Ford targets $6.5B-$7.5B adjusted EBIT in 2025 while reallocating EV capital to Ford Pro transformation

Earnings Call Insights: Ford Motor Company (F) Q2 2025

Management View

CEO James Duncan Farley highlighted a “solid second quarter, including a record $50 billion in revenue that underscores the strength of our incredible products and services.” Farley stated the company delivered $2.1 billion in adjusted EBIT and provided full-year adjusted EBIT guidance of $6.5 billion to $7.5 billion, net of tariffs. He emphasized Ford Pro as the growth engine, noting “aftermarket, which includes parts and software and services, contributed 17% of Pro’s EBIT, closing in on that 20% target for next year.” Farley also announced a strategic shift: “we are shifting capital towards Pro, partly funded by reallocating the resources on future EV programs.”
Farley revealed a key management change: “Alicia Boler Davis will be joining Ford as the President of Ford Pro effective October 1st.”
CFO Sherry House stated, “Our global revenue grew 5% in the second quarter outpacing wholesale growth of 4%. We achieved our fourth consecutive quarter of year-over-year cost improvement, excluding the impact of tariffs. And we delivered $2.1 billion in adjusted EBIT despite a net tariff impact of about $800 million.”

Outlook

Ford projects full-year 2025 adjusted EBIT of $6.5 billion to $7.5 billion, adjusted free cash flow of $3.5 billion to $4.5 billion, and capital expenditures of about $9 billion. These targets assume a net tariff headwind of about $2 billion, with US industry sales expected at 16 million to 16.5 million units and industry pricing projected to be about flat.
House explained, “Our updated guidance reflects a strong underlying first half performance across our 3 automotive segments and Ford Credit including our continued improvement in costs.”
Compared to the previous quarter, Ford has reinstated guidance after suspension in Q1, despite increasing the expected net tariff headwind from $1.5 billion to $2 billion.

Financial Results

Ford reported $50 billion in revenue for the quarter and $2.1 billion in adjusted EBIT. Adjusted free cash flow was $2.8 billion, with a balance sheet showing over $28 billion in cash and $46 billion in liquidity.
Ford Pro revenue rose 11% to nearly $19 billion, with a 12.3% EBIT margin. Paid software subscriptions for Pro climbed 24% to 757,000, and ARPU increased 24%. Model e revenue more than doubled to $2.4 billion, with margin improvement of nearly 44 points.
Ford Credit delivered $645 million of EBT and distributed $500 million in the quarter.

Q&A

Emmanuel Rosner, Wolfe Research: Asked about guidance drivers and cost improvements. House responded, “The guidance is underpinned by the strong performance in the business, which is primarily in the cost area.”
Rosner also questioned Ford’s evolving EV strategy in light of regulatory changes. Farley replied, “there’s no doubt about it that we’ve had to change our EV spending and capital allocation pretty large, pretty massively. We’ve definitely moved out launches. We canceled some products. We’ve made the right choices in terms of battery, chemistry change like LFP in Michigan.”
Dan Meir Levy, Barclays: Inquired about recall headwinds versus quality improvements. Farley stated, “FSAs have a much longer arc… there are some early indicators that the vehicles, for example, ’23 to ’25 model year are substantially lower in FSA costs than the previous ’22 to ’24 model year window.”
Mark Trevor Delaney, Goldman Sachs: Sought clarity on balancing emissions policy changes and EV competitiveness. Farley responded, “We believe the only way to really compete effectively with the Chinese over the globe on EVs is to go and really push ourselves to radically reengineer and transform our engineering, supply chain and manufacturing process.”
Colin M. Langan, Wells Fargo: Asked about implied improvement in the second-half outlook. House explained, “some of our material cost items are coming in, in the second half.”

Sentiment Analysis

Analysts pressed for detail on guidance changes, cost improvements, and the impact of tariffs, showing a neutral to slightly negative tone due to persistent questions about headwinds and structural challenges.
Management maintained a confident tone during prepared remarks, emphasizing cost progress and strategic shifts. In Q&A, Farley and House provided detailed responses and repeatedly stressed cost discipline and capital reallocation, with Farley highlighting, “We think that’s going to be great for our investors and great for the employees.”
Compared to the previous quarter, analysts remained cautious but management showed increased confidence, particularly having reinstated full-year guidance.

Quarter-over-Quarter Comparison

Full-year guidance reinstated after being suspended in Q1; EBIT target lowered to $6.5 billion–$7.5 billion from the prior $7 billion–$8.5 billion range.
Net tariff headwind increased from $1.5 billion (Q1) to $2 billion.
Strategic focus shifted more explicitly to Ford Pro with capital reallocated from EV programs, and a new president for Ford Pro appointed.
Management tone more decisive on strategic direction, while analysts sustained a focus on risk factors and cost controls.

Risks and Concerns

Tariffs remain a significant headwind, with management estimating a $2 billion net impact for the year.
Recall costs, particularly FSAs, continue to pose a challenge, though there are “early indicators” of improvement in newer models.
Analysts raised concerns about the sustainability of market share gains and the effect of changing emissions and trade policies on profitability and product strategy.
Management is monitoring the policy environment closely and adjusting capital allocation, especially in response to US regulatory and trade developments.

Final Takeaway

Ford’s Q2 2025 call signaled a return to guidance and a sharpened strategy, with capital flowing into Ford Pro and selective investment in EVs. Management pointed to robust revenue and margin performance in Pro and Model e, reinforced cost improvements, and a strengthened balance sheet. With a new leader incoming for Ford Pro and a strategic pivot away from high-volume EV segments, Ford aims to leverage its US manufacturing strength and fresh product lineup to navigate tariff headwinds and shifting regulatory terrain, targeting $6.5 billion to $7.5 billion in adjusted EBIT for 2025 while focusing on capital efficiency and sustainable profitability.

Read the full Earnings Call Transcript