Ford will write off $19.5 billion due to a review of its electric business. Is this good for investors?

Ford, one of the major US automakers, will write off $19.5 billion in losses as part of a review of its electric vehicle business. The company will refuse to produce a number of planned models and retool its battery plant to launch a "fast-growing" business producing energy storage systems. Investors took a positive view of the announced measures, with the share price rising more than 1% on the post-market.

The bulk of the financial losses will occur in the fourth quarter of 2025, Ford said. The company said its new approach to the electric vehicle business prioritizes profit, choice and vehicle availability.

"As part of these actions, Ford no longer plans to produce individual larger electric vehicles, the economic viability of which has declined due to lower-than-expected demand, high costs and regulatory changes," Ford said.

Specifically, the automaker canceled plans to produce electric F-series pickup trucks and decided to focus more on gasoline-powered vehicles and hybrids. The company is also retooling its electric vehicle battery factory into a broader "high-growth business" of producing larger energy storage systems.

Ford raised its forecast for adjusted EBIT (earnings before interest and taxes) to about $7 billion, with free cash flow expectations confirmed in the range of $2 billion to $3 billion, closer to its upper end.

The scale of the change shows the difficulty Ford has had in trying to produce and sell electric cars at a profit, Bloomberg said. In addition, Ford recognizes that it has created excessive battery capacity and has reached an impasse with large electric cars that would have cost it money, the agency noted.

"It didn't make sense to keep investing billions in products we knew would not be profitable. We had to make that choice," Ford CEO Jim Farley told Bloomberg TV.

The decisions made will make Ford's electric business profitable by 2029, said Andrew Frick, head of the division, in a Bloomberg statement. Last year, the division made a loss of $5.1 billion. In 2025, it could be even bigger, the company admitted.

Ford shares were up more than 1% in extended trading on Dec. 15. The main session ended with a decrease of 0.8%.

Ford shares have risen 38% since the beginning of 2025. The most popular recommendation from analysts is to hold the stock, with 17 Hold ratings out of 22 total, MarketWatch shows. Another three analysts advise buying the stock, while two advise selling. The average target price of $12.9 is lower than the current price target.

This article was AI-translated and verified by a human editor