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What changed in Ford Motor Company's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ford Motor Company's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+644 added−595 removedSource: 10-K (2025-02-06) vs 10-K (2024-02-07)

Top changes in Ford Motor Company's 2024 10-K

644 paragraphs added · 595 removed · 407 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

77 edited+137 added−48 removed56 unchanged
Biggest changeCalifornia ZEV Requirements. The California vehicle emissions program includes requirements for manufacturers to produce and deliver for sale zero-emission vehicles (“ZEVs”). California’s light-duty vehicle ZEV regulation, which uses a system based on credits that can be banked and carried forward, mandates annual increases in the production and sale of battery-electric, fuel cell, and plug-in hybrid vehicles.
Biggest changeCalifornia’s regulations, which use a system based on credits (whether generated by us or purchased from another manufacturer) that can be banked and carried forward, require annual percentage increases in the production and sale of ZEVs. For light-duty vehicles, in the 2025 model year, CARB regulations require that approximately 22% of a manufacturer’s California light-duty vehicle sales volume be ZEVs.
Risk Factors under “Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations,” in addition to the rates of EV growth, production disruptions, stop ships, supply chain limitations, lower-than-planned market acceptance of our vehicles, and/or other circumstances may cause us to modify product plans or, in some cases, purchase credits in order to comply with emissions standards, fuel economy standards, or ZEV requirements.
Risk Factors under “ Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations,” in addition to the rates of EV growth, production disruptions, stop ships, supply chain limitations, lower-than-planned market acceptance of our vehicles, and/or other circumstances may cause us to modify product plans or, in some cases, purchase credits in order to comply with emissions standards, fuel economy standards, or ZEV requirements.
The reports are available through Ford Credit’s website located at www.ford.com/finance/investor-center and can also be found on the SEC’s website located at www.sec.gov . The foregoing information regarding Ford Credit’s website and its content is for convenience only and not deemed to be incorporated by reference into this Report nor filed with the SEC. 7 Item 1.
The reports are available through Ford Credit’s website located at www.ford.com/finance/investor-center and can also be found on the SEC’s website located at www.sec.gov . The foregoing information regarding Ford Credit’s website and its content is for convenience only and not deemed to be incorporated by reference into this Report nor filed with the SEC. 6 Item 1.
Safety and recall requirements in Brazil, China, India, South Korea, and Gulf Cooperation Council (“GCC”) countries may add substantial costs and complexity to our global recall practice. Brazil has set mandatory fleet safety targets and penalties are applied if these levels are not maintained, while a tax reduction may be available for over-performance.
Business (Continued) Safety and recall requirements in Brazil, China, India, South Korea, and Gulf Cooperation Council (“GCC”) countries may add substantial costs and complexity to our global recall practice. Brazil has set mandatory fleet safety targets and penalties are applied if these levels are not maintained, while a tax reduction may be available for over-performance.
Business (Continued) Elsewhere, there is a mix of regulations and processes based on U.S. and EU standards. Not all countries have adopted appropriate fuel quality standards to accompany the stringent emission standards adopted. This could lead to compliance problems, particularly if OBD or in-use surveillance requirements are implemented. Global Developments.
Elsewhere, there is a mix of regulations and processes based on U.S. and EU standards. Not all countries have adopted appropriate fuel quality standards to accompany the stringent emission standards adopted. This could lead to compliance problems, particularly if OBD or in-use surveillance requirements are implemented. Global Developments.
Some European countries have implemented or are considering other initiatives for reducing CO 2 vehicle emissions, including fiscal measures and CO 2 labeling to address country specific targets associated with the Paris Accord. For example, the United Kingdom, France, Germany, Spain, Portugal, and the Netherlands, among others, have introduced taxation based on CO 2 emissions.
Business (Continued) Some European countries have implemented or are considering other initiatives for reducing CO 2 vehicle emissions, including fiscal measures and CO 2 labeling to address country specific targets associated with the Paris Accord. For example, the United Kingdom, France, Germany, Spain, Portugal, and the Netherlands, among others, have introduced taxation based on CO 2 emissions.
Many countries, in an effort to address air quality and climate change concerns, are adopting previous versions of European or United Nations Economic Commission for Europe (“UN-ECE”) mobile source emission regulations. Some countries have adopted more advanced regulations based on the most recent version of European or U.S. regulations.
Many countries, in an effort to address air quality and climate change concerns, have adopted previous versions of European or United Nations Economic Commission for Europe (“UN-ECE”) mobile source emission regulations. Some countries have adopted more advanced regulations based on the most recent version of European or U.S. regulations.
We verify compliance with regulatory requirements as well as our internal safety standards. To prevent recurrence of workplace injuries, regular updates are provided to Company management on key safety issues, including safety key performance indicators (“KPI”), significant incidents, and high potential near misses.
Business (Continued) We verify compliance with regulatory requirements as well as our internal safety standards. To prevent recurrence of workplace injuries, regular updates are provided to Company management on key safety issues, including safety key performance indicators (“KPI”), significant incidents, and high potential near misses.
For the production of our electric vehicles, we are dependent on the supply of batteries and the raw materials (e.g., lithium, cobalt, nickel, graphite, and manganese) used by our suppliers to produce those batteries. As we increase our production of electric vehicles, we expect our need for such materials to increase significantly.
For the production of our electric vehicles, we are dependent on the supply of batteries and the raw materials (e.g., lithium, cobalt, and nickel) used by our suppliers to produce those batteries. As we increase our production of electric vehicles, we expect our need for such materials to increase significantly.
Any difference between North American and UN-ECE based regulations can add complexity and costs to the development of global platform vehicles, and we continue to support efforts to harmonize regulations to reduce vehicle design complexity while providing a common level of safety performance; we are seeking new opportunities in bilateral negotiations that can potentially contribute to this goal.
Any difference between North American and UN-ECE based regulations can add complexity and costs to the development of global platform vehicles, and we continue to support efforts to harmonize regulations to reduce vehicle design complexity while providing a common level of safety performance; we are seeking new opportunities in bilateral negotiations that can potentially contribute to this goal. 13 Item 1.
We use a mix of annual and real-time surveys designed to understand employee sentiment in areas such as: people leader effectiveness, job satisfaction, DEI, wellbeing, overall satisfaction, strategy and execution, and Ford Operating System behaviors.
We use a mix of annual and real-time surveys designed to understand employee sentiment in areas such as people leader effectiveness, job satisfaction, inclusion, wellbeing, overall satisfaction, strategy and execution, and Ford Operating System behaviors.
Our Board of Directors and Board committees provide important oversight on certain human capital matters, including items discussed at the Executive People Forum. The Compensation, Talent and Culture Committee maintains responsibility to review, discuss, and set strategic direction for various people-related business strategies, including: compensation and benefit programs; leadership succession planning; culture; DEI; and talent development programs.
Our Board of Directors and Board committees provide important oversight on human capital matters, including items discussed at the Executive People Forum. The Compensation, Talent and Culture Committee maintains responsibility to review, discuss, and set strategic direction for various people-related business strategies, including: compensation and benefit programs, leadership succession planning, inclusive culture, and talent development programs.
Ford maintains an Executive People Forum consisting of the CEO and top leadership team that meets monthly with a specific focus on people and organizational topics that will enable and accelerate delivery of our Ford+ plan. Key topic areas include Compensation & Retention; Diversity, Equity, and Inclusion (“DEI”); Organization Design; Talent Planning & Development; and Culture.
Ford maintains an Executive People Forum consisting of the CEO and top leadership team that meets monthly with a specific focus on people and organizational topics that will enable and accelerate delivery of our Ford+ plan. Key topic areas include Compensation & Retention; Organization Design; Talent Planning & Development; and Inclusion and Culture.
Employee Health and Safety Nothing is more important than the health, safety and wellbeing of our employees and we consistently strive to achieve world-class levels of safety through the application of sound policies and best practices. We maintain a robust safety culture designed to reduce workplace injuries, supported by effective communication, reporting, and external benchmarking.
Employee Health and Safety Nothing is more important than the health, safety, and wellbeing of our employees and we consistently strive to achieve world-class levels of safety through the application of sound policies and best practices. We maintain a robust safety culture designed to reduce workplace injuries, supported by effective communication, reporting, and external benchmarking. 14 Item 1.
The introduction of WLTP in Europe started in September 2017 and requires updates to CO 2 labeling, thereby impacting taxes in countries with a CO 2 tax scheme as well as CO 2 fleet regulations for passenger cars and light commercial vehicles. Costs associated with new or incremental testing for WLTP are significant.
The introduction of WLTP in Europe started in September 2017 and requires updates to CO 2 labeling, thereby impacting taxes in countries with a CO 2 tax scheme as well as CO 2 fleet regulations for passenger cars and light commercial vehicles. Costs associated with new or incremental testing for WLTP are significant. 11 Item 1.
EU heavy-duty CO 2 regulations are being finalized and will also limit CO 2 fleet performance, with slightly different requirements. The United Kingdom and Switzerland have introduced similar rules for light-duty vehicles, and the United Kingdom has adopted ZEV mandates as well as CO 2 fleet limits for non-ZEV vehicles starting in 2024.
EU heavy-duty CO 2 regulations are being finalized and will also limit CO 2 fleet performance, with slightly different requirements. The United Kingdom and Switzerland have introduced similar rules for light-duty vehicles, and the United Kingdom has adopted a ZEV mandate as well as CO 2 fleet limits for non-ZEV vehicles starting in 2024.
The National Traffic and Motor Vehicle Safety Act of 1966 (the “Safety Act”) regulates vehicles and vehicle equipment in two primary ways. First, the Safety Act prohibits the sale in the United States of any new vehicle or equipment that does not conform to applicable vehicle safety standards established by NHTSA.
Vehicle Safety U.S. Requirements. The National Traffic and Motor Vehicle Safety Act of 1966 (the “Safety Act”) regulates vehicles and vehicle equipment in two primary ways. First, the Safety Act prohibits the sale in the United States of any new vehicle or equipment that does not conform to applicable vehicle safety standards established by NHTSA.
On December 20, 2023, the Canadian federal government also published light-duty ZEV sales requirements through amendments to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations. The amendments require annual sales percentages starting with 20% for the 2026 model year to 100% by the 2035 model year.
In 2023, the Canadian federal government also published light-duty ZEV sales requirements through amendments to the Passenger Automobile and Light Truck Greenhouse Gas Emission Regulations. The amendments require annual sales percentages starting with 20% for the 2026 model year to 100% by the 2035 model year.
The EU CO 2 requirements are likely to trigger further measures. In addition, delayed vehicle launches and supply shortages, as well as an insufficient charging infrastructure and lower demand for ZEV and low CO 2 emission vehicles as certain electric vehicle incentives are reduced or for other reasons, can trigger compliance risks in all European markets. 11 Item 1.
The EU CO 2 requirements are likely to trigger further measures. In addition, delayed vehicle launches and supply shortages, as well as an insufficient charging infrastructure and lower demand for ZEV and low CO 2 emission vehicles as certain electric vehicle incentives are reduced or eliminated or for other reasons, can trigger compliance risks in all European markets.
A penalty system applies to manufacturers failing to meet the individual CO 2 targets. Pooling agreements between manufacturers to utilize credits are possible under certain conditions, and we have entered into such pooling agreements in order to comply with fuel economy regulations without paying a penalty and to enable other manufacturers to benefit from our positive CO 2 performance.
A penalty system applies to manufacturers failing to meet the individual CO 2 targets. Pooling agreements between manufacturers to utilize credits are possible under certain conditions, and Ford has entered into such pooling agreements in order to comply with fuel economy regulations without paying a penalty and to enable other manufacturers to benefit from our positive CO 2 performance.
Outside of the United States, Europe is Ford Credit’s largest operation. Ford Credit’s European operations are managed primarily through its United Kingdom-based subsidiary, FCE Bank plc (“FCE”). Within Europe, Ford Credit’s largest markets are the United Kingdom and Germany.
Outside of the United States, Europe is Ford Credit’s largest operation. Ford Credit’s European operations are managed primarily through its United Kingdom-based subsidiary, FCE Bank plc (“FCE”), and its Germany-based subsidiary, Ford Bank GmbH (“Ford Bank”). Within Europe, Ford Credit’s largest markets are the United Kingdom and Germany.
Sales, Industry Volume, and Market Share Sales, industry volume, and market share in certain key markets during the past three years were as follows: Sales (a) Industry Volume (b) Market Share (c) (in millions of units) (in millions of units) (as a percentage) 2021 2022 2023 2021 2022 2023 2021 2022 2023 United States 1.9 1.9 2.0 15.4 14.2 16.1 12.4 % 13.1 % 12.4 % China (d) 0.6 0.5 0.5 26.3 23.9 25.1 2.4 2.1 1.8 Canada 0.2 0.2 0.2 1.7 1.6 1.8 14.3 15.2 13.7 United Kingdom 0.2 0.2 0.2 2.0 1.9 2.3 11.8 12.1 10.8 Germany 0.2 0.2 0.2 3.0 3.0 3.2 5.7 5.7 5.1 Türkiye 0.1 0.1 0.1 0.8 0.8 1.3 9.7 10.5 8.9 Italy (e) 0.1 0.1 0.1 1.7 1.5 1.8 6.2 6.4 6.1 France (e) 0.1 0.1 0.1 2.1 2.0 2.3 3.4 3.9 3.9 __________ (a) Represents primarily sales by dealers, sales to the government, and leases to Ford management, and is based, in part, on estimated vehicle registrations; includes medium and heavy trucks.
