Ford Motor's (F) Q2 results show that losses in its electric vehicle business are likely to improve, showing potential to "dramatically" boost earnings before interest and taxes by 2029, RBC Capital Markets said in a Tuesday note.

The auto maker raised its 2026 outlook for earnings before interest and taxes for the Model E segment by $250 million, implying that underlying profitability of the segment is improving by $1.8 billion, or 40%, RBC analysts said. They noted that the electric vehicle segment, which the company sees moving to profitability in 2029, and battery energy storage systems business are critical to Ford's investment thesis.

Software and services are also seen as playing a key role in lifting profit margins to the target of 8% by 2029, with the company stating it now has more than 14 million connected vehicles and total paid subscriptions growing 50% year over year to 1.6 million, according to the note.

If Ford is able to execute on its multi-year plan, it would become a "unique turnaround story" in the automobile sector, RBC said.

RBC maintained the company's stock rating at sector-perform and raised the price target to $15 from $13.

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