- Ford’s first-quarter profits dropped by 65% to $471 million due to new vehicle launches and tariff impacts.
- The company withdrew its full-year forecast due to uncertainty over tariffs.
- Ford estimates tariffs will cut its adjusted operating earnings by $1.5 billion this year.
- The automaker is adjusting its supply chain to reduce tariff-related losses.
- Ford’s electric vehicle division saw smaller losses, but profits fell in other areas.
- The company is suspending its guidance due to risks like supply chain disruptions and policy changes.
Ford is feeling the heat as tariffs and new vehicle launches take a big bite out of its profits. The company reported a sharp 65% drop in first-quarter earnings, down to $471 million. While this still beat what analysts expected, it’s clear the auto giant is facing some serious challenges.
Tariffs: The Big Problem
Tariffs, or taxes on imported goods, are a major issue for Ford. President Trump’s recent tariff actions have added $1.5 billion in unexpected costs for the year. Ford says these tariffs are hitting its business hard, especially on imported vehicles, steel, aluminum, and parts.
But Ford isn’t sitting still. The company has made some smart moves to limit the damage. For example, it’s changing how it ships vehicles from Mexico to Canada to avoid triggering U.S. tariffs. It’s also avoiding tariffs on parts that just pass through the U.S. without being used here. These steps have saved Ford $1 billion in tariff-related costs, but the total hit is still a whopping $2.5 billion.
New Vehicle Launches Slow Sales
Another reason for the profit drop is Ford’s new vehicle launches. The company is rolling out updated versions of the Ford Expedition and Lincoln Navigator, which takes time and slows down production. This led to a 7% drop in wholesale units sold compared to last year.
Despite this, Ford says its underlying business is strong. Without the tariff mess, the company would have been on track to meet its earlier profit forecast of $7 to $8.5 billion for the year.
Electric Vehicles Show Promise
While profits fell in some areas, Ford’s electric vehicle division saw smaller losses. This is a positive sign as the company invests heavily in electrification. However, divisions like Ford Pro, which focuses on business sales, and Ford Blue, which handles traditional gas-powered cars, saw profits decline.
Uncertainty Ahead
Ford is pulling its full-year forecast because of too many unknowns. Tariffs, supply chain disruptions, and potential policy changes in Washington are all adding to the uncertainty. The company is also keeping an eye on China’s restrictions on rare earth minerals, which are critical for manufacturing.
What’s Next?
Ford’s CEO, Jim Farley, says the company will stay aggressive in pursuing customers. For example, it’s extending a promotion that offers employee pricing on some models, which boosted sales in April. But executives warn that prices may rise later in 2025 as tariffs continue to ripple through the economy.
For now, Ford is in a wait-and-see mode. The hope is that the White House will ease tariffs on finished vehicles, but so far, no relief is in sight. Meanwhile, Ford is working hard to adapt and keep its business strong despite the challenges.
Only time will tell how Ford weathers this storm, but one thing is clear: tariffs and new vehicle launches are making life tough for the auto giant right now.