Business (Continued) Sales, Industry Volume, and Market Share Sales, industry volume, and market share in certain key markets during the past three years were as follows: Sales (a) Industry Volume (b) Market Share (c) (in millions of units) (in millions of units) (as a percentage) 2022 2023 2024 2022 2023 2024 2022 2023 2024 United States 1.9 2.0 2.1 14.2 16.1 16.4 13.1 % 12.4 % 12.6 % China (d) 0.5 0.5 0.4 23.9 25.1 27.1 2.1 1.8 1.6 Canada 0.2 0.2 0.3 1.6 1.8 1.9 15.2 13.7 14.7 United Kingdom 0.2 0.2 0.2 1.9 2.3 2.4 12.1 10.8 9.6 Germany 0.2 0.2 0.2 3.0 3.2 3.2 5.7 5.1 5.0 Türkiye 0.1 0.1 0.1 0.8 1.3 1.3 10.5 8.9 8.8 Italy 0.1 0.1 0.1 1.5 1.8 1.8 6.4 6.1 5.8 Australia (e) 0.1 0.1 0.1 1.1 1.2 1.2 6.2 7.2 8.2 France 0.1 0.1 0.1 2.0 2.3 2.2 3.9 3.9 3.5 __________ (a) Represents primarily sales by dealers, sales to the government, and leases to Ford management, and is based, in part, on estimated vehicle registrations; includes medium and heavy trucks.
The initial target levels get significantly more stringent every five years (2025, 2030, and 2035, after which all new light-duty vehicles must be zero emission), requiring significant investments in propulsion technologies and extensive fleet management to enable low CO 2 emissions for our fleet.
The initial target levels get significantly more stringent every five years (2025, 2030, and 2035), after which all new passenger cars and light commercial vehicles must be zero emission, requiring significant investments in alternative propulsion technologies and extensive fleet management to enable low CO 2 emissions for our fleet.
(d) China includes Taiwan; China market share includes Ford brand and JMC brand vehicles produced and sold by our unconsolidated affiliates. (e) Not previously presented. 5 Item 1. Business (Continued) U.S. Sales by Type The following table shows U.S. sales volume and U.S. wholesales (consisting primarily of vehicles sold to dealerships) segregated by electric, hybrid, and internal combustion vehicles.
(d) China includes Taiwan; China market share includes Ford brand and JMC brand vehicles produced and sold by our unconsolidated affiliates. (e) Not previously presented. U.S. Sales by Type The following table shows U.S. sales volume and U.S. wholesales (consisting primarily of vehicles sold to dealerships) segregated by electric, hybrid, and internal combustion vehicles.
NCAPs use crash tests and other evaluations that are different than what is required by applicable regulations, and use stars to rate vehicle safety, with five stars awarded for the highest rating and one for the lowest. Achieving high NCAP ratings, which may vary by country or region, can add complexity and cost to vehicles.
NCAPs use crash tests and other evaluations that are different and often more stringent than what is required by applicable regulations. Vehicle safety is rated using stars, with five stars awarded for the highest safety rating and one for the lowest. Achieving high NCAP ratings, which may vary by country or region, can add complexity and cost to vehicles.
We are committed to creating an environment where employees and People Leaders care for each other as we deliver Ford+. 15 Item 1. Business (Continued) Employee Sentiment Strategy We gather feedback from our employees through a variety of channels throughout the year.
We are committed to creating an environment where employees and People Leaders care for each other as we deliver Ford+. Employee Sentiment Strategy We gather feedback from our employees through a variety of channels throughout the year.
Testing is expected to continue on an ongoing basis. In addition, plaintiffs’ attorneys are pursuing consumer class action lawsuits based on alleged excessive emissions from cars and trucks, which could, in turn, prompt further investigations by regulators. European GHG Requirements.
Testing is expected to continue on an ongoing basis, with new testing methods continually under development. In addition, plaintiffs’ attorneys are pursuing consumer class action lawsuits based on alleged excessive emissions from cars and trucks, which could, in turn, prompt further investigations by regulators. European GHG Requirements.
Ford offers 10 global Employee Resource Groups (“ERGs”) that represent various dimensions of our employee population, including race, ethnicity, gender, religion, sexual orientation and gender identity, disability, and generation with chapters throughout the world.
Ford offers 10 global Employee Resource Groups (“ERGs”) that represent various dimensions of our employee population, including, race, ethnicity, gender, religion, LGBTQ+, disability, veterans, and generation with chapters throughout the world.
The GSR includes the mandatory introduction of multiple active and passive safety features, including cybersecurity requirements for new vehicle models from 2022 and for all registrations in 2024. EU regulators are focusing on active safety features, such as lane departure warning systems, electronic stability control, and automatic brake assist.
The GSR includes the mandatory introduction of multiple active and passive safety features, including cybersecurity requirements for all registrations, which began in 2024. EU regulators are focusing on active safety features, such as lane departure warning systems, electronic stability control, and automatic brake assist.
A shortage of, or our inability to acquire or find adequate suppliers of, key components or raw materials as a result of disruptions in the supply chain, capacity constraints, limited availability, competition for those items within the automotive industry and other sectors, or otherwise can cause a significant disruption to our production schedule and have a substantial adverse effect on our financial condition or results of operations.
A shortage of, or our inability to acquire or find adequate suppliers of, key components or raw materials as a result of disruptions in the supply chain, import and export bans or tariffs imposed by the U.S. or foreign governments, capacity constraints, limited availability, competition for those items within the automotive industry and other sectors, or otherwise can cause a significant disruption to our production schedule and have a substantial adverse effect on our financial condition or results of operations.
Mexico and most countries in Central America, the Caribbean, and South America are evolving to implement more stringent requirements accepting Europe and U.S. regulations, except Brazil, which has a unique local process called PROCONVE based on U.S. regulations for light-duty vehicles and European regulations for heavy-duty vehicles.
Mexico and most countries in Central America, the Caribbean, and South America continue to evolve and implement more stringent requirements accepting Europe and U.S. regulations, except Brazil, which has a unique local process called PROCONVE based on U.S. regulations for light-duty vehicles and European regulations for heavy-duty vehicles. Other 10 Item 1.
Corporate governance expenses are primarily administrative, delivering benefit on behalf of the global enterprise, that are not allocated to operating segments. These include expenses related to setting and directing global policy, providing oversight and stewardship, and promoting the Company’s interests. INTEREST ON DEBT Interest on Debt consists of interest expense on Company debt excluding Ford Credit.
Corporate governance expenses are primarily administrative, delivering benefit on behalf of the global enterprise, that are not allocated to operating segments. These include expenses related to setting and directing global policy, providing oversight and stewardship, and promoting the Company’s interests.
There is an increasing trend of city access restrictions for internal combustion engine powered vehicles. The access rules being introduced are developed by individual cities based on their specific concerns, resulting in rapid deployment of access rules that differ greatly among cities.
There continues to be an increasing trend of city access restrictions for internal combustion engine powered vehicles. These access rules are developed by individual cities based on their specific concerns, resulting in rapid deployment of access rules that differ greatly among cities.
In Canada, regulatory requirements are currently aligned with U.S. regulations; however, under the Canadian Motor Vehicle Safety Act, the Minister of Transport has broad powers to order manufacturers to submit a notice of defect or non-compliance when the Minister considers it to be in the interest of safety.
In Canada, regulatory requirements are mostly aligned with U.S. regulations; however, under the Canadian Motor Vehicle Safety Act, the Minister of Transport has broad powers to order manufacturers to submit a notice of defect or non-compliance when the Minister considers it to be in the interest of safety. In 2021, Canada started preliminary consultations on several new proposed regulations.
Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”) have established motor vehicle tailpipe and evaporative emissions standards that become increasingly stringent over time. In addition to regulating emissions of certain pollutants for which EPA has adopted ambient health-based standards, EPA and CARB also regulate greenhouse gas (“GHG”) emissions from vehicles.
Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”) have motor vehicle tailpipe and evaporative emissions standards that become increasingly stringent over time. In addition to regulating emissions of certain pollutants—known as “criteria pollutants”—for which EPA has adopted ambient health-based standards (e.g., oxides of nitrogen), EPA and CARB also regulate greenhouse gases (“GHGs”) from vehicles (e.g., carbon dioxide).
Manufacturers are subject to civil penalties if they fail to meet the CAFE standard in any model year, after taking into account all available credits for the preceding five model years and expected credits for the three succeeding model years.
Manufacturers are subject to pre-determined civil penalties if they fail to meet fuel economy standards in any model year, after taking into account all available credits for the preceding five model years and expected credits for the three succeeding model years. Alignment and Misalignment of Standards.
Both provinces have also started developing heavy-duty ZEV mandates based on CARB’s standards. Compliance with ZEV requirements depends heavily on market conditions that promote consumer preference for EVs, such as technology readiness, purchase incentives, and affordability, as well as the availability and reliability of adequate infrastructure to support vehicle charging.
Compliance with ZEV and emissions requirements depends heavily on market conditions that promote consumer preference for EVs, such as technology readiness, purchase incentives, and affordability, as well as the availability and reliability of adequate infrastructure to support vehicle charging.
In 2023, the EU adopted the Carbon Border Adjustment Mechanism (“CBAM”), which will subject certain imported materials (such as iron, steel, and aluminum) to a carbon levy linked to the carbon price payable on domestic goods under the European Trading Scheme.
Companies that fail to comply with these requirements could face significant monetary penalties and suffer reputational harm. In 2023, the EU adopted the Carbon Border Adjustment Mechanism (“CBAM”), which will subject certain imported materials (such as iron, steel, and aluminum) to a carbon levy linked to the carbon price payable on domestic goods under the European Trading Scheme.
During this time, Ford reached an agreement with California on a set of terms for an alternative framework in which Ford committed to meet a designated set of standards on a national basis for model years 2021 through 2026 that were more stringent than the then-rolled back federal standards in lieu of the California regulatory program.
To manage the uncertainty from the 2019 waiver rescission, pending legal challenges, and other considerations, Ford reached an agreement with California and opt-in states on a set of terms for an alternative framework in which Ford committed to meet a designated set of GHG standards on a national basis for the 2021 through 2026 model years that were more stringent than the then-rolled back federal standards in lieu of the California regulatory program.
Should we or NHTSA determine that either a safety defect or noncompliance issue exists with respect to any of our vehicles, the cost of such recall campaigns could be substantial. European Requirements.
A manufacturer is obligated to recall vehicles if it or NHTSA determines the vehicles contain a non-compliance or a defect resulting in an unreasonable risk to safety. Should we or NHTSA determine that either a safety defect or noncompliance issue exists with respect to any of our vehicles, the cost of such recall campaigns could be substantial. European Requirements.
Stringent federal or state agency fuel economy and GHG standards that are misaligned with market conditions could also force Ford to take various actions that could have substantial adverse effects on its sales volumes and operations.
Stringent requirements that are misaligned with market conditions could force Ford to take various product-led actions that could have substantial adverse effects on its sales volumes and operations.
In 2021, Canada started preliminary consultations on several new proposed regulations, including Administrative Monetary Penalties (“AMPs”) and Analysis of Technical Information for Vehicles and Equipment (“ACTIVE”) regulations. Final regulations for AMPs took effect in October 2023. Draft regulations for ACTIVE are expected to be released in 2024 and will likely contain some reporting requirements that are unique to Canada.
Final regulations for Administrative Monetary Penalties took effect in 2023. Draft regulations for Analysis of Technical Information for Vehicles and Equipment are expected to be released in 2025 and will likely contain some reporting requirements that are unique to Canada.
In addition, new requirements for tailpipe and non-tailpipe emissions will be included in the upcoming Euro 7 regulation.
In addition, new requirements for tailpipe and non-tailpipe emissions will be included in the upcoming Euro 7 regulation and will be phased in beginning in November 2026 for new vehicle types and for all vehicles in November 2027.
The EU Commission is investigating the introduction of Real Driving CO 2 and Life Cycle Assessment elements, and heavy-duty vehicles are addressed in separate regulations with analogous requirements and challenges.
The EU Commission has introduced mandatory requirements for national authorities to conduct in-service verification testing on vehicles to measure their actual CO 2 emissions in the field. It is also investigating the introduction of Real Driving CO 2 and Life Cycle Assessment elements, and heavy-duty vehicles are addressed in separate regulations with analogous requirements and challenges.
Operational Risks Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to acquire key components or raw materials, such as lithium, cobalt, nickel, graphite, and manganese, can disrupt Ford’s production of vehicles.
Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to timely acquire key components or raw materials can disrupt Ford’s production of vehicles. Our products contain components that we source globally from suppliers who, in turn, source components from their suppliers.
Such actions could include restricting offerings of selected engines and popular options; taking actions to increase sales of Ford’s most fuel-efficient vehicles; and ultimately curtailing the production and sale of certain internal combustion vehicles, such as high-performance cars, utility vehicles, and/or full-size light trucks in order to maintain compliance.
Such actions could include: restricting offerings of certain products and popular options; taking actions to increase sales of Ford’s lowest-emitting and most fuel-efficient vehicles; and curtailing the production and sale of certain internal combustion vehicles.
E-Call became mandatory in the UAE for new vehicles starting with the 2021 model year, and, following an update to its next generation e-Call regulations, will be required in Saudi Arabia beginning with the 2027 model year. 13 Item 1. Business (Continued) New Car Assessment Programs.
E-Call is mandatory in the UAE for new vehicles, and, following an update to its next generation e-Call regulations, will be required in Saudi Arabia beginning with the 2027 model year. New Car Assessment Programs. Organizations around the world rate and compare motor vehicles in NCAPs to provide consumers and businesses with additional information about the safety of new vehicles.
Our leadership strategy equips our leaders with the capabilities to deliver business results and grow the talent needed to meet our organizational needs. Employee Wellbeing Initiatives Our global, holistic approach to wellbeing encompasses the financial, social, mental/emotional, physical, and professional needs of our employees.
Our leadership strategy equips our leaders with the capabilities to deliver business results and grow the talent needed to meet our organizational needs. Competitive Benefit Programs We provide employees with a competitive, comprehensive, and flexible set of benefits and resources to support their financial, social, mental/emotional, physical, and professional health.
