333; revenue $50.184B materially beat consensus $43.93B; EBITDA $1.97B was below consensus $3.48B* .
  • Consensus inputs: EPS estimates (18), Revenue estimates (10). Near-term estimates likely to adjust to stronger revenue trajectory and Pro services mix, while EBITDA expectations may reflect tariff and special-item headwinds.

Values marked with * retrieved from S&P Global (Capital IQ).

Key Takeaways for Investors

  • Despite substantial tariff headwinds, Ford delivered a revenue and adjusted EPS beat, reinstated full-year guidance, and showed tangible cost traction — underpinning durability of Ford+ .
  • Ford Pro’s services/software flywheel is accelerating (757k paid subs, 17% of Pro EBIT TTM), structurally derisking earnings from vehicle cyclicality; watch services EBIT share trend toward 20% target .
  • Back-half weighted cost/warranty/material improvements and normalized operations (post Kentucky downtime) support H2 margin trajectory; monitor execution vs stated $1B net cost goal .
  • Model e losses reflect intentional investment in next-gen EV platform and battery capabilities; upcoming Aug 11 reveal is a key narrative catalyst for EV competitiveness and capital efficiency .
  • Segment mix remains favorable: Pro strong, Blue profitable with pricing and share gains; tariffs pressure margins and add policy volatility, but Ford’s U.S. footprint is a relative advantage in several core segments .
  • Liquidity remains a strategic strength ($46.6B), enabling continued shareholder returns (regular dividend maintained) and opportunistic investment through cycles .
  • Watch policy developments (USMCA, EPA standards, credits/PTC) and tariff negotiations; management engagement suggests potential upside via reduced parts tariff liabilities and mix flexibility .

Other Relevant Q2 Press Releases

  • Leadership: Alicia Boler Davis named President of Ford Pro (effective Oct 1), reinforcing Pro’s pivot to software/services and scaling operations .
  • EV Charging/Grid: ChargeScape (JV with BMW, Honda, Ford, Nissan) partners with PSEG Long Island to enroll BMW and Ford EVs in peak load reduction, signaling growing utility-integrated charging programs .