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Ford stock (NYSE: F) is trading 2% lower today after the company disclosed costs of around $570 million related to the recall of 694,271 crossover SUVs due to a fuel leakage issue.
Fuel injectors in affected vehicles may crack, which could lead to fuel leakage into the engine compartment that poses fire risks. The NHTSA estimates that 0.3% of recalled vehicles, which include 2021–2024 Bronco Sport and 2020–2022 Escape models, may have the defect. Italy-based Dumarey Flowmotion Technologies supplied these injectors to Ford.
Ford Faces Massive Recall Costs
Disturbingly, this is not a new problem for these models. Ford has attempted to address this defect through multiple previous recalls in 2022 and 2024, primarily offering software updates and drain tube installations. However, a year-long investigation by the NHTSA determined that these “fixes” were inadequate as they failed to address the root cause – the faulty injectors themselves. Eight vehicles have already reportedly experienced under-hood fires due to this issue, with six of them not having received the recommended software updates.
Separately, Ford is pulling back over 850,000 vehicles, including popular SUVs like the Bronco (2021-2023), Explorer (2021-2023), Expedition (2022), and Lincoln Aviator (2021-2023), as well as various F-Series trucks and the Mustang. The core of this recall lies with the low-pressure fuel pump, which can fail due to internal contamination of the jet pump. This can lead to a loss of fuel pressure and flow, potentially causing the engine to stall while driving and increasing the risk of a crash.
Recall and Warranty Costs Have Been a Headwind for Ford
Notably, recall and warranty costs have been a headwind for Ford. While the company has said that it is a legacy issue, they are quite frequent and many times impact newer vehicles. Recall costs have also hit Ford stock, as we are witnessing today, and the company hasn’t been able to get over the recurring issue.
Ford Reported Strong Sales in Q2
Meanwhile, Ford reported a 14.2% rise in its US deliveries in Q2, which was over 10x the overall industry growth. The company’s F-series trucks had their best second quarter since 2019, while its EV sales soared to a record high in the first half of 2025. Importantly, Ford sold 156,509 EVs in the first half of 2025, which was more than the combined deliveries of General Motors (NYSE: GM) and Stellantis.
Meanwhile, legacy automakers are posting losses in their EV business. Ford’s Model e business, which is its EV business, posted a loss of $849 million in Q1 compared to $1.33 billion in the corresponding quarter last year. Both Ford and General Motors are struggling with profitability in their EV business, in part due to the price war, which has depressed the pricing.
The price war has also taken a toll on Tesla’s once industry-leading margins, and if not for the regulatory credits, the Elon Musk-run company would have posted a net loss in Q1 2025.
Ford Reported Better Than Expected Q1 Earnings
Ford reported better-than-expected results for Q1 even as the stock fell after the release. Ford’s total revenues fell 5% YoY to $40.7 billion in Q1. The company’s automotive revenues came in at $37.42 which was ahead of the $36.21 billion that analysts were expecting. The company generated a net income of $0.5 billion, and its EPS of 14 cents easily surpassed the 2 cents that analysts were expecting.
Looking at the different business segments, Ford Blue, which houses the company’s internal combustion engine (ICE) business, generated revenues of $21 billion, which was 3% lower than the corresponding quarter last year. The segment’s pre-tax profits, however, nosedived to a mere $96 million as compared to $901 million in the corresponding quarter in 2024.
During the earnings call, CFO Sherry House said, “Ford Blue earned a modest profit, reflecting the expected volume decline in adverse exchange due to the strengthening of the U.S. dollar that impacted key markets like Canada and Australia, offset partially by higher net pricing in North America.”
Ford Pro, which is the company’s commercial business, reported revenues of $15.2 billion – a YoY fall of 15%. The segment posted a pre-tax profit of $1.3 billion, which was less than half of what it achieved in Q1 2024.
Automakers Face Tariff Uncertainty
The US automotive industry is facing a lot of uncertainty over tariffs, and while GM lowered its 2025 guidance, Ford withdrew it altogether. Stellantis has also suspended its guidance as the automaker grapples with tariff uncertainty that was made worse by company-specific issues, which led to the ouster of its CEO, Carlos Tavares, in December 2024. The company recently appointed Antonio Filosa as its next CEO. Filosa is a company insider and was heading the company’s Americas business.
Automakers, which were already reeling under the impact of Trump’s tariffs on imports of cars and some car parts, received yet another jolt last month after President Trump raised the tariffs on US steel and aluminum imports. The increase in steel and aluminum tariffs has come as yet another jolt to the industry. US steel prices are already among the highest globally, and the tariffs would embolden domestic companies to raise prices further, making it even costlier to make cars in the US.
Trump Doubled Steel and Aluminum Tariffs
While no automaker has issued a profit warning on the impact of these tariffs, in 2018, Ford had warned of a hit of $1 billion between 2018 and 2019 from the steel and aluminum tariffs that Trump had imposed in his first tenure. Notably, back then, Trump slapped a 25% tariff on steel imports and a 10% tariff on aluminum imports. This time, he started with a 25% tariff on both metals, which he is now raising to 50%.
Meanwhile, we are now in the Q2 earnings season and Ford will report its Q2 earnings on July 30, where the company might talk more about the impact of tariffs and provide color on the spate of recent recalls.