We have listed below the material risk factors applicable to us grouped into the following categories: Operational Risks; Macroeconomic, Market, and Strategic Risks; Financial Risks; and Legal and Regulatory Risks.
At December 31, 2024, approximately 56,500 hourly employees in the United States were represented by the UAW. 16 ITEM 1A. Risk Factors. We have listed below the material risk factors applicable to us grouped into the following categories: Operational Risks; Macroeconomic, Market, and Strategic Risks; Financial Risks; and Legal and Regulatory Risks.
Employment Data The approximate number of individuals employed by us and entities that we consolidated as of December 31 was as follows (in thousands): 2022 2023 United States 84 87 Rest of World 84 85 Company excluding Ford Credit 168 172 Ford Credit 5 5 Total Company 173 177 Substantially all of the hourly employees in our Ford Blue, Ford Model e, and Ford Pro operations are represented by unions and covered by collective bargaining agreements.
Employment Data The approximate number of individuals employed by us and entities that we consolidated as of December 31 was as follows (in thousands): 2023 2024 United States 87 87 Rest of World 84 78 Company excluding Ford Credit 171 165 Ford Credit 6 6 Total Company 177 171 In the United States, approximately 99% of our unionized hourly employees are covered by collective bargaining agreements and represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW” or “United Auto Workers”).
Similarly, environmental rating systems exist in various regions, e.g., Green NCAP in Europe. In China, C-NCAP has a stringent rating structure to decrease the number of five-star ratings. In Southeast Asia, an updated NCAP test and rating protocol is similarly forecast to be effective beginning in 2026, and is expected to put greater emphasis on assessment of driver assistance technologies.
In Southeast Asia and Latin America, an updated NCAP test and rating protocol is similarly forecast to be effective beginning in 2026 and is expected to put greater emphasis on assessment of driver assistance technologies.
Wholesales 2022 2023 2022 2023 Electric Vehicles 61,575 72,608 71,418 99,928 Hybrid Vehicles 106,705 133,743 101,662 146,249 Internal Combustion Vehicles 1,696,184 1,789,561 1,839,265 1,850,448 Total Vehicles 1,864,464 1,995,912 2,012,345 2,096,625 FORD NEXT SEGMENT The Ford Next segment (formerly the Mobility segment) primarily includes expenses and investments for emerging business initiatives aimed at creating value for Ford in vehicle-adjacent market segments. 6 Item 1.
Wholesales 2023 2024 2023 2024 Electric Vehicles 72,608 97,865 99,928 68,990 Hybrid Vehicles 133,743 187,426 146,249 215,735 Internal Combustion Vehicles 1,789,561 1,793,541 1,850,448 1,914,862 Total Vehicles 1,995,912 2,078,832 2,096,625 2,199,587 FORD NEXT SEGMENT In 2024, the Ford Next segment primarily included expenses and investments for emerging business initiatives aimed at creating value for Ford in vehicle-adjacent market segments.
Our diversity statistics include the following as of December 31, 2023: 27.9% of our salaried employees worldwide identify as females; 25.5% of our total salaried and hourly employees in the United States identify as female; and 36.7% of our total salaried and hourly employees in the United States identify as a minority.
Our workforce statistics include the following as of December 31, 2024: 28.0% of our salaried employees worldwide are women; 25.7% of our total salaried and hourly employees in the United States are women; and 36.5% of our total salaried and hourly employees in the United States are underrepresented racial and ethnic groups.
Other countries across Southeast Asia, the Middle East, and Australasia expect to introduce regulations based on EU Stage VI standards in the near term. Canadian criteria emissions regulations are largely aligned with U.S. requirements and are anticipated to remain aligned with the new EPA rules that will be published in 2024 for 2027 model year and beyond. 10 Item 1.
Business (Continued) countries across Southeast Asia, the Middle East, and Australasia expect to introduce regulations based on EU Stage VI standards in the near term. Canadian criteria emissions regulations are largely aligned with U.S. requirements, and Canada accepts U.S. EPA certifications of vehicles and engines prior to their sale in Canada.
The heavy-duty vehicle and engine GHG emissions regulations for the 2021 model year and beyond were published in May 2018 and are in line with U.S. requirements, subject to any change in those requirements. Ford expects that the federal government in Canada will continue to align its standards with the new EPA standards for the 2027 model year and beyond.
EPA rules by reference; however, while currently aligned, model year emission targets are standalone in Canada’s heavy-duty vehicle and engine regulations and, therefore, are not automatically updated with any updates to U.S. law. Ford expects that the federal government in Canada will continue to align its standards with the new EPA standards for the 2027 model year and beyond.
It is also possible that the EU may mandate Member States to maintain these networks to allow for the continued functionality of existing e-Call systems. Other National Requirements. Globally, governments generally have been adopting UN-ECE based regulations with minor variations to address local concerns.
The e-Call systems in existing vehicles may need to be updated as these systems are phased out. It is also possible that the EU may mandate Member States to maintain these networks to allow for the continued functionality of existing e-Call systems. Other National Requirements.
Beginning with the 2012 model year, EPA and NHTSA jointly promulgated harmonized GHG and fuel economy regulations under what came to be known as the “One National Program” (“ONP”) framework, and California agreed that compliance with the federal program would satisfy compliance with its own GHG requirements, thereby avoiding a patchwork of federal and state standards.
Before approximately the 2020 model year, NHTSA and EPA aligned their standards, and California agreed that compliance with the federal program would satisfy compliance with its own GHG requirements, thereby avoiding a patchwork of federal and state standards.
The CBAM could increase our costs of importing such materials and/or limit our ability to import lower cost materials from non-EU countries. Other National GHG and Fuel Economy Requirements. Regional governments across the globe are considering implementing, and in some cases introducing, emissions regulations that align with CAFE standards.
The EU CBAM could increase our costs of importing such materials from 2026 onwards and/or limit our ability to import lower cost materials from non-EU countries. A similar CBAM is expected to be introduced in the United Kingdom in 2027. Other National GHG and Fuel Economy Requirements.
Furthermore, mobile network providers in certain EU Member States have begun shutting down their 2G and 3G networks, which form the basis for e-Call system functionality in existing vehicles. The e-Call systems in existing vehicles may need to be updated as these systems are phased out.
Electric vehicle safety continues to be an active area of regulation in the EU, with UN-ECE Regulation No. 100 establishing safety requirements for EVs and mandating certain testing of electrical powertrains. Furthermore, mobile network providers in certain EU Member States have begun shutting down their 2G and 3G networks, which form the basis for e-Call system functionality in existing vehicles.
Business (Continued) In addition to imposing strict emissions requirements, European regulations are increasingly including other sustainability requirements, such as reporting obligations and supply chain due diligence. While these regulations are applicable in European jurisdictions, they often apply to global corporations and require adjustments in corporate processes, policies, and strategies, which may be costly.
Compliance with regulations like these will require manufacturers to navigate complex data collection, calculation, and reporting processes. In addition to imposing strict emissions requirements, European regulations are increasingly including other sustainability requirements, such as reporting obligations and supply chain due diligence.
In 2023, NHTSA proposed increasingly stringent fuel economy standards for passenger cars and light trucks in model years 2027-2031 and heavy-duty pickup trucks and vans in model years 2030 through 2035.
In 2022, NHTSA promulgated fuel economy standards for the 2024 through 2026 model years. In 2024, NHTSA promulgated fuel economy standards for light-duty vehicles for the 2027 through 2031 model years, as well as standards for heavy-duty pickup trucks and vans for the 2030 through 2035 model years. These recently finalized standards are the subject of ongoing legal challenges.
Other provinces have signaled their interest in light-duty ZEV sales regulations but are waiting to assess the provincial impact of the final federal ZEV regulations. China’s Corporate Average Fuel Consumption and New Energy Vehicle (“NEV”) Credit Administrative Rules contain fuel consumption requirements as well as credit mandates for NEV passenger vehicles, i.e., plug-in hybrids, electric vehicles, or fuel cell vehicles.
For example, China’s Corporate Average Fuel Consumption and New Energy Vehicle (“NEV”) Credits Administrative Rules contain fuel consumption requirements as well as credit mandates for NEV passenger vehicles, i.e., plug-in hybrids, electric vehicles, or fuel cell vehicles. The fuel consumption requirement, which is based on the WLTP, uses a weight-based approach to establish targets, with year-over-year target reductions.
Federal law requires that light-duty vehicles meet minimum corporate average fuel economy (“CAFE”) standards set by the National Highway Traffic Safety Administration (“NHTSA”).
The National Highway Traffic Safety Administration (“NHTSA”) requires that light-duty vehicles meet minimum corporate average fuel economy (“CAFE”) standards, and that certain heavy-duty vehicles meet fuel efficiency standards. For CAFE standards, NHTSA establishes separate standards applicable to three subsets of manufacturers’ products: domestic passenger cars, imported passenger cars, and light-duty trucks.
For example, the Corporate Sustainability Reporting Directive requires companies to disclose how their business model and strategy align with limiting global warming to 1.5°C in line with the Paris Agreement. Companies that fail to comply with these requirements could face significant monetary penalties and suffer reputational harm.
While these regulations are applicable in European jurisdictions, they often apply to global corporations across jurisdictions and require adjustments in corporate processes, policies, and strategies, which may be costly. For example, the Corporate Sustainability Reporting Directive requires companies to disclose the compatibility of their business model and strategy with limiting global warming to 1.5°C in line with the Paris Agreement.
The law requires NHTSA to promulgate and enforce separate CAFE standards applicable to each manufacturer’s fleet of domestic passenger cars, imported passenger cars, and light-duty trucks. 9 Item 1. Business (Continued) Because the vast majority of GHGs emitted by a vehicle are the result of fuel combustion, GHG emissions correspond closely with fuel economy.
Because the vast majority of GHGs emitted by a vehicle are the result of fuel combustion, GHG emissions correspond closely with fuel economy.
As of December 31, 2023, seventeen states (referenced as “opt-in” states) have adopted CARB’s light-duty emissions standards, and nine opt-in states have adopted California’s heavy-duty standards. The list of opt-in states changes over time, based on the legislative and regulatory actions by each individual state.
The list of opt-in states changes over time, based on the legislative, executive, and regulatory actions by each individual state. California Waivers of Clean Air Act Preemption.
Wellbeing is an integral part of our total rewards strategy as we work to address business and employee challenges through a multi-channel approach that provides our diverse populations and global regions flexibility and choice to meet their specific needs. We use data-driven insights gathered through surveys, focus groups, and claims data to understand employee needs and prioritize our wellbeing efforts.
This comprehensive approach is integral to our total rewards strategy, addressing business and employee challenges through a multi-channel approach that provides diverse populations and global regions with flexible options to meet their specific goals. 15 Item 1.
Our safety team also participates in multi-industry benchmarking groups, within and outside the automotive sector, to share safety best practices and collaborate on common health and safety concerns. Our Safety Record Any loss of life or serious injury in the workplace is unacceptable and deeply regretted. Unfortunately, there was one employee fatality incident in 2023.
As a Company, we participate in multi-industry benchmarking groups, within and outside the automotive sector, to share safety best practices and collaborate on common health and safety concerns. In 2024, there were zero employee fatality incidents globally.
Both federal and California regulations also require motor vehicles and motor vehicle engines to be equipped with on-board diagnostic (“OBD”) systems that monitor emission-related systems and components.
EPA and CARB also require: that vehicles and engines are durable enough to meet emissions standards for prescribed amounts of time; that vehicles and engines be equipped with on-board diagnostic (“OBD”) systems that monitor emissions-related systems and components; and that manufacturers offer and honor warranties on certain emissions-related components.
In addition to the ZEV mandates, Quebec is also developing a regulation to ban the sale of light-duty internal combustion engine vehicles as of 2035, which is intended to capture only small manufacturers not already obligated under the ZEV mandate.
In addition to the ZEV mandate, Quebec is also developing a regulation to ban the sale of light-duty internal combustion engine vehicles as of 2035. Regional governments across the globe have adopted or are considering implementing, and in some cases introducing, emissions regulations that align with CAFE standards.
Compliance with automobile emissions standards depends in part on the widespread availability of high-quality and consistent automotive fuels that the vehicles were designed to use. Legislative, regulatory, and judicial developments related to fuel quality at both the national and state levels could affect vehicle manufacturers’ warranty costs as well as their ability to comply with vehicle emissions standards.
Compliance with emissions standards, ZEV requirements, fuel economy standards, OBD requirements, emissions warranty requirements, and related regulations can be challenging and can drive increased product development costs, production costs, higher retail prices, warranty costs, and vehicle recalls. Compliance depends in part on the widespread availability of high-quality and consistent automotive fuels that internal combustion vehicles are designed to use.
Second, the Safety Act requires that defects related to motor vehicle safety be remedied through safety recall campaigns. A manufacturer is obligated to recall vehicles if it or NHTSA determines the vehicles contain a non-compliance or a defect resulting in an unreasonable risk to safety.
Government safety standards require manufacturers to remedy defects related to vehicle safety through safety recall campaigns, and a manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply with a safety standard.
The federal government has also published its intent to develop ZEV sales requirements for heavy-duty vehicles beginning with the 2027 model year. Both Quebec and British Columbia have regulations requiring that 100% of new vehicle sales be ZEVs by 2035, but finalized amendments in 2023 that increase their interim annual targets starting in 2025 and 2026.
The provinces of Quebec and British Columbia have regulations requiring that 100% of new vehicle sales be ZEVs by 2035. Both provinces have also started developing heavy-duty ZEV mandates based on CARB’s standards.
This framework enabled Ford to continue its product planning on a nationwide basis. EPA’s 2021 rule established GHG standards that are more stringent than this California framework agreement. Further, in 2022, EPA reversed the 2019 revocation of California’s authority to set and enforce its own vehicle GHG standards.
