Ford's EV Struggles Highlighted by F-150 Shortfall and Deep Financial Restructuring

What happened

Ford's electric F-150 pickup, while impressive in design, has failed to meet market expectations, exacerbating the company's challenges in capturing EV demand as highlighted in a recent WSJ article. This aligns with SEC filings showing Ford taking drastic measures, including ~$8.5 billion in Model e impairments and ending F-150 Lightning production, to address deep losses in its EV segment. The company has also cut 2025 guidance for adjusted EBIT to $6.0–$6.5 billion and free cash flow to $2.0–$3.0 billion, citing ongoing EV headwinds, pricing normalization, and tariff risks. Despite solid cash flows from Ford Blue and Pro segments, the persistent Model e losses and high leverage at 9.7x net debt/EBITDA are straining overall financial health and execution capacity. Management's aggressive restructuring, including canceling other EV programs, signals a strategic pivot but underscores the difficulty in competing with EV leaders and meeting investor expectations.

Implication

The news reinforces that Ford's EV transition remains a significant drag, with ongoing restructuring and write-downs likely to pressure near-term earnings and cash flow, potentially impacting dividends and balance sheet repair. Guidance cuts reflect heightened execution risks, making the stock vulnerable to further downside if EV losses persist or macro conditions worsen. However, the current valuation at ~11x P/E and ~42% below DCF intrinsic value offers a margin of safety, assuming core truck and commercial businesses continue to generate stable profits. Investors must watch for tangible progress in narrowing Model e losses by 2026 and improvements in leverage metrics to gauge a sustainable turnaround. Given the competitive landscape and Ford's history of strategic U-turns, a disciplined, wait-and-see approach is prudent until clearer signs of EV profitability and financial discipline emerge.

Thesis delta

The WSJ article on Ford's EV expectations gap does not alter the core thesis from the DeepValue report but amplifies the risks around Model e execution and investor sentiment. It reinforces the need for critical scrutiny of management's restructuring efforts, as the path to EV profitability remains uncertain and heavily dependent on external factors like demand and competition. Therefore, the 'POTENTIAL BUY' stance retains its conditional nature, with a slightly increased emphasis on the urgency of monitoring EV loss trajectories and leverage reduction.