Ford Weathers Electric Shock, Boosting Forecast Amid Defense Contracts, Energy Initiatives

As we know now, Ford’s ambitious foray into electric vehicles went down about as well as an F-150 at the Miami Grand Prix.

On Tuesday, the Big Three automaker signaled it’s Ford Tough enough to handle the fallout. The company said it expects to make $11 billion before interest and taxes in 2026, up from its prior forecast of $8.5 billion to $10.5 billion, and better than Wall Street expected. Along with a second-quarter earnings beat, that lifted shares 6.8% in after-hours trading.

Ford, Revenue Explorer

In December, Ford took a $19.5 billion writedown on underperforming EV investments, canceling its F-150 Lightning plug-in pickup after EV tax credits evaporated and EV demand waned. Its EV business has lost more than $16 billion since 2022, including $1.3 billion in the second quarter, and is not expected to turn a profit until 2029. Going forward, the EV business will focus on scaled-down models like a forthcoming $30,000 pickup.

Electric dreams dashed, Ford is after new strategic payoffs. One is defense, with large-scale rearmament by NATO countries expected to mobilize hundreds of billions in future investments. Ford and crosstown Detroit rival GM have already held talks with governments about supplying military-purpose vehicles. On Monday, Ford was awarded a contract to develop prototypes for the US Army’s next-generation tactical trucks. Based on the F-Series Super Duty pickups, they’ll be pitted against competing prototypes from GM and Utah-based BC Customs.

Ford has also jumped aboard the AI bandwagon. In May, it debuted a battery energy storage subsidiary to repurpose excess manufacturing capacity in service of data centers and other facilities. Executives said Tuesday that they don’t expect profits from the new unit until 2028. In the meantime, the core business is strong enough to power Ford’s overhaul:

• Ford posted $2.5 billion in operating profit and revenue of $48.3 billion in the second quarter, ahead of Wall Street expectations. The driving factor was resilient demand for its high-margin SUV and pickup models, despite a 10% decline in overall US vehicle sales.
• Bronco and Explorer SUVs were the stars in the second quarter. However, Ford said it expects an uptick in sales of its best-selling F-Series pickups after fires at an aluminum supplier last year stalled production.

Just Do It: On Monday, Ford debuted a limited edition of 1,000 Bronco SUVs with a magenta color scheme inspired by the state of Utah. The company’s Matt Simpson told CNBC it plans to increase limited offerings in a manner similar to “Nike dropping a sneaker.” Sneakerheads, though, tend to buy dozens if not hundreds of limited releases, while having more than a couple of cars in their driveway may prompt most consumers to look for a Ford Escape.