This framework enabled Ford to continue its product planning on a nationwide basis. EPA’s emissions standards for GHGs, as finalized in 2021 and currently in place through the 2026 model year, get stricter over time and become more stringent than this California framework agreement. Such framework agreements are a possibility for manufacturers to manage similar uncertainty in the future.
The NEV mandate requires that OEMs generate a specific amount of NEV credits each year, with NEV credits of at least 28% and 38% of the annual ICE passenger vehicle production or import volumes required in 2024 and 2025, respectively.
The credit mandates require OEMs to generate a specific amount of NEV credits each year based on a percentage of the OEM’s annual ICE vehicle production or import volume, with the percentage increasing year over year. China also imposes a national standard governing fuel consumption limits for passenger vehicles that are produced and to be sold domestically in China.
In China, new standards regulating Intelligent and Connected Vehicles, vehicle cybersecurity, software updates, and Data Storage System for Automated Driving (“DSSAD”), which are more comprehensive than UN-ECE requirements, are expected to take effect in 2026, and in China, Malaysia, and South Korea, mandatory e-Call requirements are being drafted.
Additionally, new mandatory national standards for intelligent connected vehicles governing vehicle information security, software updates, and autonomous driving data recording systems are currently under development in China and will take effect in January 2026.
The Canadian federal government regulates vehicle GHG emissions under the Canadian Environmental Protection Act. In October 2014, the Canadian federal government published the final changes to the regulation for light-duty vehicles, which maintain alignment with U.S. EPA vehicle GHG standards for the 2017-2025 model years. The revised U.S.
The Canadian federal government regulates vehicle GHG emissions under the Canadian Environmental Protection Act. A majority of the U.S. EPA light-duty vehicle standards are automatically adopted in Canada by reference to the United States Code of Federal Regulations, with a few standalone administrative elements. Similarly, heavy-duty vehicle and engine GHG emissions regulations in Canada also incorporate U.S.
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Item 1. Business (Continued) Wholesales Wholesales consist primarily of vehicles sold to dealerships. For the majority of such sales, we recognize revenue when we ship the vehicles to our dealerships from our manufacturing facilities. See Item 7 for additional discussion of revenue recognition practices.
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As of January 1, 2025, Ford Next is no longer a reportable segment, and those expenses and investments are now reflected in either the reportable segments that benefit from those expenses and investments or Corporate Other. 5 Item 1.
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Wholesales in certain key markets during the past three years were as follows: Wholesales (a) (in thousands of units) 2021 2022 2023 United States 1,716 2,012 2,097 China (b) 649 495 467 Canada 233 258 260 United Kingdom 227 263 243 Germany 152 182 162 Türkiye 72 85 124 Italy (c) 93 107 122 France (c) 77 90 104 Other Markets 723 739 834 Total Company 3,942 4,231 4,413 __________ (a) Wholesale unit volumes include sales of medium and heavy trucks.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGovernment investigations against Ford or Ford Credit could result in fines, penalties, orders, or other resolutions that could have an adverse impact on our financial condition, results of operations, or the operation of our business. Moreover, compliance with governmental standards does not necessarily prevent individual or class action lawsuits, which can entail significant cost and risk.
Biggest changeGovernment investigations against Ford or Ford Credit have resulted in, and may in the future result in, fines, penalties, orders, or other resolutions, through litigation, administrative proceedings, settlement, or otherwise, which have in the past had, and could in the future have, an adverse impact on our financial condition, results of operations, or the operation of our business, including oversight by regulators or a government-appointed monitor.
To claim the retail tax credit, the IRA establishes numerous and complex prerequisites, including that the vehicle must be assembled in North America; the vehicle must be under specified limitations on manufacturer suggested retail price (“MSRP”); purchaser income limitations; starting in 2024, any vehicle that contains “battery components” that were “manufactured or assembled” by a “foreign entity of concern” will be ineligible; and, starting in 2025, any vehicle that contains battery materials that were “extracted, processed, or recycled” by a “foreign entity of concern” will be ineligible.
To claim the retail tax credit, the IRA establishes numerous and complex prerequisites, including that the vehicle must be assembled in North America; the vehicle must be under specified limitations on manufacturer suggested retail price (“MSRP”); purchaser income limitations; any vehicle that contains “battery components” that were “manufactured or assembled” by a “foreign entity of concern” will be ineligible; and, starting in 2025, any vehicle that contains battery materials that were “extracted, processed, or recycled” by a “foreign entity of concern” will be ineligible.
Moreover, regulatory actions seeking to impose significant financial penalties for noncompliance and/or legal actions (including pursuant to laws providing for private rights of action by consumers) could be brought against us in the event of a data compromise, misuse of consumer information, or perceived or actual non-compliance with data protection, privacy, or artificial intelligence requirements.
Moreover, regulatory actions seeking to impose significant financial penalties for noncompliance and/or legal actions (including pursuant to laws providing for private rights of action by consumers) could be brought against us in the event of a data compromise, misuse of consumer information, or perceived or actual non-compliance with data protection, data access, privacy, or artificial intelligence requirements.
Offering vehicles and services that customers want and value can mitigate the risks of increasing price competition and declining demand, but products and services that are perceived to be less desirable (whether in terms of price, quality, styling, safety, overall value, fuel efficiency, or other attributes) can exacerbate these risks.
Offering vehicles and services that customers want and value can mitigate the risks of increasing price competition, price sensitive customers, and declining demand, but products and services that are perceived to be less desirable (whether in terms of price, quality, styling, safety, overall value, fuel efficiency, or other attributes) can exacerbate these risks.
Historically, industry overcapacity has resulted in many manufacturers offering marketing incentives on vehicles in an attempt to maintain and grow market share; these incentives historically have included a combination of subsidized financing or leasing programs, price rebates, and other incentives.
Historically, industry overcapacity has resulted in many manufacturers offering marketing incentives on vehicles in an attempt to maintain and grow market share; these incentives historically have included a combination of subsidized financing or leasing programs, price rebates and reductions, and other incentives.
Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information.
Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, data access, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information.
Moreover, a cybersecurity incident could harm our reputation, cause customers to lose trust in our security measures, and/or subject us to regulatory actions or litigation, which may result in fines, penalties, judgments, or injunctions, and a cybersecurity incident involving us or one of our suppliers could impact our production, internal operations, business strategy, results of operations, financial condition, or our ability to deliver products and services to our customers .
Moreover, a cybersecurity incident could harm our reputation, cause customers to lose trust in our security measures, and/or subject us to regulatory actions or litigation, which may result in fines, penalties, judgments, or injunctions, and a cybersecurity incident involving us or one of our suppliers or service providers could impact our production, internal operations, business strategy, results of operations, financial condition, or our ability to deliver products and services to our customers .
To the extent actual results are less favorable than our assumptions, we may recognize a remeasurement loss in our results, which could be substantial. For additional information regarding our assumptions, see “Critical Accounting Estimates” in Item 7 and Note 17 of the Notes to the Financial Statements. Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition.
To the extent actual results are less favorable than our assumptions, we may recognize a remeasurement loss in our results, which could be substantial. For additional information regarding our assumptions, see “Critical Accounting Estimates” in Item 7 and Note 16 of the Notes to the Financial Statements. Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition.
Legal Proceedings” for a discussion of tax proceedings in Brazil and the potential requirement for us to post collateral. The U.S. Inflation Reduction Act (“IRA”) provides, among other things, financial incentives in the form of tax credits to grow the domestic supply chain and domestic manufacturing base for electric vehicles, plug-in hybrid vehicles (PHEVs), and other “clean” vehicles.
Legal Proceedings” for a discussion of tax proceedings in Brazil and the potential requirement for us to post collateral. The U.S. Inflation Reduction Act (“IRA”) provides, among other things, financial incentives in the form of tax credits to grow the domestic supply chain and domestic manufacturing base for electric vehicles, plug-in hybrid vehicles (“PHEVs”), and other “clean” vehicles.
This risk exposure rises as we continue to develop and produce vehicles with increased connectivity. Moreover, we, our suppliers, and our dealers have been the target of cybersecurity incidents and such threats are continuing and evolving, which may cause cybersecurity incidents to be more difficult to detect for periods of time.
This risk exposure rises as we continue to develop and produce vehicles with increased connectivity. Moreover, we, our suppliers, service providers, and dealers have been the target of cybersecurity incidents and such threats are continuing and evolving, which may cause cybersecurity incidents to be more difficult to detect for periods of time.
We receive economic benefits from national, state, and local governments in various regions of the world in the form of incentives designed to encourage manufacturers to establish, maintain, or increase investment, workforce, or production. These incentives may take various forms, including grants, loan subsidies, or tax abatements or credits.
We receive economic benefits from national, state, and local governments in various regions of the world in the form of incentives designed to encourage manufacturers to establish, maintain, or increase investment, workforce, or production. These incentives may take various forms, including grants, forgivable loans and loan subsidies, or tax abatements or credits.
Moreover, the rates of EV growth, production disruptions, stop ships, supply chain limitations, lower-than-planned market acceptance of our vehicles, and/or other circumstances may cause us to modify product plans, or, in some cases, purchase credits, which we have done, in order to comply with emissions standards, fuel economy standards, or ZEV requirements, which could have an adverse effect on our financial condition and results of operations and cause reputational harm.
Moreover, the rates of EV growth, production disruptions, stop ships, supply chain limitations, lower-than-planned market acceptance of our vehicles, and/or other circumstances may cause us to modify product plans, or, in some cases, purchase credits, which we have done, in order to comply with emissions standards, fuel economy standards, or ZEV requirements, which could have an adverse effect on our financial condition and results of operations and cause reputational harm. 29 Item 1A.
We employ capabilities, processes, and other security measures we believe are designed to detect, reduce, and mitigate the risk of cybersecurity incidents, and have requirements for our suppliers to do the same; however, we may not be aware of all vulnerabilities or might not accurately assess the risks of incidents, and such preventative measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks, including potential production disruption or the loss or disclosure of sensitive information.
We employ capabilities, processes, and other security measures we believe are reasonably designed to detect, reduce, and mitigate the risk of cybersecurity incidents, and have requirements for our suppliers and service providers to do the same; however, we may not be aware of all vulnerabilities or might not accurately assess the risks of incidents, and such preventative measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks, including potential production disruption or the loss or disclosure of sensitive information.
In the United States, for example, Ford Credit’s operations are subject to regulation and supervision under various federal, state, and local laws, including the federal Truth-in-Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, and Fair Credit Reporting Act. 29 Item 1A.
In the United States, for example, Ford Credit’s operations are subject to regulation and supervision under various federal, state, and local laws, including the federal Truth-in-Lending Act, Consumer Leasing Act, Equal Credit Opportunity Act, and Fair Credit Reporting Act. 30 Item 1A.
Other parties may object to the positions we have taken and may, in the future, take on environmental, social, or other issues, or in the event we change our position on such issues, which may result in a loss of customers, a boycott of our products or services, or other actions that may impact not only our brand and reputation but also our results of operations, financial condition, and the price of our Common Stock.
Other parties may object to the positions we have or are perceived to have taken and may, in the future, take or be perceived to take on environmental, social, or other issues, or in the event we change our position on such issues, which may result in a loss of customers, a boycott of our products or services, or other actions that may impact not only our brand and reputation but also our results of operations, financial condition, and the price of our Common Stock.
See Note 17 of the Notes to the Financial Statements for more information about these plans. These benefit plans impose significant liabilities on us and could require us to make additional cash contributions, which could impair our liquidity.
See Note 16 of the Notes to the Financial Statements for more information about these plans. These benefit plans impose significant liabilities on us and could require us to make additional cash contributions, which could impair our liquidity.
In the United States, legal and policy debates on environmental regulations are continuing, with a primary trend toward reducing GHG emissions and increasing vehicle electrification. Recently, different federal administrations have either sought to make standards more strict or to make them less strict, with one administration often replacing the regulations enacted by the last.
In the United States, legal and policy debates on environmental regulations are continuing, with a recent primary trend toward reducing GHG emissions and increasing vehicle electrification. However, different federal administrations have either sought to make standards more strict or to make them less strict, with one administration often replacing the regulations enacted by the last.
Such incidents could materially disrupt operational information systems; result in loss or unwilling publication of trade secrets or other proprietary or competitively sensitive information; compromise the privacy of personal information of consumers, employees, or others; jeopardize the security of our facilities; affect the performance of in-vehicle systems or services we offer; and/or impact the safety of our vehicles.
Such incidents could materially disrupt operational information systems; result in loss or unwilling publication of trade secrets or other proprietary or competitively sensitive information; compromise the privacy of personal information of consumers, employees, or others; jeopardize the security of our facilities; disrupt or degrade service or our operations; affect the performance of in-vehicle systems or services we offer; and/or impact the safety of our vehicles.
If demand for electric vehicles grows at a rate greater than our ability to increase our production capacity for those vehicles, lower market share and revenue, as well as facility and other asset-related charges (e.g., accelerated depreciation) associated with the production of internal combustion vehicles, may result.
Despite recent trends, if demand for electric vehicles grows at a rate greater than our ability to increase our production capacity for those vehicles, lower market share and revenue, as well as facility and other asset-related charges (e.g., accelerated depreciation) associated with the production of internal combustion vehicles, may result.
Increased scrutiny of automaker emission compliance by regulators around the world has led to new regulations, more stringent enforcement programs, additional field actions, demands for reporting on the field performance of emissions components and higher scrutiny of field data, and delays in regulatory approvals.
Risk Factors (Continued) Increased scrutiny of automaker emission compliance by regulators around the world has led to new regulations, more stringent enforcement programs, additional field actions, demands for reporting on the field performance of emissions components and higher scrutiny of field data, and delays in regulatory approvals.
Among the factors that can affect the value of returned lease vehicles are the volume and mix of vehicles returned industry-wide, economic conditions, marketing programs, and quality or perceived quality, safety, fuel efficiency, or reliability of the vehicles, or changes in propulsion technology and related legislative changes.
