Ford’s EV shakeup leads to its worst quarterly loss since 2008

Ford reported Q4 revenue of $45.9 billion and adjusted EPS of $0.13 (Estimize Q4 EPS $0.18), and full-year 2025 revenue of $187.9 billion with adjusted EPS $1.09, but posted a Q4 net loss of $11.1 billion and a full-year net loss of $8.2 billion. The company will take roughly $19.5 billion of special charges (about $14.4 billion in Q4) driven by Model e asset impairments, JV disposition and program cancellations as it pivots toward lower-cost hybrids and affordable EVs on a new UEV platform; Model e posted a 2025 EBIT loss of $4.8 billion. Management guided to adjusted EBIT of $8–10 billion for 2026 with segment targets (Ford Pro $6.5–7.5B, Ford Blue $4.0–4.5B, Ford Model -$4.0–4.5B) and plans five sub-$40k EVs starting in 2027 while ending current F-150 Lightning production.

Analysis

Winners are GM (169,887 US EVs, +48% YoY) and suppliers of hybrids/affordable EVs; losers are Ford (84k EVs, -14.7% YoY) and pure‑play high‑capex EV projects as Ford takes ~$19.5B of special charges and prints a Q4 net loss of $11.1B. Competitive dynamics shift toward scaled, lower‑price platforms (Renault JV, UEV) and hybrids—this favors OEMs that can leverage scale and low unit capex and penalizes firms with heavy sunk EV investments.

Supply/demand signals: near‑term oversupply risk for early high‑end EVs (pricing pressure, slower sales) and lower commodity intensity per vehicle if the industry pivots to hybrids/cheaper EVs; expect Ford equity vol and credit spreads to widen while copper/lithium spot momentum could slow 3–12 months. Cross‑asset: Ford CDS and senior bond spreads are a tradeable indicator (watch for >50bp move), options skew will rise around earnings and the 2027 product roadmap milestones.

Risks: tail events include adverse regulatory changes (EV incentives cut in US/EU within 12–24 months), an unsuccessful JV execution or legal/asset impairment from BlueOval SK, or a competitor battery breakthrough that reorders economics. Time horizons: immediate (days) — elevated equity/option volatility; short (3–12 months) — restructuring noise, margin compression; long (2027+) — outcome depends on UEV launches and Renault JV execution.

Actionable edge: the market may be over‑penalizing Ford because most restructuring charges are already taken; if Ford demonstrates 2026 EBIT toward the $8–10B guide and Model e loss narrows to ~$4B–4.5B, downside is limited and a recovery trade into late 2026/2027 could be justified—but execution risk is high and requires event‑driven hedges.

Key Decisions for Investors

• Establish a 2–3% overweight in GM (ticker: GM) vs benchmark for a 6–12 month horizon to capture EV share wins; trim if GM equity returns +25% or GM/F relative performance exceeds +20%.
• Hedge/short Ford (ticker: F) via a cost‑limited put spread: buy 6‑month put 30% OTM and sell 6‑month put 50% OTM sized to protect 1.5% of portfolio value (add another 1% protection if F drops >25% intraday).
• If Ford 5Y CDS widens by ≥50bp from current levels or crosses 300bp, buy up to 3% notional CDS protection or short Ford senior bonds maturing 2027–2032 to play credit stress; unwind if spreads tighten by ≥30bp.
• Initiate 1–2% long positions in hybrid/powertrain suppliers (examples: BorgWarner BWA, Aptiv APTV) to capture pivot to hybrids/affordable EVs over 12–24 months; take profits if combined supplier revenue exposure to hybrid programs falls >15% YoY or if Ford cancels hybrid sourcing commitments.
• Attend Ford earnings call and monitor four KPIs over next 30 days—Model e cash burn/q, confirmed UEV capex schedule, Renault JV economics, and BlueOval SK proceeds—and if Model e cash burn >$1B/q or no firm UEV launch capex is committed, accelerate downside positions (add puts/credit protection within 48 hours).