Ford will see ‘significant tailwinds’ over the next few years

Yahoo Finance Video 及 Julie Hyman

Thu, February 12, 2026 at 9:30 PM GMT+9

In this video:

F

+2.06%

Ford (F) reported its biggest earnings miss in four years on Tuesday. However, electric vehicle (EV) investments, regulatory tailwinds, and continued pickup demand could signal a path toward long-term growth.

TD Cowen equity analyst Itay Michaeli joins Market Catalysts host Julie Hyman to discuss what’s next for the automaker.

To watch more expert insights and analysis on the latest market action, check out more Market Catalysts.

Video Transcript

00:00 Speaker A

Itay, this felt like sort of a noisy report, right? You had the tariff thing, you had some other items. So, how do you sort of push that aside and figure out how Ford is actually doing?

00:19 Itay

Yeah, well, thank you for having me. You’re right, it was a noisy quarter, both with some tariff timing issues and the continued recovery from the Novellas uh fire, but the underlying results, both for Q4, the 2026 outlook and even beyond, to us were pretty encouraging. If you remove some of the tariff uh timing issue in Q4, Ford would have beat uh including on cost. And remember that Ford has been a cost execution story for some uh quite some time. So great to kind of see them execute uh better than expected in Q4.

00:54 Itay

and the 2026 outlook was in line with consensus at the midpoint. Though that also included some non-repeating Novellas items that suggest a stronger underlying earnings rate uh than what the street kind of had coming in. And lastly, the company also provided 2029 margin target of about 8%, which supports a much higher earnings power going forward. So we were actually pretty encouraged with the results last night.

01:21 Speaker A

Um, I want to ask a little bit more about Novellas, which is uh the company’s uh aluminum supplier. They, what you’re referring to is they had a big fire at their facility in New York. Um, they’re closed for now. The Wall Street Journal this morning is reporting that Novellas says they could be open again as soon as the summer. What does that imply for Ford?

01:47 Itay

Sure, yeah, that that’s in line with the company’s commentary as well. Um that should mean that we should see a recovery uh in volume and over time, uh some of the mitigation of the incremental cost that Ford is incurring today to keep up on volumes. The company lost about 100,000 units of some of their most profitable vehicles last year because of the disruption that also created as you pointed out some noise in Q4. Um that recovery really will take place this year and then next year should have additional recovery from the non-repeat of some of the transitory costs that they’re incurring today.

02:26 Itay

So the overall impact on a net basis in 2026 will be positive a billion dollars. and it should be further tailwinds going forward uh for for the F-150. And of course, pickup truck demand also remains quite strong, uh which is encouraging overall for the uh program.

02:44 Speaker A

And and on that front, Itay, I’m curious about some of the regulatory changes that we’ve seen from this administration, visa-vis electric vehicles versus traditional gas-powered vehicles. How um is Ford communicating that it’s going to be changing its strategy, if at all, in terms of production, and then what is that going to mean for the business?

03:12 Itay

Absolutely. There’s been puts and takes. Of course, we saw the significant EV charges that were taken uh last month or in in December. And but going forward, we see significant tailwinds uh from a number of fronts. Fir first, the ability to sell um a richer mix of vehicles. That could be more Raptor trims, more pickup trucks. And Ford did call that out last night as a tailwind including in 2026. There’s also reduction in actual compliance costs going forward that could be several hundred million dollars this year.

03:47 Itay

Um and over time, uh there could be even additional R&D benefits that the company could could uh record too. So, net net, we think it’s a multi-billion dollar opportunity over a number of years uh for from an earnings tailwind perspective. Though, of course, it did lead to restructuring in the near term including some significant supplier payments that will impact the company’s, you know, cash flow generation this year. Uh but overall, we think that the shifting uh regulations is a tailwind uh for Ford and some of the other automakers in the US as well.

04:26 Speaker A

Um, at the same time, Ford is saying um about three more years of electric vehicle related losses are to come. Is that a surprise at all and and, you know, is there any potential upside from that that it actually isn’t that that long?

04:47 Itay

Yeah, no real surprises there, but it’s a great point to bring up because the company is not moving completely away from electric vehicles. They’re still investing in the next generation platform that will launch next year with about a $30,000 mid-sized electric pickup truck. We are actually still constructive on EV demand in the US over the next couple of years. And so, what you saw in the restructuring charges were a lot of just the kind of the the Gen 1 platforms and just some of the shifting that have to happen in the near term and that that is of course costly.

05:21 Itay

But Ford still is investing quite a bit uh in the next generation EVs uh and that will help drive them towards profitability kind of later in the decade or at least kind of a break even point at that point in time. Um and a lot of the lessons learned from the first generations of EVs are being applied to the second generation, um which will launch next year. So, um, you know, they’re kind of at a point now where they can enjoy some of the flexibility from from the easing emissions regulations, a lot of tailwinds there while kind of learning lessons from the past and taking their time to invest in the next generation uh of more affordable and better EVs, uh which could be well-timed frankly with what we think will be an eventual recovery in EV demand, uh and those two things combined should help the company kind of achieve that 8% target in 2029.

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