Ford EV sales fall 31% while hybrids rise

Ford reported a 31% decline in U.S. electric vehicle sales for Q2 2025, with year-to-date EV sales down 12% to 38,988 units, driven by significant drops in F-150 Lightning, E-Transit, and Mustang Mach-E models. This downturn, despite overall sales growth and a 23% jump in hybrid sales, reflects a broader softening in the U.S. EV market, also seen in Hyundai and Kia's recent results, amid policy uncertainties like potential federal tax incentive changes and an aging Ford EV lineup. Ford is developing new, lower-cost EVs, but these are not expected until 2027.

Analysis

Ford's U.S. electric vehicle sales experienced a significant contraction in the second quarter of 2025, falling 31% year-over-year and contributing to a nearly 12% decline for the first half of the year to 38,988 units. The weakness was broad-based across its EV portfolio, with the Mustang Mach-E declining almost 20% to 10,178 units and the F-150 Lightning dropping 26% to 5,842 units. E-Transit van sales saw a near-total collapse, falling from 3,410 to just 418 units, though the company attributed this to the timing of large fleet orders in the first quarter. This EV downturn starkly contrasts with Ford's hybrid segment, where sales surged by more than 23%, and with its overall sales growth, which was buoyed by promotions ahead of potential tariffs. The challenges are not unique to Ford, reflecting a wider market softening as Hyundai and Kia also reported double-digit declines for key EV models and Tesla is anticipated to release similarly weak results. The slowdown is occurring amid a confluence of headwinds, including an aging product lineup—with key models launched in 2020 and 2022—and significant policy uncertainty from the Trump administration's threats to eliminate federal EV subsidies. With Ford's next-generation, lower-cost EVs not expected until 2027, the company faces a prolonged period of competitive pressure in the EV space.

Key Decisions for Investors

• Investors should monitor Ford's capital allocation between its EV and hybrid segments, as the 23% surge in hybrid sales alongside a 31% drop in EV sales indicates a significant shift in consumer demand that could impact future profitability.
• The multi-year gap until Ford's next-generation, lower-cost EVs arrive in 2027 presents a considerable risk, potentially leading to further market share erosion as its current lineup ages.
• Given the sector-wide nature of the EV slowdown, with competitors like Hyundai and Kia also reporting sharp declines, it is prudent to reassess overall exposure to the EV space and related supply chains due to weakening demand and significant policy uncertainty.