Among the factors that can affect the value of returned lease vehicles are the volume and mix of vehicles returned industrywide, economic conditions, marketing programs, and quality or perceived quality, safety, fuel efficiency, or reliability of the vehicles, or changes in propulsion technology and related legislative changes.
If our cash flows and capital resources are insufficient to meet any pension or OPEB obligations, we could be forced to reduce or delay investments and capital expenditures, suspend dividend payments, seek additional capital, or restructure or refinance our indebtedness. 27 Item 1A.
If our cash flows and capital resources are insufficient to meet any pension or OPEB obligations, we could be forced to reduce or delay investments and capital expenditures, suspend dividend payments, seek additional capital, or restructure or refinance our indebtedness.
Risk Factors (Continued) With increased consumer interconnectedness through the internet, social media, and other media, mere allegations relating to quality, safety, fuel efficiency, sustainability, corporate social responsibility, or other key attributes can negatively impact our reputation or market acceptance of our products or services, even where such allegations prove to be inaccurate or unfounded.
With increased consumer interconnectedness through the internet, social media, and other media, mere allegations relating to quality, safety, reliability, fuel efficiency, sustainability, corporate social responsibility, or other key attributes can negatively impact our reputation or market acceptance of our products or services, even where such allegations prove to be inaccurate or unfounded.
Risk Factors (Continued) Although we continue to invest in our electric vehicle strategy, we have observed lower-than-anticipated industrywide electric vehicle adoption rates and near-term pricing pressures, which has led us and may in the future lead us to adjust our spending, production, and/or product launches to better match the pace of electric vehicle adoption.
Although we continue to invest in our electric vehicle strategy, we have observed lower-than-anticipated industrywide electric vehicle adoption rates and near-term pricing pressures, which have led us, and may in the future lead us, to adjust our spending, production, and/or product launches to better match the pace of electric vehicle adoption.
As a result of the lower-than-anticipated adoption rates, near-term pricing pressures, and other factors, we have accrued and may continue to incur charges, which could be substantial, related to payments to our electric vehicle-related suppliers (battery, raw material, or otherwise), inventory adjustments, or other matters.
As a result of the lower-than-anticipated adoption rates, near-term pricing pressures, and other factors, we have accrued and may continue to incur charges related to payments to our electric vehicle-related suppliers (battery, raw material, or otherwise), inventory adjustments, or other matters.
Because of the interconnectedness of the global economy, the challenges of a pandemic, a financial crisis, economic downturn or recession, natural disaster, war, geopolitical crises, or other significant events in one area of the world can have an immediate and material adverse impact on markets around the world.
Because of the interconnectedness of the global economy, the challenges of a pandemic, financial crisis, economic downturn or recession (including reduced consumer spending), natural disaster, war, geopolitical crises, or other significant events in one area of the world can have an immediate and material adverse impact on markets around the world.
Risk Factors (Continued) Legal and Regulatory Risks Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise.
Legal and Regulatory Risks Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise.
Steps taken by governments to apply or consider applying tariffs on automobiles, parts, and other products and materials have the potential to disrupt existing supply chains, impose additional costs on our business, and could lead to other countries attempting to retaliate by imposing tariffs, which would make our products more expensive for customers, and, in turn, could make our products less competitive.
Steps taken by governments to implement local content requirements or apply or consider applying additional or new tariffs on automobiles, parts, and other products and materials have the potential to disrupt existing supply chains, impose additional costs on our business, and could lead to other countries attempting to retaliate by imposing tariffs, which would make our products more expensive for customers, and, in turn, could make our products less competitive.
Financial Risks Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors.
Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, asset portfolios, or other factors.
Further, higher inventory levels put downward pressure on pricing, which may have an adverse effect on our financial condition and results of operations. 24 Item 1A.
Further, higher inventory levels put downward pressure on pricing, which may have an adverse effect on our financial condition and results of operations.
Upon receipt, we evaluate those claims, and, in certain circumstances, we have made payments to our suppliers, and this trend may continue. 20 Item 1A.
Upon receipt, we evaluate those claims, and, in certain circumstances, we have made payments to our suppliers, and this trend may continue.
Item 1A. Risk Factors (Continued) Unlike our historical arrangements with suppliers, under multi-year offtake agreements and other long-term purchase contracts, the risks associated with lower-than-expected electric vehicle production volumes or changes in battery technology that reduce the need for certain raw materials, batteries, or their components are borne by Ford rather than our suppliers.
Unlike our standard arrangements with suppliers, under multi-year offtake agreements and other long-term purchase contracts, the risks associated with lower-than-expected electric vehicle production volumes or changes in battery technology that reduce the need for certain raw materials, batteries, or their components are borne by Ford rather than our suppliers.
Risk Factors (Continued) Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers.
Item 1A. Risk Factors (Continued) Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford, Ford Credit, their suppliers, and dealers.
We are subject to laws, rules, guidelines from privacy and other regulators, and regulations in the United States and other countries (such as the European Union’s and the U.K.’s General Data Protection Regulations and the California Consumer Privacy Act) relating to the collection, use, cross-border data transfer, and security of personal information of consumers, employees, or others, including laws that may require us to notify regulators and affected individuals of a data security incident.
We are subject to laws, rules, guidelines from privacy and other regulators, and regulations in the United States and other countries (such as the EU’s and the U.K.’s General Data Protection Regulations, the EU’s Data Act, the EU’s Artificial Intelligence Act, the Colorado Artificial Intelligence Act, and the California Consumer Privacy Act) relating to the collection, use, transfer, and security of data and the personal information of consumers, employees, or others, including laws that may require us to notify regulators and affected individuals of a data security incident.
Those factors primarily relate to the cost and effectiveness of available technologies; consumer acceptance of new technologies and their costs; changes in vehicle mix (as described in more detail above under “ Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and its reputation may be harmed if it is unable to achieve the initiatives it has announced ”); the appropriateness (or lack thereof) of certain technologies for use in particular vehicles; the widespread availability (or lack thereof) of supporting infrastructure for new technologies, including charging for electric vehicles; the availability (or lack thereof) of the raw materials and component supply to make affordable batteries and other elements of electric vehicles; and the human, engineering, and financial resources necessary to deploy new technologies across a wide range of products and powertrains in a short time.
Those factors primarily relate to the cost and effectiveness of available technologies; consumer acceptance of new technologies and their costs; changes in industrial policy, including incentives for electric vehicles and battery manufacturing and requirements for battery supply chains; changes in trade policy, which may affect the profitability of certain products; changes in vehicle mix (as described in more detail above under “ Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and Ford’s reputation may be harmed based on positions it takes or if it is unable to achieve the initiatives it has announced ”); the appropriateness (or lack thereof) of certain technologies for use in particular vehicles; the widespread availability (or lack thereof) of supporting infrastructure for new technologies, including charging for electric vehicles; the availability (or lack thereof) of the raw materials and component supply to make affordable batteries and other elements of electric vehicles; and the human, engineering, and financial resources necessary to deploy new technologies across a wide range of products and powertrains in a short time.
For example, if we are unable to differentiate our products and services from those of our competitors, develop innovative new products and services, or sufficiently tailor our products and services to customers in other markets, there could be insufficient demand for our products and services, which could have an adverse impact on our financial condition or results of operations. 22 Item 1A.
For example, if we are unable to differentiate our products and services from those of our competitors in a manner that appeals to customers, develop innovative new products and services, or sufficiently tailor our products and services to customers in other markets, there could be insufficient demand for our products and services, which could have an adverse impact on our financial condition or results of operations.
Further, the degree of success of some of our investment strategies depends upon IRA tax credit eligibility and for those credits to continue to remain available through the currently contemplated expiration. The IRA also authorizes tax credits for purchasers of qualified commercial and retail clean vehicles.
Further, the degree of success of some of our investment strategies depends upon IRA tax credit eligibility and for those credits to continue to remain available through the currently contemplated expiration. 26 Item 1A. Risk Factors (Continued) The IRA also authorizes tax credits for purchasers of qualified commercial and retail clean vehicles.
This may be the case even if the supplier finds another purchaser, as we may be responsible for the costs of finding the new purchaser as well as any lost revenue attributable to the replacement purchaser paying a lower price than required under the pricing mechanism in our agreement.
We have incurred and we may continue to incur such charges. This may be the case even if the supplier finds another purchaser, as we may be responsible for the costs of finding the new purchaser as well as any lost revenue attributable to the replacement purchaser paying a lower price than required under the pricing mechanism in our agreement.
Moreover, new offerings, including those related to electric vehicles and autonomous driving technologies, may present technological challenges that could be costly to implement and overcome and may subject us to customer claims if they do not operate as anticipated.
Moreover, new offerings, including those related to electric vehicles and autonomous driving technologies, may present technological challenges that could be costly to implement and overcome and have subjected us and may continue to subject us to customer claims, government investigations, and recalls of our vehicles if they do not operate as anticipated.
With a global footprint and supply chain, Ford’s results and operations could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events.
Risk Factors (Continued) Macroeconomic, Market, and Strategic Risks With a global footprint and supply chain, Ford’s results and operations could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events.
Macroeconomic, Market, and Strategic Risks Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and its reputation may be harmed if it is unable to achieve the initiatives it has announced.
Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and Ford’s reputation may be harmed based on positions it takes or if it is unable to achieve the initiatives it has announced.
Risk Factors (Continued) The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback.
Financial Risks The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback.
We rely on information technology networks and information systems, including in-vehicle systems and mobile devices, some of which are managed by suppliers, to process, transmit, and store electronic information that is important to the operation of our business, our vehicles, and the services we offer.
We rely on information technology networks and information systems, including in-vehicle systems and mobile devices, some of which are managed by suppliers, some of which are provided by third-party service providers, and some of which ultimately rely on other services provided to these third parties by unaffiliated service providers, to process, transmit, and store electronic information that is important to the operation of our business, our vehicles, and the services we offer.
To the extent we are unable to achieve these initiatives or our transition to electrification is slower than expected, it may harm our reputation or we may not otherwise receive the expected return on the investment.
To the extent we are unable to achieve these initiatives or our plans for our electrification transition do not succeed, it may harm our reputation or we may not otherwise receive the expected return on the investment.
Failure to comply with applicable laws and regulations could subject Ford Credit to regulatory enforcement actions, including consent orders or similar orders where Ford Credit may be required to revise practices, remunerate customers, or pay fines. An enforcement action against Ford Credit could harm Ford Credit’s reputation or lead to further litigation.
Failure to comply with applicable laws and regulations could subject Ford Credit to regulatory enforcement actions, including consent orders or similar orders where Ford Credit may be required to revise practices, remunerate customers, or pay fines.
Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors, particularly for electric vehicles. The global automotive industry is intensely competitive, with installed manufacturing capacity generally exceeding current demand.
Risk Factors (Continued) Ford may face increased price competition for its products and services, including pricing pressure resulting from industry excess capacity, currency fluctuations, competitive actions, or economic or other factors, particularly for electric vehicles. The global automotive industry is intensely competitive, with installed manufacturing capacity generally exceeding current demand.
To the extent interest rates remain relatively high, they may have an adverse effect on borrowing costs for Ford Credit, making it more expensive to fund our operations or leading to higher rates charged to our customers if these costs are passed on. 25 Item 1A.
An increasing interest rate environment may have an adverse effect on borrowing costs for Ford Credit, making it more expensive to fund our operations or leading to higher rates charged to our customers if these costs are passed on. 27 Item 1A.
We spend substantial resources to comply with governmental safety regulations, mobile and stationary source emissions regulations, consumer and automotive financial regulations, and other standards, but we cannot ensure that employees or other individuals affiliated with us will not violate such laws or regulations.
We spend substantial resources to comply with governmental safety regulations, mobile and stationary source emissions regulations, consumer and automotive financial regulations, labor and employment practices, and other standards, but we cannot ensure that employees, contractors, agents, or other individuals affiliated with us will not violate such laws or regulations, which could result in civil or criminal liability.
Litigation also is inherently uncertain, and we have in the past experienced and could in the future experience significant adverse results, including compensatory and punitive damage awards, a disgorgement of profits or revenue, or injunctive relief, any of which could have an adverse effect on our financial condition, results of operations, or our business in general, particularly with larger jury verdicts becoming more prevalent.
Risk Factors (Continued) compensatory and punitive damage awards, a disgorgement of profits or revenue, or injunctive relief, any of which could have an adverse effect on our financial condition, results of operations, or our business in general, particularly with larger jury verdicts becoming more prevalent.
If fuel prices are relatively low and market conditions or the consumer attributes 28 Item 1A. Risk Factors (Continued) of our vehicles do not lead consumers to purchase electric vehicles and other highly fuel-efficient vehicles in sufficient numbers, it may be difficult to meet applicable environmental standards.
If fuel prices are relatively low and market conditions or the consumer attributes of our vehicles do not lead consumers to purchase electric vehicles and other highly fuel-efficient vehicles in sufficient numbers, it may be difficult to meet applicable environmental standards and may constrain our ability to sell internal combustion engine vehicles, including some of the more profitable vehicles in our portfolio.
The impact of these incentives can be significant in a particular market during a reporting period. A decrease in, expiration without renewal of, or other cessation or clawback of government incentives for any of our operations, as a result of administrative decision or otherwise, could have a substantial adverse impact on our financial condition or results of operations.
A decrease in, expiration without renewal of, or other cessation or clawback of government incentives for any of our operations or that impact consumers of our products and services, as a result of administrative decision or otherwise, could have a substantial adverse impact on our financial condition or results of operations.
Ford is addressing its impact on climate change aligned with the United Nations Framework Convention on Climate Change (Paris Agreement) by working to reduce our carbon footprint over time across our vehicles, operations, and supply chain.
