Ford's $19.5 billion EV writedown signals tough road ahead for legacy carmakers

Ford’s $19.5 billion writedown tied to a reset of its electric-vehicle business highlights the mounting challenges for legacy automakers as they navigate waning demand and a changed regulatory backdrop, analysts said on Tuesday.

The writedown was seen as the most visible sign to date of the auto industry’s pullback from a technology carmakers wholeheartedly embraced early this decade, exacerbated by President Donald Trump’s cancellation of electric-vehicle tax breaks.

Ford Motor’s shares rose 1.3% before the bell on Tuesday following the announcement. Tesla edged 0.6% lower and General Motors was flat. U.S.-listed shares of Stellantis were up about 1%.

Washington’s action has deepened the decline in sales, forcing the Detroit Three automakers – Ford, GM and Chrysler-parent Stellantis to roll back their ambitious EV plans in the U.S. and pivot back to their hybrids and gasoline-powered vehicles.

“Ford’s strategic reset is a clear acknowledgement of shifting market realities and consumer demand,” Morgan Stanley analysts said.

The charges are a “painful reset for the company” but one that is essential to align itself with consumer interests which would eventually improve profitability and returns for Ford, Morgan Stanley said.

U.S. sales of EVs fell about 40% in November following the expiration of a $7,500 consumer tax credit on September 30. The incentive had been in place for more than 15 years to stoke demand.

Since September, Ford shares gained 14%, GM rose 34% and Tesla advanced about 7%.

GM took a $1.6 billion charge in October as it adjusted its EV factory plans, and warned that it would likely take more charges in the future. Stellantis has also backtracked on some of its EV plans, axing a scheduled electric Ram pickup truck and leaning into hybrids.

“This move by Ford was to be expected (and should be expected for others) given a new reality on the dramatically weaker U.S. EV environment, driven by weaker demand and heavily reduced compliance requirements,” Barclays analysts said.

It is, however, a step in the right direction, and can help Ford improve profits, they added.