Ford's 2025 Sales Surge Highlights Core Strength, But EV and Leverage Risks Loom Large

What happened

Ford reported a 6% sales increase to 2.2 million units in 2025, marking its highest sales year this decade, driven by robust demand for trucks and hybrids, and gained 0.6 percentage points of market share. This performance aligns with the DeepValue report's emphasis on Ford's durable franchises in Ford Blue and Ford Pro, which generate substantial EBIT from trucks and commercial vehicles. However, the report cautions that Ford's EV segment, Model e, continues to incur multi-billion-dollar losses, with recent restructuring adding impairments and cash costs. The sales growth may temporarily bolster earnings and cash flow, but it doesn't address the elevated leverage, with net debt/EBITDA at 9.7x, or the uncertain path to EV profitability. Overall, while the news reinforces the value case from core segments, it underscores the ongoing divergence between strong ICE/hybrid performance and deep-seated EV challenges.

Implication

The sales uptick could lead to better-than-expected EBIT in Ford Blue and Ford Pro, potentially providing additional cash to fund EV restructuring and maintain dividends. However, this is offset by ongoing Model e losses and recent impairment charges, which will pressure consolidated earnings and free cash flow. Investors should monitor whether this sales momentum translates into sustained margin resilience and positive adjusted FCF after dividends, as highlighted in the report's watch items. The news does not change the need for clear progress on reducing EV losses or deleveraging to improve the risk/reward profile. Long-term, Ford's investment case remains a balance between leveraging core strengths and navigating EV transition risks, with no immediate shift in the underlying thesis.

Thesis delta

The strong 2025 sales data validates the durability of Ford's truck and hybrid businesses, slightly enhancing confidence in the value thesis from these segments. However, it does not materially alter the EV loss trajectory or leverage concerns, which are central to the 'POTENTIAL BUY' rating. Thus, the overall investment case remains unchanged, pending evidence of reduced EV drag and improved balance-sheet health.