Ford is addressing its impact on climate change aligned with the United Nations Framework Convention on Climate Change (Paris Agreement) by working to reduce our carbon footprint over time across our vehicles, operations, and supply chain. We have announced interim emissions targets approved by the Science Based Targets initiative (SBTi) and made other statements about similar initiatives.
Actual proceeds realized by Ford Credit upon the sale of returned leased vehicles at lease termination may be lower than the amount projected, which would reduce Ford Credit’s return on the lease transaction.
In addition, Ford Credit projects expected residual values (including residual value support payments from Ford) and return volumes for the vehicles it leases. Actual proceeds realized by Ford Credit upon the sale of returned leased vehicles at lease termination may be lower than the amount projected, which would reduce Ford Credit’s return on the lease transaction.
If the market for electrified vehicles does not develop at the rate we expect, even if the regulatory framework encourages a rapid adoption of electrified vehicles, there is a negative perception of our vehicles or about electric vehicles in general, we are unable to or are delayed in developing or embracing new technologies or processes, or if consumers prefer our competitors’ vehicles, there could be an adverse impact on our financial condition or results of operations.
This trend may continue, including as a result of the regulatory framework in various markets shifting away from supporting the rapid adoption of electrified vehicles, if there is a negative perception of our vehicles or about electric vehicles in general, if we are unable to or are delayed in developing or embracing new technologies or processes, or if consumers prefer our competitors’ vehicles, and there could be an adverse impact on our financial condition or results of operations.
In certain circumstances, courts may permit civil actions even where our vehicles, services, and financial products comply with federal and/or other applicable law. Furthermore, simply responding to actual or threatened litigation or government investigations of our compliance with regulatory standards, whether related to our products, services, or business or commercial relationships, requires significant expenditures of time and other resources.
Furthermore, simply responding to actual or threatened litigation or government investigations of our compliance with regulatory standards, whether related to our products, services, or business or commercial relationships, requires significant expenditures of time and other resources and may be disruptive to our operations.
Although we ultimately expect the IRA to benefit Ford and the automotive industry in general, the availability of such benefits will depend on the further development and improvement of the U.S. battery supply, sufficient access to raw materials within the scope of the IRA, and the terms of the regulations and guidance (and the limitations therein) the U.S. government issues to implement the IRA, which will ultimately determine which vehicles qualify for incentives and the amount thereof.
To the extent these elements remain in place or are replaced with new laws that provide benefits using comparable eligibility criteria, the availability of such benefits to Ford will depend on the further development and improvement of the U.S. battery supply, sufficient access to raw materials within the scope of the IRA, and the terms of the regulations and guidance (and the limitations therein) the U.S. government issues for such benefits, which will ultimately determine which vehicles qualify for incentives and the amount thereof.
As a result, our margins, results of operations, financial condition, and reputation may be adversely impacted by commitments we make pursuant to offtake agreements and other long-term purchase contracts. Ford’s long-term competitiveness depends on the successful execution of Ford+. We previously announced our plan for growth and value creation – Ford+.
As a result, our margins, results of operations, financial condition, and reputation may be adversely impacted by commitments we make pursuant to offtake agreements and other long-term purchase contracts. 22 Item 1A.
When paired with the IRA’s tax credit for the construction of certain electric vehicle charging infrastructure, Ford expects the commercial clean vehicle credit will influence commercial fleets, governmental fleets, and other vehicle purchasers in their evaluation of a transition from internal combustion engine vehicles to EVs and PHEVs.
In their current form, the IRA’s tax credit and the commercial clean vehicle credit would, together, likely influence commercial fleets, governmental fleets, and other vehicle purchasers in their evaluation of a transition from internal combustion engine vehicles to EVs and PHEVs.
Further, our ability to successfully grow through capacity expansion and investments in the areas of electrification, connectivity, digital and physical services, and software services depends on many factors, including advancements in technology, regulatory changes, infrastructure development (e.g., a widespread vehicle charging network), and other factors that are difficult to predict, that may significantly affect the future of electric vehicles, autonomous technologies, digital and physical services, and software services.
Risk Factors (Continued) including advancements in technology, regulatory changes, infrastructure development (e.g., a widespread vehicle charging network), and other factors that are difficult to predict, that may significantly affect the future of electric vehicles, autonomous and driver assistance technologies, digital and physical services, and software services. The automotive, software, and digital service businesses are very competitive and change rapidly.
In addition, our results are impacted by fluctuations in the market value of our investments, with unrealized gains and losses that could be material in any period.
In addition, our results are impacted by fluctuations in the market value of our investments, with unrealized gains and losses that could be material in any period. 25 Item 1A. Risk Factors (Continued) Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States.
Battery costs remain high, which is detrimental to electric vehicles reaching pricing parity with ICE vehicles and further exacerbates the pricing pressures on electric vehicles.
Significant unexpected changes in the EV demand environment have led, and may in the future lead, to incremental competitive pricing actions. Battery costs remain high, which is detrimental to electric vehicles reaching pricing parity with ICE vehicles and further exacerbates the pricing pressures on electric vehicles.
In the event we do not purchase the materials or components pursuant to the terms of these agreements, we may be obligated to reimburse the supplier for costs it incurs. We have incurred and we may continue to incur such charges.
In the event we do not purchase the materials or components pursuant to the terms of these agreements, we may nevertheless be obligated to pay the purchase price or otherwise compensate the supplier in an amount determined by the contract or reimburse the supplier for costs or losses it incurs.
Credit risk is the possibility of loss from a customer’s or dealer’s failure to make payments according to contract terms. Credit risk (which is heavily dependent upon economic factors including unemployment, consumer debt service burden, personal income growth, dealer profitability, and used car prices) has a significant impact on Ford Credit’s business.
Credit risk (which is heavily dependent upon economic factors including unemployment, consumer debt service burden, personal income growth, dealer profitability, and used car prices) has a significant impact on Ford Credit’s business. The level of credit losses Ford Credit may experience could exceed its expectations and adversely affect its financial condition or results of operations.
Further, the U.S. government, other governments, and international organizations could impose additional sanctions or export controls that could restrict us from doing business directly or indirectly in or with certain countries or parties, which could include affiliates. Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event.
Further, the U.S. government, other governments, and international organizations could impose additional sanctions or export controls that could restrict us from doing business directly or indirectly in or with certain countries or parties, which could include affiliates, and potentially impact the repatriation of earnings.
In addition, since new technologies are subject to market acceptance, a malfunction involving any manufacturer’s autonomous vehicle may negatively impact the perception of autonomous vehicles and autonomous vehicle technologies and erode customer trust. 23 Item 1A. Risk Factors (Continued) Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States.
In addition, since new technologies are subject to market acceptance, a malfunction involving any manufacturer’s vehicle using autonomous or driver assist technologies may negatively impact the perception of such technologies and erode customer trust. 24 Item 1A.
Manufacturers are facing increased scrutiny from regulators at the state and federal level on system misuse by customers, feature capabilities, and whether advertising for this technology contains false or misleading information. Some states are developing their own regulations that impact the testing and design of autonomous vehicles. This patchwork approach without federal guidance may subject Ford to additional compliance costs.
Some states are developing their own regulations that impact the testing and design of autonomous vehicles. This patchwork approach without federal guidance may subject Ford to additional compliance costs.
A “Battery Components Credit” is available for those vehicles that have a specified percentage of “value” of its battery “components” that are “manufactured or assembled” in North America.
A “Battery Components Credit” is available for those vehicles that have a specified percentage of “value” of its battery “components” that are “manufactured or assembled” in North America. Although we ultimately expect the IRA to benefit Ford and the automotive industry in general, this would be the case only insofar as the IRA remains in place in its current form.
Our plans include offering electrified versions of many of our vehicles, including the F-150 Lightning and E-Transit.
Our plans include offering electrified versions of many of our vehicles, including the F-150 Lightning and E-Transit which we introduced in recent years. We have observed lower than initially anticipated industrywide electric vehicle adoption rates.
Because we, like other manufacturers, have a higher proportion of fixed structural costs, relatively small changes in industry sales volume can have a substantial effect on our cash flow and results of operations. Vehicle sales are affected by overall economic and market conditions, consumer behavior, and developing trends such as shared vehicle ownership and ridesharing services.
Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event. Because we, like other manufacturers, have a higher proportion of fixed structural costs, relatively small changes in industry sales volume can have a substantial effect on our cash flow and results of operations.
We have announced interim emissions targets approved by the Science Based Targets initiative (SBTi) and made other statements about similar initiatives, e.g., our expected electric vehicle volumes in future years. Achievement of these initiatives will require significant investments and the implementation of new processes; however, there is no assurance that the desired outcomes will be achieved.
Achievement of these initiatives will require significant investments and the implementation of new processes; however, there is no assurance that the desired outcomes will be achieved.
Accordingly, the eventual implications of higher government deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital for the business. At Ford Credit, rising interest rates may impact Ford Credit’s ability to source funding and offer financing at competitive rates, which could reduce its financing margin.
Elevated interest rates would make government debts more expensive to finance, and in that environment, businesses would face a higher cost of capital, impacting capital intensive businesses such as Ford. At Ford Credit, a high interest rate environment may impact Ford Credit’s ability to source funding and offer financing at competitive rates, which could reduce its financing margin.
Automakers that better optimize eligibility for their vehicles, as compared to their competition, will have a competitive advantage. 26 Item 1A. Risk Factors (Continued) Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles.
Risk Factors (Continued) Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles. Credit risk is the possibility of loss from a customer’s or dealer’s failure to make payments according to contract terms.
Existing and newly developed laws and regulations may contain broad definitions of personal information, are subject to change and uncertain interpretations by courts and regulators, and may be inconsistent from state to state or country to country.
Such laws, rules, and regulations, also apply to our vendors and/or may hold us liable for any violations by our vendors. Existing and newly developed laws and regulations may apply broadly to our operations within the relevant jurisdiction, are subject to change and uncertain interpretations by courts and regulators, and may be inconsistent across jurisdictions.
Upon receipt, we evaluate those claims, and, in certain circumstances, we have made payments to our suppliers, and this trend may continue. Further, interest rates have increased significantly as central banks in developed countries attempt to subdue inflation while government deficits and debt remain at high levels in many global markets.
Further, despite some recent rate cuts, over the last several years interest rates have increased significantly as central banks in developed countries attempt to subdue inflation, and there is no assurance that they will not remain elevated for a multi-year period. At the same time, government deficits and debt remain at high levels in many global markets.
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Ford+ is focused on delivering distinctive and increasingly electric products plus “Always-On” customer relationships and user experiences. Our Ford+ plan is designed to leverage our foundational strengths to build new capabilities – enriching customer experiences and deepening loyalty.
Added
To facilitate access to the raw materials and other components necessary for the production of electric vehicles, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast.
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As we undertake this transformation of our business, we must integrate our strategic initiatives into a cohesive business model, and balance competing priorities, or we will not be successful. To facilitate this transformation, we are making substantial investments, recruiting new talent, and optimizing our business model, management system, and organization.
Added
We have announced plans to significantly increase our electric vehicle production volumes; however, our ability to produce higher volumes of electric vehicles is dependent upon the availability of raw materials and other components necessary for the production of batteries, e.g., lithium, cobalt, and nickel, among others.
Removed
Accordingly, maintaining discipline in our capital allocation continues to be important, as a strong core business and a balance sheet that provides the flexibility to invest in these new growth opportunities is critical to the success of our Ford+ plan.
Added
As described above under “ Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to timely acquire key components or raw materials can disrupt Ford’s production of vehicles ,” to facilitate our access to such raw materials, we have entered into and we may, in the future, enter into offtake agreements and other long-term purchase contracts.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor additional information, see “ Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers ” on page 20. 32
Biggest changeFor a discussion of whether and how cybersecurity incidents, ransomware attacks, and other disruptions to our operational information systems, security systems, vehicles, and services could reasonably be expected to affect the Company, including its business strategy, results of operations or financial condition, see our risk factors above in Item 1A. generally and, in particular, “ Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford, Ford Credit, their suppliers, and dealers ” on page 22. 33
As part of its oversight responsibilities, the Audit Committee receives regular updates on our cybersecurity practices as well as cybersecurity and information technology risks from our Chief Information Security Officer. These regular updates include topics related to cybersecurity practices, cyber risks, and risk management processes, such as updates to our cybersecurity programs and mitigation strategies, and other cybersecurity developments.
As part of its oversight responsibilities, the Audit Committee receives regular updates on our cybersecurity practices as well as cybersecurity and information technology risks from our Chief Information Security Officer. These updates include topics related to cybersecurity practices, cyber risks, and risk management processes, such as updates to our cybersecurity programs and mitigation strategies, and other cybersecurity developments.
In addition to these regular updates, as part of our incident response processes, the Chief Enterprise Technology Officer, in collaboration with the Chief Information Security Officer and General Counsel, provides updates on certain cybersecurity incidents to the Audit Committee and, in some cases, the Board.
In addition to these regular updates, as part of our incident response processes, the Chief Enterprise Technology Officer, in collaboration with the Chief Information Security Officer and Chief Policy Officer and General Counsel, provides updates on certain cybersecurity incidents to the Audit Committee and, in some cases, the Board.
In 2023, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
In 2024, we did not identify any cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition.
The Company’s global cybersecurity incident response is overseen by our Chief Information Security Officer. Our Chief Information Security Officer has served in that role for over 6 years and has over a decade of engineering and operations expertise with cybersecurity technologies and services.
The Company’s global cybersecurity incident response is also overseen by our Chief Information Security Officer. Our Chief Information Security Officer has served in that role for over 7 years and has over a decade of engineering and operations expertise with cybersecurity technologies and services.
All cybersecurity incidents that are identified as reasonably having the potential to be highly significant to the Company are brought to the attention of both the Chief Enterprise Technology Officer and General Counsel by the Chief Information Security Officer as part of our cybersecurity incident response processes.
