The change is what Farley calls a “game changer”: the end of the $7,500 consumer incentive from the federal government, something Farley sees cutting U.S. EV sales to 5% of the industry from current levels of roughly 10% to 12%. (JD Power estimated that EVs represented 6.6% of new retail sales in January, suggesting that the overall picture is very close to what Farley predicted.)

On Tuesday, during Ford’s fourth-quarter earnings call, Farley presented the Detroit factory’s confirmation of his predictions: a $4.8 billion operating loss for the Model E electric vehicle unit. CFO Sherry House confirmed that the bleeding doesn’t stop there. The company expects the unit to lose another $4 billion to $4.5 billion in 2026, with a break-even target pushed back to 2029.

“The customer spoke. That’s the punch line,” Farley told investors, confirming his own dire predictions with a balance sheet showing the high cost of a market correction he sees coming. In a sign that Farley is preparing the market well for this moment, Ford’s stock has risen more than 27% in the past six months.

The prophecy was fulfilled

In response to what he calls the consumer’s “duty cycle,” a shorthand for how, where, and for what purpose a vehicle is used is Used by Farley for many yearshe declared an end on Tuesday to the period of building EVs only to meet regulatory targets. “We don’t just build cars to follow Ford,” Farley said.

Instead, the automaker is pivoting to a “high-volume, affordable end of the market,” specifically targeting the $30,000 to $35,000 price range where Farley says EVs “continue to thrive in America” ​​without subsidies. This strategy is in stark contrast to the industry’s past rush to $75,000 electric trucks and SUVs—products that Farley previously noted customers found “interesting” but prohibitively expensive.

The pivot, however, comes with a hefty price tag. Ford expects to record approximately $7 billion in special charges in 2026 and 2027 related to scrapping the old EV strategy and disposing of assets that no longer fit the new road map. In December 2025, Farley announced a $19.5 billion writedown amid the company’s pivot to EVs.

JD Power found in January that “affordability pressure remains significant” in the auto sales space, with the average monthly finance payment reaching $760, up $24 from a year ago. “EV retail sales remain depressed as transaction prices jump through a combination of the elimination of federal credits and reduced incentives from manufacturers.”

Old habits pay the bills

While the EV division is going through this painful restructuring, Ford is relying on its traditional strengths to stay profitable. The company’s commercial division, Ford Pro, delivered $6.8 billion in Ebit for the year, effectively subsidizing power outages.

Farley also highlighted the growing consumer preference for “partial electrification,” a trend he saw early on, noting that Americans “love” hybrids over pure EVs. On the call, he reported that Ford’s off-road performance trims and hybrids now make up more than 20% of the US sales mix, providing “tremendous earning power” to fund the company’s future.

A ‘reset’ environment

The earnings call also highlighted the volatility of the current political landscape, which Farley has previously navigated with calls for consistency. He identified a “partnership with the administration” and a “reset of emission standards” as key factors in 2026. However, trade barriers remain a wild card; the company took an unexpected $1 billion hit in the fourth quarter due to an “unexpected late-year change in tariff credits for auto parts,” further complicating the financial picture.

For Farley, the 2025 results are proof of his caution. The initial EV gold rush is over, replaced by a smaller, more robust market that demands affordability in idealism. As he ended the call: “Customers in their duty cycle are talking.”