Ford Motor Company (NYSE: F) has experienced a notable 35% increase in its stock price throughout 2025, as of December 23, yet has not managed to reclaim the $15 per share level it last reached in July 2023. This stock price trend illustrates moderate investor confidence despite underlying operational difficulties and financial pressures the firm currently confronts.
On December 15, Ford announced a significant financial impairment estimated at $19.5 billion related to the comprehensive overhaul of its electric vehicle (EV) program. Central to this adjustment was the termination of the anticipated F-150 Lightning, reflecting a strategic pivot in the company's EV development. This one-time charge is expected to substantially weigh on earnings, with repercussions spanning the fourth quarter of fiscal year (FY) 2025 through the entirety of FY 2026. Furthermore, the company anticipates an additional $5.5 billion impact extending into FY 2027.
Beyond the EV program realignment, Ford continues to recover from elevated warranty costs, a persistent issue impacting its profitability. Since early 2024, the company has grappled with an increase in vehicle recalls, which directly contribute to warranty-related expenditures. This challenge intensified to the point that in December 2024, Ford appointed a new head of quality in an effort to curb mounting expenses. In 2025, Ford has accounted for 35% of all national auto recalls, underscoring the magnitude of its quality control challenges.
Financially, the impact of warranty claims is significant. During the first two quarters of 2025, Ford incurred $2.8 billion in warranty costs, reflecting a year-over-year increase of $300 million in the second quarter alone. Although the third quarter showed a $459 million reduction in warranty expenses compared to the prior year, industry developments remain a concern. Specifically, on December 19, the National Highway Traffic Safety Administration (NHTSA) initiated a recall of approximately 273,000 Ford vehicles due to a parking system malfunction capable of allowing unintended vehicle movement, further contributing to potential warranty costs.
Market valuation metrics for Ford suggest that these financial pressures have been factored into investor expectations. The company's current trailing price-to-earnings (P/E) ratio stands at 11.4, with a forward P/E of 9.4. These ratios are substantially lower than the S&P 500 index average P/E of 31.2 as of December 24, indicating that market anticipations for Ford's earnings remain subdued relative to the broader market. This valuation discount reflects apprehension regarding the resolution timeline of Ford's earnings challenges.
Given the aggregate effect of the EV program restructuring and ongoing warranty cost complications, Ford's earnings trajectory appears constrained for the next several years. Investors considering equity positions in the company must weigh these substantial headwinds, which contribute to a cautious outlook amidst the backdrop of recent stock price gains.