All cybersecurity incidents that are identified as reasonably having the potential to be highly significant to the Company are brought to the attention of both the Chief Enterprise Technology Officer and Chief Policy Officer and General Counsel by the Chief Information Security Officer as part of our cybersecurity incident response processes. 32 ITEM 1C.
Our ability to monitor the cybersecurity practices of our suppliers is limited and there can be no assurance that we can prevent or mitigate the risk of any compromise or failure in the information systems, software, networks, and other assets owned or controlled by our suppliers.
Our ability to monitor the cybersecurity practices of third parties is limited and there can be no assurance that we can prevent or mitigate the risk of any compromise or failure in the information systems, software, networks, and other assets owned or controlled by each of them.
When we become aware that a supplier’s cybersecurity has been compromised, we attempt to mitigate the risk to the Company, including, if appropriate and feasible, by terminating the supplier’s connection to our information systems.
When we become aware that a supplier or service provider’s cybersecurity has been compromised, we attempt to mitigate the risk to the Company, including, if appropriate and feasible, by terminating the supplier’s connection to our information systems.
We also perform phishing and social engineering simulations with, and provide cybersecurity training for, personnel with Company email and access to Company assets. On a monthly basis, we disseminate security awareness newsletters to employees to highlight emerging or urgent cybersecurity threats and best practices. Externally, we monitor notifications from the U.S.
We also perform phishing and social engineering simulations with, and provide cybersecurity training for, personnel with Company email and access to Company assets, and regularly circulate security awareness newsletters to employees. Externally, we monitor notifications from the U.S.
Cybersecurity risk management is an integral part of our overall enterprise risk management program. As part of its enterprise risk management efforts, the Board meets with senior management, including the executive leadership team, to assess and respond to critical business risks. Critical enterprise risks are assessed by senior management annually and discussed with the Board.
Cybersecurity (Continued) Cybersecurity Governance and Oversight Cybersecurity risk identification, assessment, and management are integrated into our overall enterprise risk management program. As part of its enterprise risk management efforts, the Board meets with senior management, including the executive leadership team, to assess and respond to critical business risks.
Our Chief Information Security Officer reports to our Chief Enterprise Technology Officer who has spent over two decades leading digital and technology organizations at both enterprise software companies and Fortune 50 enterprises. Our Chief Enterprise Technology Officer reports directly to the Chief Executive Officer. 31 ITEM 1C.
Our Chief Information Security Officer reports to our Chief Enterprise Technology Officer who has spent over two decades managing cybersecurity risks as a leader at enterprise software and Fortune 50 companies. Our Chief Enterprise Technology Officer reports directly to our Chief Executive Officer.
Cybersecurity threats have been and continue to be identified as one of the Company’s top risks, with our Chief Enterprise Technology Officer and Chief Information Security Officer assigned as the executive risk owners. The Board has delegated primary responsibility for the oversight of cybersecurity and information technology risks, and the Company’s preparedness for these risks, to the Audit Committee.
As a result of this enterprise risk management process, cybersecurity threats have been and continue to be identified as one of the Company’s critical business risks, with our Chief Enterprise Technology Officer and Chief Information Security Officer assigned as the executive risk owners.
Cybersecurity (Continued) When a cybersecurity threat or incident is identified, our policy is to review and triage the threat or incident, and to then manage it to conclusion in accordance with our cybersecurity incident response processes.
When a cybersecurity threat or incident is identified, our policy is to review and triage the threat or incident, and to then manage it to conclusion in accordance with our cybersecurity incident response processes. When a cybersecurity incident is determined to be significant, it is addressed by management committees using processes that leverage subject-matter expertise from across the Company.
This responsibility includes identifying, considering, and assessing potentially material cybersecurity incidents on an ongoing basis, establishing processes designed to prevent and monitor potential cybersecurity risks, implementing mitigation and remedial measures, and maintaining our cybersecurity program. To do so, our program leverages both internal and external techniques and expertise.
This responsibility includes identifying, considering, and assessing potentially material cybersecurity incidents on an ongoing basis, establishing processes designed to prevent and monitor potential cybersecurity risks, implementing mitigation and remedial measures, and maintaining our cybersecurity program. Our program is informed by and designed to comply with the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF).
These efforts are designed to protect against, and mitigate the effects of, among other things, cybersecurity incidents where unauthorized parties attempt to access confidential, sensitive, or personal information; potentially hold such information for ransom; destroy data; disrupt or degrade service or our operations; sabotage systems; or otherwise cause harm to the Company, our customers, suppliers, or dealers, or other key stakeholders.
We believe our cybersecurity program is reasonably designed to protect our information systems, software, networks, and other assets against, and mitigate the effects of cybersecurity incidents where unauthorized parties attempt, among other things, to disrupt or degrade service or our operations; misuse or abuse technology and information systems; make unauthorized disclosure of data; or otherwise cause harm to the Company, our customers, suppliers, or dealers, or other key stakeholders.
We employ capabilities, processes, and other security measures we believe are designed to reduce and mitigate these risks, and have requirements for our suppliers to do the same. Despite having thorough due diligence, onboarding, and cybersecurity assessment processes in place for our suppliers, the responsibility ultimately rests with our suppliers to establish and uphold their respective cybersecurity programs.
We employ capabilities, processes, and other security measures we believe are reasonably designed to reduce and mitigate these risks, and have requirements for our suppliers and service providers to do the same.
ITEM 1C. Cybersecurity. While no organization can eliminate cybersecurity risk entirely, we devote significant resources to our security program that we believe is reasonably designed to mitigate our cybersecurity and information technology risk. Our efforts focus on protecting and enhancing the security of our information systems, software, networks, and other assets.
ITEM 1C. Cybersecurity. Cybersecurity Strategy and Risk Management We devote significant resources to our security program that we believe is reasonably designed to mitigate our cybersecurity and information technology risk.
Once identified, each of the risks we view as most significant is assigned an executive risk owner who is responsible to oversee risk assessment, develop and implement mitigation plans, and provide regular updates to the Board (and/or Board committee assigned to the risk).
These critical enterprise risks are assessed by senior management annually and discussed with the Board. Then each of the top risks are validated, prioritized, and assigned risk owners who are responsible to oversee risk assessment, develop and implement mitigation plans, and provide regular updates to the Board (and/or Board committee assigned to the risk).
Computer Emergency Readiness Team (“CERT”) and various Information Sharing and Analysis Centers (each an “ISAC”); review customer, media, and third-party cybersecurity reports; and offer bounties to responsible third-parties who notify us of vulnerabilities they are able to detect in our cyber defenses (commonly referred to as a “Bug Bounty”).
Computer Emergency Readiness Team (“CERT”) and various Information Sharing and Analysis Centers (each an “ISAC”); review customer, media, and third-party cybersecurity reports; and operate a bug bounty program. Our cybersecurity program also includes disaster recovery and incident response plans, including a ransomware response plan which is regularly tested and evaluated in tabletop simulations.
Removed
Notwithstanding our efforts to mitigate any such risk, there can be no assurance that the compromise or failure of supplier information systems, technology assets, or cybersecurity programs would not have an adverse effect on the security of the Company’s information systems.
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Despite having thorough due diligence, onboarding, and cybersecurity assessment processes in place for our suppliers and service providers, the responsibility ultimately rests with those parties to establish and maintain their respective cybersecurity programs.
Removed
Internally, among other things, we perform penetration tests, internal tests/code reviews, and simulations using cybersecurity professionals (often referred to as “white hat hackers” or a “Red Team”), to assess vulnerabilities in our information systems and evaluate our cyber defense capabilities.
Added
Our program leverages both internal and external techniques and expertise. Internally, we perform penetration tests, internal tests/code reviews, and red team exercises, among other things, to evaluate aspects of our cybersecurity program.
Removed
Our capabilities, processes, and other security measures also include, without limitation: • Security Information and Event Management (“SIEM”) software, which provides a threat detection, compliance, and security incident management system; • Endpoint Detection and Response (“EDR”) software, which monitors for malicious activities on external-facing endpoints (e.g., Windows workstations, servers, MAC clients, and Linux endpoints); • Cloud monitoring, running on primary public and private cloud environments; and • Disaster recovery and incident response plans, including a ransomware response plan.
Added
Further, we have in the past and may in the future engage with third-party advisors and government and law enforcement agencies as part of our incident management processes.
Removed
We invest in enhancing our cybersecurity capabilities and strengthening our partnerships with appropriate business partners, service partners, and government and law enforcement agencies to understand the range of cybersecurity risks in the operating environment, enhance defenses, and improve resiliency against cybersecurity threats.
Added
In this way, critical business risks, including cybersecurity risk, benefit from both top-down and bottom-up risk management efforts that we believe are reasonably designed to escalate key risk and control issues to senior management and the Board.
Removed
Additionally, we are a member of the Financial Services and Information Technology ISACs and both a founding member and board member of the Automotive ISAC. Our membership with these industry cybersecurity groups assists in our efforts to protect the Company against both enterprise and in-vehicle security risks.
Added
The Chief Enterprise Technology Officer and Chief Information Security Officer monitor the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including through the operation of the Company’s global cybersecurity incident response plans, which include provisions for escalation to the Chief Policy Officer and General Counsel, as well as the Board and its committees, as appropriate.
Removed
When a cybersecurity incident is determined to be significant, it is addressed by management committees using processes that leverage subject-matter expertise from across the Company. Further, we may engage third-party advisors, from time to time, as part of our incident management processes.
Added
As discussed below, the executive risk owners for cybersecurity risk report out to the Audit Committee and, in some cases, the Board, on a regular basis as part of our enterprise risk management process. The Board has delegated primary responsibility for the oversight of cybersecurity and information technology risks, and the Company’s preparedness for these risks, to the Audit Committee.
Removed
However, despite the capabilities, processes, and other security measures we employ that we believe are designed to detect, reduce, and mitigate the risk of cybersecurity incidents, we may not be aware of all vulnerabilities or might not accurately assess the risks of incidents, and such preventative measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks.
Removed
Moreover, we, our suppliers, and our dealers have been the target of cybersecurity incidents and such threats are continuing and evolving, which may cause cybersecurity incidents to be more difficult to detect for periods of time.
Removed
Our networks and in-vehicle systems, sharing similar architectures, could also be impacted by, or a cybersecurity incident may result from, the negligence or misconduct of insiders or third parties who have access to our networks and systems.
Removed
A cybersecurity incident could harm our reputation, cause customers to lose trust in our security measures, and/or subject us to regulatory actions or litigation, which may result in fines, penalties, judgments, or injunctions, and a cybersecurity incident involving us or one of our suppliers could impact our business strategy, results of operations, financial condition, or our reputation.

Item 2. Properties

Properties — owned and leased real estate

13 edited+3 added−7 removed13 unchanged
Biggest changeNanchang Jiangling Investment Co., Ltd. is a 50/50 joint venture between Changan and Jiangling Motors Company Group. The public investors in JMC own 27% of its total outstanding shares. JMC assembles Ford Transit, a series of Ford SUVs, Ford engines, and non-Ford vehicles and engines for distribution in China and in other export markets.
Biggest changeProperties (Continued) • JMC — a publicly-traded company in China with Ford (32% shareholder) and Nanchang Jiangling Investment Co., Ltd. (41% shareholder) as its controlling shareholders. Nanchang Jiangling Investment Co., Ltd. is a 50/50 joint venture between Changan and Jiangling Motors Company Group. The public investors in JMC own 27% of its total outstanding shares.
CAF operates four assembly plants, an engine plant, and a transmission plant in China where it produces and distributes a variety of Ford passenger vehicle models. • Ford Otomotiv Sanayi Anonim Sirketi (“Ford Otosan”) — a joint venture in Türkiye among Ford (41% partner), the Koc Group of Türkiye (41% partner), and public investors (18%) that is the sole supplier to us of the Transit, Transit Custom, and Transit Courier commercial vehicles and the Puma for Europe and the sole distributor of Ford vehicles in Türkiye.
CAF operates four assembly plants, an engine plant, and a transmission plant in China where it produces and distributes a variety of Ford and Lincoln brand passenger vehicle models. • Ford Otomotiv Sanayi Anonim Sirketi (“Ford Otosan”) — a joint venture in Türkiye among Ford (41% partner), the Koc Group of Türkiye (41% partner), and public investors (18%) that is the sole supplier to us of the Transit, Transit Custom, and Transit Courier commercial vehicles and the Puma for Europe and the sole distributor of Ford vehicles in Türkiye.
The majority of the warehouses that we operate are leased, although many of our manufacturing and assembly facilities contain some warehousing space. Substantially all of our sales offices are leased space. Approximately 85% of the total square footage of our testing, prototype, and operations space is owned by us.
The majority of the warehouses that we operate are leased, although many of our manufacturing and assembly facilities contain some warehousing space. Substantially all of our sales offices are leased space. Approximately 80% of the total square footage of our testing, prototype, and operations space is owned by us.
Our facilities are situated in various sections of the country and include assembly plants, engine plants, casting plants, metal stamping plants, transmission plants, and other component plants. Most of our distribution centers are leased (we own approximately 32% of the total square footage and lease the balance).
Our facilities are situated in various sections of the country and include assembly plants, engine plants, casting plants, metal stamping plants, transmission plants, and other component plants. Most of our distribution centers are leased (we own approximately 34% of the total square footage and lease the balance).
(a wholly owned subsidiary of SK On) that will build and operate electric vehicle battery plants in Tennessee and Kentucky to supply batteries to Ford and Ford affiliates. • Changan Ford Automobile Corporation, Ltd. (“CAF”) — a 50/50 joint venture between Ford and Chongqing Changan Automobile Co., Ltd. (“Changan”).
(a wholly owned subsidiary of SK On) that is building and will operate electric vehicle battery plants in Tennessee and Kentucky to supply batteries to Ford and Ford affiliates. • Changan Ford Automobile Corporation, Ltd. (“CAF”) — a 50/50 joint venture between Ford and Chongqing Changan Automobile Co., Ltd. (“Changan”).
