Ford pivots from EVs with $19.5B impairment and forecasts $1.52 EPS in 2026
Ford will discontinue its all-electric F-150 Lightning and cancel other large EV truck plans, taking a $19.5 billion non-cash impairment charge to shift focus to higher-margin combustion and hybrid vehicles. The company projects adjusted EPS of $1.52 for 2026, trading at roughly 9x forward earnings after a 33% stock gain in 2025.
1. Major Recall of 119,075 Vehicles Over Engine Block Heater Defect
Ford Motor Company has announced a safety recall affecting 119,075 vehicles in the U.S., covering certain 2013–2018 Focus, 2013–2019 Escape, 2015–2016 MKC, 2019 Explorer and 2024 Explorer models. Regulators at the National Highway Traffic Safety Administration warn that a crack in the engine block heater housing may allow coolant to leak and short circuit when the heater is plugged in, potentially causing under-hood fires. To date, 1,191 vehicles have been confirmed with the defect. Ford will replace the block heater free of charge; interim notification letters are expected to be mailed by February 13, 2026, with a final remedy rollout by April 2026. Owners are advised not to plug in their heaters until repairs are complete.
2. Strategic Pivot Delivers 33% Stock Surge Last Year
After years of underperformance, Ford’s shares climbed 33% over the past 12 months, driven by the December decision to shift focus from full-battery electric trucks to a broader lineup of hybrids and combustion engines. The plan, which includes discontinuing electric F-150 Lightning production and canceling other large EV projects, sparked a $19.5 billion non-cash impairment charge but positions the company to leverage higher-margin products. Through the first three quarters, revenue rose 3% to $141.4 billion despite a supplier plant fire that trimmed adjusted operating income from $8.1 billion to $5.7 billion. Analysts now forecast adjusted earnings per share of $1.52 for 2026, up from $1.10 in 2025, reflecting confidence in Ford’s new product strategy.
3. FDIC Approval to Establish an Industrial Bank
On Thursday, the Federal Deposit Insurance Corporation approved Ford’s application for deposit insurance, clearing the way for the company to form its own industrial bank. This regulatory green light allows Ford to offer a broader range of financial services—such as captive financing and deposit products—directly through its own chartered institution. The move aligns Ford with other automakers seeking to integrate banking operations, and is expected to support more competitive vehicle financing terms and potentially generate additional fee income. Ford did not disclose a timeline for the bank’s launch, but industry observers anticipate services could begin rolling out in late 2026.