Fire at aluminum plant to hit Ford's bottom line by up to $1 billion, analyst says

A September 16 fire at a Novelis aluminum plant is projected by Evercore ISI analysts to reduce Ford Motor's earnings by up to $1 billion, primarily impacting F-150 truck production. The plant's full recovery is not expected until Q1 2026, with Ford's F-150 supply specifically affected through year-end, leading to a 6% drop in Ford's stock upon the news. This incident exacerbates Ford's existing supply chain challenges, though analysts are also assessing potential knock-on effects for other automakers like Stellantis and Toyota.

Analysis

DETROIT, Oct 8 (Reuters) - A fire at a New York aluminum plant that is expected to affect production of Ford Motor's F-150 truck for months will sap up to $1 billion from the automaker's earnings, according to a Wednesday note from Evercore ISI analysts. The September 16 blaze at Novelis is expected to take much of the aluminum factory down until the first quarter of 2026, the company told Reuters, affecting the supply of the metal to Ford's (F.N) best-selling F-150 trucks through the end of the year. Stay up to date with the latest news, trends and innovations that are driving the global automotive industry with the Reuters Auto File newsletter. Sign up here. Advertisement · Scroll to continue The Dearborn, Michigan, automaker's stock fell about 6% yesterday after news of the fire. “Novelis is one of several aluminum suppliers to Ford. Since the fire nearly three weeks ago, Ford has been working closely with Novelis, and a full team is dedicated to addressing the situation and exploring all possible alternatives to minimize any potential disruptions," a spokesperson for the automaker said in a statement. The company declined to comment on the Evercore note. The supply-chain disruption is the latest challenge for the automaker as it weathers elevated steel and aluminum prices, a fast-changing trade environment and a battered supplier base that is emerging from work stoppages during the COVID-19 pandemic and 2023 union strike. Advertisement · Scroll to continue While other automakers are likely to be affected by the fire, Ford is expected to see the largest fallout, analysts say. "We believe this is largely a Ford issue, at this time being, although we are continuing to check knock-on effects for [Stellantis] and Toyota as well," Evercore's Chris McNally wrote in the note, which outlined a $500 million to $1 billion hit to Ford's EBIT. Ford began using a mainly aluminum body on its F-150 truck more than a decade ago in an effort to reduce the weight of the vehicle. The automaker is set to report third-quarter earnings later this month. Reporting by Nora Eckert: Editing by Sharon Singleton Our Standards: The Thomson Reuters Trust Principles. A September 16 fire at a Novelis aluminum plant is projected by Evercore ISI analysts to significantly impact Ford Motor's earnings, with an estimated $500 million to $1 billion hit to EBIT. This incident specifically affects the supply of aluminum for Ford's best-selling F-150 trucks through year-end, as the plant's full recovery is not expected until Q1 2026. Ford's stock ($F) reacted negatively, falling approximately 6% yesterday following the news. The supply chain disruption exacerbates existing challenges for Ford, which is already navigating elevated steel and aluminum prices, a volatile trade environment, and a strained supplier base recovering from prior work stoppages and the 2023 union strike. While Ford is actively exploring alternatives to minimize disruption, the reliance of its F-150 on an aluminum body, a strategy adopted over a decade ago, makes it uniquely vulnerable to such events. Analysts expect Ford to bear the largest fallout from this event, despite Novelis being one of several aluminum suppliers, due to the F-150's significant market position and material dependency. Evercore is monitoring potential knock-on effects for other automakers, including Stellantis ($STLA) and Toyota ($TM), but currently views the primary impact as concentrated on Ford. The incident's timing is notable, preceding Ford's Q3 earnings report later this month.

Key Decisions for Investors

• Monitor Ford's Q3 earnings report for official guidance on the financial impact and mitigation strategies.
• Assess F-150 production outlook and inventory levels for potential revenue and market share effects in key segments.
• Evaluate Ford's broader supply chain resilience, particularly for critical raw materials, given the increasing frequency of external shocks.
• Consider relative valuation against peers like Stellantis and Toyota, accounting for the Ford-specific nature of this disruption and existing macro challenges.