Ford Plans Vehicle Price Hikes Amid Tariff Concerns
Ford Motor Company (F) is preparing to raise vehicle prices on models produced from May 2025 onwards unless President Donald Trump delivers on suggested tariff relief for automakers. A memo from Andrew Frick, president of Ford’s gas-powered and electric car divisions, indicated that pricing adjustments will be necessary unless Trump alters his tariff position significantly.
The price adjustments will impact vehicles manufactured in May, which are expected to arrive at U.S. dealerships in late June or early July, after Ford concludes its current employee-pricing promotion. Vehicles already in inventory will not see any price changes.
This announcement signals that automakers may need to transfer some of the increased costs from Trump’s 25% tariffs on imported vehicles to consumers. Notably, the warning comes shortly after Trump suggested a potential temporary suspension of tariffs to give car manufacturers more time to shift production back to the U.S. Additionally, similar duties on imported car parts may be implemented by May 3.
As Ford seeks to better understand the implications of Trump’s trade policies, the company anticipates that some tariffs will remain in place for the foreseeable future. Detroit automakers actively lobbied the White House for exemptions on parts deemed critical, as without these exemptions, substantial financial strain could occur.
While Ford produces 80% of the vehicles it sells in the U.S. at domestic facilities, many of its more affordable models, including the electric Mustang Mach-E, the Maverick small pickup, and the Bronco Sport SUV, are built in Mexico.
High Tariffs to Further Impact Ford’s Sales and Profits
Ford has already been grappling with fierce competition, pricing pressures, and significant costs related to the development of next-generation electric vehicles. The company reported a $4.7 billion loss in its EV segment for 2023, with losses from its Model e sector climbing to $5.07 billion in 2024. Looking ahead, Ford anticipates segmental losses between $5 billion and $5.5 billion in 2025. Its full-year adjusted EBIT is projected to fall between $7 billion and $8.5 billion, down from $10.2 billion in 2024.
This cautious guidance does not account for any possible shifts in Trump’s policies. The anticipated tariffs are expected to elevate raw material costs significantly, leading to higher vehicle prices, which could dampen demand and adversely affect Ford’s sales and profits.
Other Automakers Facing High Tariff Effects
The elevated tariffs may also impact General Motors Company (GM), which imported approximately 750,000 vehicles from Canada and Mexico in 2024. The new tariffs will likely increase costs for fully assembled vehicles and parts sourced from Mexico, raising production expenses at GM’s U.S. plants.
Meanwhile, tariffs on steel and aluminum could raise vehicle costs for Tesla, Inc. (TSLA), impacting affordability and compressing margins. Should tariffs on vehicles from Mexico and Canada come into effect, supply chain disruptions may further exacerbate the situation. The potential for increased costs could weigh on Tesla’s margins, creating significant challenges for the company.
Ford Stock Performance and Projections
Over the past year, Ford shares have declined by 22.1%, underperforming compared to the 4.3% decline in the Zacks Auto, Tires and Trucks sector and the 14.1% growth in the Zacks Automotive – Domestic industry.
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The Zacks Consensus Estimate projects a year-over-year decline in Ford’s 2025 sales and earnings by 5.12% and 27.17%, respectively. Additionally, the earnings forecasts have decreased over the past month.
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Currently, Ford (F) holds a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article was originally published on Zacks Investment Research (zacks.com).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
