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Will Ford's Gen-1 Cost Reductions Drive Further Model e Improvements?
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Key Takeaways
Ford's Model e reported a $1.06 billion EBIT loss, narrowing 25% year over year.
Lower Gen-1 losses and favorable net pricing improved EBIT by $352 million year over year.
Ford targets a 40% improvement in Gen-1 EBIT in 2026 through cost cuts and production discipline.
Ford's (F - Free Report) efforts to improve the profitability of its electric vehicle (EV) business are beginning to yield results, with lower losses on its first-generation (Gen-1) products supporting a gradual recovery in Model e.
In the third quarter of 2026, the segment incurred an EBIT loss of $1.06 billion, narrowing 25% from $1.41 billion in the prior-year quarter. The improvement came despite a 31% decline in revenue to $1.22 billion, reflecting lower wholesale volumes and unfavorable product mix. Ford's focus on rightsizing Gen-1 production, reducing structural costs and improving pricing is helping contain losses as it transitions toward its next-generation EV portfolio.
Ford’s Gen-1 Cost Reductions Support Improvement
Ford's ongoing efforts to align production with market demand and reduce the cost base of its first-generation EV portfolio are driving progress. During the third quarter, Model e wholesale volumes declined 31% year over year to 34,000 units, primarily due to the discontinuation of the F-150 Lightning and production adjustments for the Mustang Mach-E.
However, lower Gen-1 product losses and favorable net pricing helped improve EBIT by $352 million year over year. Management also highlighted that Mustang Mach-E recorded its lowest spending level since 2023, reflecting tighter cost controls and disciplined production management.
Ford remains on track to improve Gen-1 EBIT by approximately 40% year over year in 2026. This reflects its strategy of balancing production and pricing with underlying market demand while realizing savings from a rightsized manufacturing footprint. Although continued cost reductions should support progress, achieving its 2029 Model e breakeven target will depend on disciplined spending and successful execution of its next-generation EV strategy.
Ford's efforts to narrow EV losses reflect a broader industry shift toward improving EV economics through cost reductions and production adjustments. General Motors (GM - Free Report) is following a similar path. During the third quarter of 2026, General Motors' EV-related net realizable value inventory adjustments declined by $400 million year over year, while EV strategic realignment charges fell to $238 million from $1.59 billion in the prior-year quarter. For full-year 2026, General Motors expects EV losses to improve by $1-$1.5 billion, reflecting continued efforts to optimize its EV manufacturing footprint and control costs.
Meanwhile, Stellantis N.V. (STLA - Free Report) is also focusing on structural cost reductions and manufacturing efficiencies to improve profitability. Under its Value Creation Program (VCP), the automaker is targeting €6 billion in annual cost savings by 2028 compared with its 2025 baseline. In the third quarter of 2026, the program continued to deliver savings, with management expecting fourth-quarter benefits in the mid-hundreds of millions of euros, approximately double the third-quarter level. Stellantis is also optimizing its manufacturing footprint and production capacity to reduce underutilized facilities and improve operating efficiency.
The Zacks Rundown for Ford
Shares of F have plunged 6.1% in a year compared with its industry’s 1.9% decline.
Image Source: Zacks Investment Research
Ford is currently trading at a forward 12-month price-to-sales of 0.28X, lower than the industry’s average of 3.57X. It carries a Value Score of A.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for F for 2026 earnings implies year-over-year growth of 74.3%.
Image Source: Zacks Investment Research
The consensus estimate for EPS for fiscal 2026 has moved northward over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
Will Ford's Gen-1 Cost Reductions Drive Further Model e Improvements?
Key Takeaways
Ford's (F - Free Report) efforts to improve the profitability of its electric vehicle (EV) business are beginning to yield results, with lower losses on its first-generation (Gen-1) products supporting a gradual recovery in Model e.
In the third quarter of 2026, the segment incurred an EBIT loss of $1.06 billion, narrowing 25% from $1.41 billion in the prior-year quarter. The improvement came despite a 31% decline in revenue to $1.22 billion, reflecting lower wholesale volumes and unfavorable product mix. Ford's focus on rightsizing Gen-1 production, reducing structural costs and improving pricing is helping contain losses as it transitions toward its next-generation EV portfolio.
Ford’s Gen-1 Cost Reductions Support Improvement
Ford's ongoing efforts to align production with market demand and reduce the cost base of its first-generation EV portfolio are driving progress. During the third quarter, Model e wholesale volumes declined 31% year over year to 34,000 units, primarily due to the discontinuation of the F-150 Lightning and production adjustments for the Mustang Mach-E.
However, lower Gen-1 product losses and favorable net pricing helped improve EBIT by $352 million year over year. Management also highlighted that Mustang Mach-E recorded its lowest spending level since 2023, reflecting tighter cost controls and disciplined production management.
Ford remains on track to improve Gen-1 EBIT by approximately 40% year over year in 2026. This reflects its strategy of balancing production and pricing with underlying market demand while realizing savings from a rightsized manufacturing footprint. Although continued cost reductions should support progress, achieving its 2029 Model e breakeven target will depend on disciplined spending and successful execution of its next-generation EV strategy.
Ford's efforts to narrow EV losses reflect a broader industry shift toward improving EV economics through cost reductions and production adjustments. General Motors (GM - Free Report) is following a similar path. During the third quarter of 2026, General Motors' EV-related net realizable value inventory adjustments declined by $400 million year over year, while EV strategic realignment charges fell to $238 million from $1.59 billion in the prior-year quarter. For full-year 2026, General Motors expects EV losses to improve by $1-$1.5 billion, reflecting continued efforts to optimize its EV manufacturing footprint and control costs.
Meanwhile, Stellantis N.V. (STLA - Free Report) is also focusing on structural cost reductions and manufacturing efficiencies to improve profitability. Under its Value Creation Program (VCP), the automaker is targeting €6 billion in annual cost savings by 2028 compared with its 2025 baseline. In the third quarter of 2026, the program continued to deliver savings, with management expecting fourth-quarter benefits in the mid-hundreds of millions of euros, approximately double the third-quarter level. Stellantis is also optimizing its manufacturing footprint and production capacity to reduce underutilized facilities and improve operating efficiency.
The Zacks Rundown for Ford
Shares of F have plunged 6.1% in a year compared with its industry’s 1.9% decline.
Ford is currently trading at a forward 12-month price-to-sales of 0.28X, lower than the industry’s average of 3.57X. It carries a Value Score of A.
The Zacks Consensus Estimate for F for 2026 earnings implies year-over-year growth of 74.3%.
The consensus estimate for EPS for fiscal 2026 has moved northward over the past 60 days.
F currently carries a Zacks Rank of #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here