Piper Sandler named Ford its “favorite idea in 2026” on Monday, citing lower losses in the automaker’s EV unit, reduced spending on regulatory credits, and lower structural costs following recent write-downs.
Warranty Costs
Potter highlighted Ford‘s persistent warranty expenses, which have exceeded those of rival GM over the years.
“It’s no secret that Ford has a reputation for poor quality,” Potter wrote.
However, he noted that improvement on this front “seems possible” in 2026, potentially generating up to $2.8 billion in incremental EBIT and a year-over-year EPS tailwind of $0.54.
“If it materializes, this earnings boost would complement strong trends in Ford Pro, which is Ford‘s highest-margin segment,” Potter added.
Ford’s quality challenges remain evident in recall data.
The Detroit automaker issued its first recall of the year last week after leading all automakers in 2025 with 153 notices, compared to just 24 from second-place Honda.
Analyst Alexander Potter reiterated an Overweight rating and $16.00 price target on Ford, implying 18% upside potential based on Friday’s closing price.
Ford shares have gained 3% year to date and 31% over the past twelve months.
EV Unit
Potter expects Ford‘s EV losses to improve year-over-year following the company’s December announcement of $19.5 billion in charges on electric-vehicle investments.
The write-down includes approximately $8.5 billion tied to scrapping several future EV models, including a planned large pickup truck, along with $6 billion from a joint-venture battery operation with South Korea’s SK On.
In October, during Ford’s latest earnings conference call, Ford reported that the model e unit was at a $3.6 billion loss for the first nine months of the year.
“Ford Model e delivered both revenue and volume growth driven by new product introductions in Europe,” the company’s CFO Sherry House said. “EBIT losses increased due to lower net pricing and an increase in spending on our next generation vehicles.”
Of those $3.6 billion, House said a vast majority was related to the first gen EV models of the Detroit automaker.
“Roughly 3 billion of this, is from our first generation products: Mach-E, Lightning, Puma, Explorer, and Capri,” the CFO stated. “The balance is investment in our next generation vehicles, including our UEV platform.”
House warned back then of the difficulties in the industry to improve fixed cost leverage.
“Given current industry trends, it’s clear scaling fixed costs is a challenge for most of the industry,” the finance chief stated. “You can see this in the multitude of recent program cancellations and charges globally.”
Separately, Barclays analyst Dan Levy last week raised his price target on Ford to $13 from $12 while maintaining an Equalweight rating.
