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The Legacy Automaker Trap: Why Ford's $5 Billion EV Loss Is Just the Beginning | Taha Abbasi
Taha Abbasi··4 min read
The Structural Problem Legacy Automakers Cannot Escape
Taha Abbasi dives deep into the fundamental challenge facing legacy automakers like Ford as they attempt to transition to electric vehicles. Ford’s devastating Q4 2025 earnings — the worst quarterly loss since the 2008 financial crisis — is not an anomaly. It is a preview of what every traditional automaker faces when they try to transform a century-old business model while competing against purpose-built EV companies.
The core issue is not technology. Ford can build excellent electric vehicles — the Mustang Mach-E and F-150 Lightning prove that. The issue is structural: legacy automakers carry the weight of dealer networks, union contracts, ICE manufacturing capacity, and organizational cultures designed for a different era. These assets were competitive advantages in the gasoline age. In the electric age, they are anchors.
The Economics of Dual Production
Running parallel ICE and EV production lines is enormously expensive. Every factory needs to be retooled. Every supply chain needs to be duplicated. Every engineering team needs to be split between maintaining existing products and developing new ones. Taha Abbasi compares this to the challenge of rebuilding a ship while sailing it — theoretically possible, but vastly more difficult and expensive than building a new ship from scratch.
Tesla never had this problem. When Tesla built Giga Texas and Giga Berlin, it designed them from the ground up for electric vehicle production, incorporating innovations like the gigacast process that reduces body assembly from hundreds of parts to a handful of large castings. Ford, by contrast, is retrofitting factories designed for internal combustion engines — a process that costs billions and delivers suboptimal results.
The Dealer Network Dilemma
Perhaps the most underappreciated structural challenge is the dealer network. Tesla sells directly to consumers, controlling the entire purchasing experience and capturing retail margins. Legacy automakers like Ford must sell through independent dealers who add cost, inconsistency, and often resistance to the EV transition. Many Ford dealers have been reluctant to invest in the charging infrastructure and training needed to sell EVs effectively.
Taha Abbasi sees the dealer model as the legacy auto industry’s biggest liability. In a world where cars receive over-the-air updates, service needs are dramatically reduced, and the buying experience is increasingly online, the traditional dealership adds friction and cost without proportional value. But unwinding century-old franchise agreements is legally and politically complex — another anchor that pure EV manufacturers simply do not carry.
What Success Would Look Like
For Ford to successfully navigate the EV transition, Taha Abbasi believes the company would need to make several bold moves: spin off the EV division completely, allowing it to operate with startup-like speed and independence. Invest aggressively in battery manufacturing and software capabilities. Renegotiate or restructure dealer relationships for direct-to-consumer sales. And most importantly, accept that the transition will be painful and expensive before it becomes profitable.
General Motors faced a similar reckoning during the 2009 bankruptcy and emerged as a leaner, more focused company. Ford may need a similarly dramatic restructuring to compete effectively in the electric era. The alternative — slow-walking the transition while bleeding cash on dual production — is a path to irrelevance.
The Investor Perspective
For investors, Ford’s Q4 results should prompt serious questions about the company’s EV strategy timeline and capital requirements. Taha Abbasi recommends examining not just the headline losses but the trajectory: Are EV unit economics improving? Is manufacturing efficiency increasing? Is software capability advancing? If the answers are no, then the losses are not investments in a future return — they are a structural drain that will persist indefinitely.
The legacy automaker trap is real, and escaping it requires conviction, capital, and willingness to cannibalize existing profitable businesses. Ford has the engineering talent and brand equity to succeed, but the window for decisive action narrows every quarter that Tesla and Chinese competitors extend their lead. The clock is ticking, and Q4 2025 should be the alarm that wakes Ford’s leadership to the urgency of the moment.
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About the Author: Taha Abbasi is a technology executive, CTO, and applied frontier tech builder. Read more on Grokpedia | YouTube: The Brown Cowboy | tahaabbasi.com
Taha Abbasi
Engineer by trade. Builder by instinct. Explorer by choice.
