Ford Motor Company (F) saw its stock slip 0.3% to $14.77 on Monday, underperforming the broader market as the S&P 500 rose 1.7%. The decline was driven by regulatory uncertainty surrounding the company's imported Lincoln Nautilus SUV, which is built in China and subject to upcoming connected-car software restrictions.
Regulatory Hurdles
Ford is seeking approval from the U.S. Commerce Department to continue importing the China-made Lincoln Nautilus. The vehicle's software, while developed by Ford in the U.S., is loaded in China. Under new U.S. rules, a vehicle is considered "connected" if its software collects data, runs digital features, or connects to networks. The ban on China-origin software is set to take effect with 2027 model-year vehicles, with hardware phased out by 2030. Any delays in obtaining licenses, changes in production locations, or supply chain shifts could pressure margins or reduce vehicle availability.
Earnings Preview
Ford is scheduled to report its second-quarter earnings on July 29. The company has maintained its guidance from April, which includes adjusted EBIT of $8.5 billion to $10.5 billion for 2024. In the first quarter, Ford reported revenue of $43.3 billion, net income of $2.5 billion, and adjusted EBIT of $3.5 billion. CEO Jim Farley highlighted the momentum of the Ford+ plan in the first-quarter results.
Supply Chain and Cost Pressures
The company faces multiple headwinds in 2026, including approximately $2 billion in commodity headwinds and $1 billion in tariffs. Ford Model e, its electric vehicle unit, is forecast to lose between $4.0 billion and $4.5 billion. The company expects a net $1 billion benefit from the recovery of aluminum production at Novelis's Oswego, New York plant, which is critical for the F-150. Free cash flow is projected between $5.0 billion and $6.0 billion. Risks include lower-than-expected aluminum recovery, higher warranty costs, increased tariffs, or larger EV losses.
Market Context
Ford shares lagged behind competitors, with General Motors (GM) rising 3.2% and Tesla (TSLA) gaining 1.2%. Analysts tracked by MarketBeat have a consensus rating of Hold on Ford, with 10 holds, 5 buys, and 1 sell. The average price target stands at $14.63, slightly below the current trading price.
Investors will be closely watching Ford's Q2 earnings for updates on aluminum supply, tariff impacts, EV losses, and any developments regarding the connected-car software regulations that could affect the Lincoln Nautilus imports.
