Investors often struggle to value legacy automakers like Ford (NYSE: F) using traditional metrics. While the company trades at a low single-digit P/E ratio, this headline number masks a critical divergence within its business. By applying a Sum-of-the-Parts (SOTP) analysis, we can deconstruct Ford into its core components—Ford Blue (ICE), Ford Pro (Commercial), and Ford Model e (EV)—to reveal a valuation picture that suggests the market is significantly discounting its electric potential.
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The automotive sector is undergoing a seismic shift, creating complex valuation challenges for financial analysts. While pure-play electric vehicle companies like Tesla and Rivian are valued on growth potential and technological leadership, legacy automakers such as Ford are a hybrid of a declining, yet cash-generative, internal combustion engine (ICE) business and a high-growth, capital-intensive EV segment. Standard valuation metrics often fail to capture this duality. This report utilizes a sum-of-the-parts (SOTP) framework to dissect Ford's valuation, benchmarking its implied EV segment against its pure-play competitors, based on financial data through fiscal year 2025.
A quantitative review of the financials reveals three distinct operational narratives. Tesla, Inc., the established EV leader, is facing significant headwinds. After posting $97.7 billion in revenue in 2024, its top line contracted by 2.9% to $94.8 billion in 2025. More critically, its operating margin has compressed from a robust 16.8% in 2022 to 4.6% in 2025, with operating income falling from $13.7 billion to just $4.4 billion over the same period.
In contrast, Rivian Automotive, Inc. represents the emerging growth story, albeit with significant cash burn. Its revenue is forecast to grow 8.4% to $5.4 billion in 2025. The most critical inflection point is achieving its first-ever positive gross profit of $144 million in 2025, a stark improvement from a negative gross profit of $3.1 billion in 2022. Despite this, its path to operational profitability remains long, with an operating loss of $3.6 billion for 2025.
Meanwhile, legacy automaker Ford Motor Co presents a concerning picture. Its revenue growth is nearly stagnant, rising just 1.2% to $187.3 billion in 2025. Alarmingly, after posting over $5.2 billion in operating income in 2024, the company suffered a massive operating loss of $9.2 billion in 2025, signaling severe pressures from its EV transition costs and legacy business challenges.
To ascertain the value the market implicitly assigns to Ford's EV division (Ford Model e), we can apply an SOTP analysis. This methodology isolates the distinct business segments and values them separately.
Step 1: Determine Ford's Enterprise Value (EV). The starting point for any SOTP is the total Enterprise Value. This figure, which adjusts market capitalization for total debt and cash, provides a clearer picture of a company's aggregate value. You can analyze the components of a firm's EV using interactive tools on Edwyn.
Step 2: Value the Legacy ICE & Pro Segments. We must make an informed assumption about the revenue contribution of Ford's legacy businesses. For this exercise, let's assume of Ford's $187.3 billion in 2025 revenue, its EV division accounts for $25 billion, with the remaining $162.3 billion coming from its ICE and Pro divisions. Given the low-growth nature of the legacy business, a conservative 0.4x EV/Sales multiple is appropriate. This yields a valuation of $64.9 billion for the non-EV segments ($162.3B * 0.4).
Step 3: Calculate the Implied Value of the EV Segment. By subtracting the value of the legacy business from Ford's total EV, we can derive the implied value of the Model e division. Assuming a hypothetical total EV for Ford of $160 billion, the implied EV for the Model e segment would be $95.1 billion ($160B Total EV - $64.9B Legacy EV).
Step 4: Calculate and Benchmark the Implied Multiple. With an implied EV of $95.1 billion and segment revenue of $25 billion, the market would be assigning an EV/Sales multiple of 3.8x to Ford's EV business ($95.1B / $25B). This multiple can then be benchmarked against competitors. How does a 3.8x multiple compare to the valuation of Tesla or Rivian? This relative analysis, easily performed using the stock pair comparison tool, is the final step in determining if the segment is fairly valued.
The SOTP analysis reveals the market's underlying assumptions about a company's disparate parts. Based on our model, a 3.8x EV/Sales multiple for Ford's EV division seems rich relative to its own growth profile and when compared to the slowing growth of market-leader Tesla. However, it may seem more reasonable compared to emerging players. The precipitous drop in Ford's overall operating income in 2025 suggests the cost of this transition is immense, potentially destroying value in the legacy business faster than it's being created in the EV segment. This framework is not a definitive answer but a powerful tool for analysts to adjust assumptions and stress-test valuations. For a complete walkthrough of how these metrics are calculated, see our valuation report demo.
Incorporate this analytical workflow using Edwyn's institutional-grade toolset:
| Metric | FY2025 | FY2024 | FY2023 |
|---|---|---|---|
| Revenue | $95B | $98B | $97B |
| Operating Income | $4B | $7B | $9B |
| Net Income | $4B | $7B | $15B |
Enterprise Value Bridge
Calculation: Market Cap + Total Debt - Cash & Equivalents
