Ford Stock Presents an Opportunity—Until These Problems Get Fixed

Ford Motor Company offers several tempting reasons for investors to consider adding shares to their portfolio. The stock trades at a compelling price-to-earnings ratio of just 11, making it attractive on valuation grounds. The company’s dividend yield of nearly 4.5%, supplemented by special dividends when cash flow permits, appeals to income-focused investors. Additionally, Ford’s dominance in the profitable full-size truck and SUV segments, combined with the steady revenue generation from its Ford Pro commercial division, demonstrates the strength of its core business. Some forward-looking investors also see long-term potential in Ford’s push toward artificial intelligence and autonomous vehicle technology.

However, Ford investors shouldn’t get ahead of themselves. The company faces two significant hurdles that must be overcome before the stock becomes a truly compelling buy. Until these issues are resolved, investors would be wise to remain cautiously patient.

The Recall Problem That Continues to Escalate

The automotive industry regularly contends with recalls and warranty costs—it’s simply part of the business. But Ford has set itself apart in the worst way possible. In 2024, the company issued 89 recalls. That number seemed substantial at the time, but 2025 shattered that mark with a staggering 153 recalls affecting nearly 13 million vehicles globally. This represents an unfortunate trend: Ford has led the industry in recalls for years, and the consequences are mounting.

These recall surges have directly impacted Ford’s financial performance. During the second quarter of 2024, warranty costs spike dramatically—reaching $800 million above expectations—which caused the automaker to miss Wall Street estimates. Beyond the immediate financial hit, leading the industry in recalls year after year damages brand perception and makes it significantly harder to win over customers from competitor brands, one of the most expensive and difficult challenges in the loyalty-driven automotive sector.

Current CEO Jim Farley has prioritized quality improvements in recent years, and many of the recall issues trace back to older vehicles in Ford’s global fleet. The chart below illustrates this has been a persistent pattern. Until Ford can meaningfully reverse this trajectory and demonstrate sustained quality improvements, the recall burden will continue to weigh on profitability.

The Electric Vehicle Division’s Massive Losses

Ford’s Model-e division, which handles the company’s electric vehicle strategy, has become a significant drag on overall profitability. In 2024 alone, this division lost over $5 billion—a figure that shocked investors and underscored the challenges facing the EV market broadly.

The context matters here: U.S. automakers initially rushed into electrification after witnessing strong EV adoption in Europe and China. Companies touted multibillion-dollar investments in battery development, infrastructure, and electrified vehicle platforms. But consumer demand didn’t materialize nearly as quickly as executives anticipated, leaving automakers struggling with massive losses on vehicles that consumers weren’t buying at the volumes originally projected.

Ford has taken decisive action to address this problem. The company recorded a substantial $19.5 billion special charge to fundamentally reshape its electrification strategy, pivoting away from an immediate full-EV push toward hybrid vehicles—which in some cases generate higher profit margins than traditional gasoline-powered vehicles. Looking ahead, Ford plans to launch a more affordable midsize electric pickup in 2027 at approximately $30,000 through its new Universal EV Platform. Crucially, Ford expects this vehicle to achieve profitability early in its production cycle, signaling that the worst of the EV losses may be behind the company.

Until Ford demonstrates that this new strategic direction actually delivers profits rather than losses, the EV question mark will remain a reason to hold off on buying the stock.

The Path Forward for Ford Investors

Ford Motor Company has genuine strengths: a solid balance sheet, a meaningful dividend, and intriguing long-term positioning in autonomous and AI-driven vehicles. However, the near-term outlook is complicated by two persistent challenges.

The company must prove it can arrest the rising tide of recalls and warranty costs while demonstrating that its repositioned EV strategy can transition from massive losses to genuine profitability. Until both of these conditions materially improve, investors would be prudent to monitor Ford from the sidelines rather than commit capital at this moment. The opportunity will be more compelling once Ford shows it has truly turned the corner on these critical issues.