We have one significant consolidated joint venture, which is in our Ford Blue segment: • Ford Vietnam Limited — a joint venture between Ford (75% partner) and Diesel Song Cong One Member Limited Liability Company (a subsidiary of the Vietnam Engine and Agricultural Machinery Corporation, which in turn is majority owned (87.43%) by the State of Vietnam represented by the Ministry of Industry and Trade) (25% partner).
We have one consolidated joint venture with manufacturing operations, which is in our Ford Blue segment: • Ford Vietnam Limited — a joint venture between Ford (75% partner) and Diesel Song Cong One Member Limited Liability Company (a subsidiary of the Vietnam Engine and Agricultural Machinery Corporation, which, in turn, is majority owned (87.43%) by the State of Vietnam represented by the Ministry of Industry and Trade) (25% partner).
We and the entities that we consolidated as of December 31, 2023 use over 300 operations facilities globally, including testing and prototype, across 24 countries, and 41 manufacturing and assembly plants, which includes plants that are operated by us or our consolidated joint venture that support our Ford Blue, Ford Model e, and Ford Pro segments.
We and the entities that we consolidated as of December 31, 2024 use over 375 operations facilities globally, including testing and prototype, across 24 countries, and 41 manufacturing and assembly plants, which includes plants that are operated by us or our consolidated joint venture that support our Ford Blue, Ford Model e, and Ford Pro segments.
The jury subsequently awarded punitive damages against Ford in the amount of $1.7 billion. We filed post-trial motions seeking a new trial, and on September 14, 2023, the trial court denied our post-trial motions. On October 13, 2023, Ford filed a notice of appeal with the Georgia Court of Appeals.
The jury subsequently awarded punitive damages against Ford in the amount of $1.7 billion. We filed post-trial motions seeking a new trial, and on September 14, 2023, the trial court denied our post-trial motions.
Along with other vehicle manufacturers, we have been the target of asbestos litigation and, as a result, are a defendant in various actions for injuries claimed to have resulted from alleged exposure to Ford parts and other products containing asbestos.
ASBESTOS MATTERS Asbestos was used in some brakes, clutches, and other automotive components from the early 1900s. Along with other vehicle manufacturers, we have been the target of asbestos litigation and, as a result, are a defendant in various actions for injuries claimed to have resulted from alleged exposure to Ford parts and other products containing asbestos.
We believe that we are targeted more aggressively in asbestos suits because many previously targeted companies have filed for bankruptcy or emerged from bankruptcy relieved of liability for such claims. Most of the asbestos litigation we face involves individuals who claim to have worked on the brakes of our vehicles.
We believe that we are targeted more aggressively in asbestos suits because many previously targeted companies have filed for bankruptcy or emerged from bankruptcy relieved of liability for such claims. 35
The furniture, equipment, and other physical property owned by our Ford Credit operations are not material in relation to the operations’ total assets. ITEM 3. Legal Proceedings. The litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance.
The facilities described above are, in the opinion of management, suitable and adequate for the manufacture and assembly of our and our joint ventures’ products. The furniture, equipment, and other physical property owned by our Ford Credit operations are not material in relation to the operations’ total assets. ITEM 3. Legal Proceedings.
See Note 25 of the Notes to the Financial Statements for a discussion of loss contingencies.
The litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. See Note 24 of the Notes to the Financial Statements for a discussion of loss contingencies.
The joint venture owns three plants, a parts distribution depot, and a research and development center in Türkiye, and a combined vehicle and engine plant in Romania. • JMC — a publicly-traded company in China with Ford (32% shareholder) and Nanchang Jiangling Investment Co., Ltd. (41% shareholder) as its controlling shareholders.
Ford Otosan also manufactures Ford heavy trucks for markets in Europe, the Middle East, and Africa. The joint venture owns three plants, a parts distribution depot, and a research and development center in Türkiye, and a combined vehicle and engine plant in Romania. 34 Item 2.
Removed
Ford Otosan also manufactures Ford heavy trucks for markets in Europe, the Middle East, and Africa.
Added
JMC assembles Ford Transit, Ford Ranger, a series of Ford SUVs, Ford engines, and non-Ford vehicles and engines for distribution in China and, for certain products, other export markets. JMC operates two assembly plants and one engine plant in Nanchang.
Removed
JMC operates two assembly plants and one engine plant in Nanchang. 33 Item 2. Properties (Continued) The facilities described above are, in the opinion of management, suitable and adequate for the manufacture and assembly of our and our joint ventures’ products.
Added
On October 13, 2023, Ford filed a notice of appeal with the Georgia Court of Appeals, and on November 1, 2024, the Georgia Court of Appeals vacated the trial court’s judgment and remanded the matter for a new trial.
Removed
We believe the law supports our position that Ford is entitled to a new trial with the right to present evidence in its defense. ASBESTOS MATTERS Asbestos was used in some brakes, clutches, and other automotive components from the early 1900s.
Added
On November 7, 2024, the plaintiffs filed their notice of intent to petition the Georgia Supreme Court for a writ of certiorari, and on December 19, 2024, the plaintiffs filed their petition with the Georgia Supreme Court. Ford filed its response to the petition on February 5, 2025.
Removed
We are prepared to defend these cases and believe that the scientific evidence confirms our long-standing position that there is no increased risk of asbestos-related disease as a result of exposure to the type of asbestos formerly used in the brakes on our vehicles.
Removed
The extent of our financial exposure to asbestos litigation remains very difficult to estimate and could include both compensatory and punitive damage awards.
Removed
The majority of our asbestos cases do not specify a dollar amount for damages; in many of the other cases the dollar amount specified is the jurisdictional minimum, and the vast majority of these cases involve multiple defendants.
Removed
Some of these cases may also involve multiple plaintiffs, and we may be unable to tell from the pleadings which plaintiffs are making claims against us (as opposed to other defendants). Annual payout and defense costs may become significant in the future. Our accrual for asbestos matters includes probable losses for both asserted and unasserted claims. 34

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

7 edited+11 added−5 removed13 unchanged
Biggest changeRemedies under these statutes may include vehicle repurchase, civil penalties, and payment by Ford of the plaintiff’s attorneys’ fees. In some cases, plaintiffs also include an allegation of fraud. Remedies for a fraud claim may include contract rescission, vehicle repurchase, and punitive damages. The cost of these litigation matters is included in our warranty costs.
Biggest changeRemedies for a fraud claim may include contract rescission, vehicle repurchase, and punitive damages. Annual payout and defense costs may become significant in the future. The cost of these litigation matters is included in our warranty costs.
At this time, we have no such class actions filed against us. OTHER MATTERS Brazilian Tax Matters. One Brazilian state (São Paulo) and the Brazilian federal tax authority currently have outstanding substantial tax assessments against Ford Motor Company Brasil Ltda.
At this time, we have no such class actions filed against us. 36 Item 3. Legal Proceedings (Continued) OTHER MATTERS Brazilian Tax Matters. One Brazilian state (São Paulo) and the Brazilian federal tax authority currently have outstanding substantial tax assessments against Ford Motor Company Brasil Ltda.
Item 3. Legal Proceedings (Continued) CONSUMER MATTERS We provide warranties on the vehicles we sell. Warranties are offered for specific periods of time and/or mileage and vary depending upon the type of product and the geographic location of its sale.
CONSUMER MATTERS We provide warranties on the vehicles we sell. Warranties are offered for specific periods of time and/or mileage and vary depending upon the type of product and the geographic location of its sale.
On March 15, 2022, the European Commission (the “Commission”) and the U.K. Competition and Markets Authority (the “CMA”) conducted unannounced inspections at the premises of, and sent formal requests for information to, several companies and associations active in the automotive sector, including Ford.
Competition and Markets Authority (the “CMA”) conducted unannounced inspections at the premises of, and sent formal requests for information to, several companies and associations active in the automotive sector, including Ford. The inspections and requests for information concern possible collusion in relation to the collection, treatment, and recovery of end-of-life cars and vans (“ELVs”).
Pursuant to these warranties, we will repair, replace, or adjust parts on a vehicle that are defective in factory-supplied materials or workmanship during the specified warranty period. We are a defendant in numerous actions in state and federal courts alleging breach of warranty and claiming damages based on state and federal consumer protection laws.
Pursuant to these warranties, we will repair, replace, or adjust parts on a vehicle that are defective in factory-supplied materials or workmanship during the specified warranty period. Software updates are increasingly a component of vehicle service and may be performed during warranty coverage repairs, through field service actions, or through over-the-air updates.
If a violation is found, a broad range of remedies is potentially available to the Commission and/or CMA, including imposing a fine and/or the prohibition or restriction of certain business practices. Given that this investigation is in its early stages, it is difficult to predict the outcome or what remedies, if any, may be imposed.
If a violation is found, a broad range of remedies is potentially available to the Commission and/or CMA, including imposing a fine and/or the prohibition or restriction of certain business practices. We are continuing to cooperate with the Commission and the CMA. National Highway Traffic Safety Administration Consent Order.
Although the ultimate resolution of these matters may take many years, we consider our overall risk of loss to be remote. 35 Item 3. Legal Proceedings (Continued) Transit Connect Customs Penalty Notice. U.S.
Although the ultimate resolution of these matters may take many years, we consider our overall risk of loss to be remote. European Commission and U.K. Competition and Markets Authority Matter. On March 15, 2022, the European Commission (the “Commission”) and the U.K.
Removed
Customs and Border Protection (“CBP”) ruled in 2013 that Transit Connects imported as passenger wagons and later converted into cargo vans are subject to the 25% duty applicable to cargo vehicles, rather than the 2.5% duty applicable to passenger vehicles. We filed a challenge in the U.S. Court of International Trade (“CIT”), and CIT ruled in our favor in 2017.
Added
Item 3. Legal Proceedings (Continued) Most of the asbestos litigation we face involves individuals who claim to have worked on the brakes of our vehicles.
Removed
CBP subsequently filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit, which ruled in favor of CBP. Following the U.S. Supreme Court’s denial of our petition for a writ of certiorari in 2020, we paid the increased duties for certain prior imports, plus interest, and disclosed that CBP might assert a claim for penalties.
Added
We are prepared to defend these cases and believe that the scientific evidence confirms our long-standing position that there is no increased risk of asbestos-related disease as a result of exposure to the type of asbestos formerly used in the brakes on our vehicles.
Removed
Subsequently, CBP issued a penalty notice to us dated July 22, 2021, and on November 18, 2021, CBP assessed against us a monetary penalty of $1.3 billion and additional duties of $181 million, plus interest. We are vigorously defending our actions and contesting payment of the penalty and the additional duties. European Commission and U.K. Competition and Markets Authority Matter.
Added
The extent of our financial exposure to asbestos litigation remains very difficult to estimate and could include both compensatory and punitive damage awards.
Removed
The inspections and requests for information concern possible collusion in relation to the collection, treatment, and recovery of end-of-life cars and vans (“ELVs”).
Added
The majority of our asbestos cases do not specify a dollar amount for damages; in many of the other cases the dollar amount specified is the jurisdictional minimum, and the vast majority of these cases involve multiple defendants.
Removed
We are cooperating with the Commission and the CMA as they complete their investigations.
Added
Some of these cases may also involve multiple plaintiffs, and we may be unable to tell from the pleadings which plaintiffs are making claims against us (as opposed to other defendants). Annual payout and defense costs may become significant in the future. Our accrual for asbestos matters includes probable losses for both asserted and unasserted claims.
Added
We are a defendant in numerous actions in state and federal courts alleging breach of warranty and claiming damages based on state and federal consumer protection laws. Remedies under these statutes may include vehicle repurchase, civil penalties, and payment by Ford of the plaintiff’s attorneys’ fees. In some cases, plaintiffs also include an allegation of fraud.
Added
On November 13, 2024, Ford entered into a consent order (the “Consent Order”) with the National Highway Traffic Safety Administration (“NHTSA”) to resolve, without an admission of liability, allegations made by NHTSA following its investigation into whether a recall conducted by Ford in 2020 addressing rearview camera performance was timely under NHTSA’s regulations.
Added
The Consent Order includes a $165 million civil penalty, which consists of a $65 million cash payment from Ford, $55 million held in abeyance subject to Ford’s adherence to the terms of the Consent Order, and $45 million that Ford will use to invest in advanced data analytics, a new testing facility, and certain other projects to enhance compliance with NHTSA’s requirements.
Added
In addition, during the term of the Consent Order, Ford has agreed to submit a monthly Safety Evaluation List (“SEL”) to NHTSA and to meet with NHTSA each quarter to review and answer NHTSA’s questions about any of the issues on the SEL.
Added
Further, Ford has hired an independent third party selected by NHTSA to assess the Company’s adherence to the Consent Order and Vehicle Safety Act over the term of the Consent Order and to report on Ford’s progress to NHTSA. Ford has also committed to review prior recalls over the past three years to ensure that all impacted vehicles were captured.
Added
In the event Ford determines that it must add more vehicles to the population, the Company will update the applicable recalls. The term of the Consent Order is three years, and it may be extended for one additional year at NHTSA’s discretion.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−4 removed1 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly-Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2023 through October 31, 2023 — $ — — — November 1, 2023 through November 30, 2023 6,713,291 10.25 6,713,291 44,286,709 December 1, 2023 through December 31, 2023 24,286,709 10.95 24,286,709 20,000,000 (a) Total / Average 31,000,000 $ 10.80 31,000,000 __________ (a) The share repurchase program announced November 20, 2023 authorized repurchases of up to 51 million shares of Ford Common Stock.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly-Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs October 1, 2024 through October 31, 2024 — $ — — 30,270,000 November 1, 2024 through November 30, 2024 13,700,000 10.91 13,700,000 16,570,000 December 1, 2024 through December 31, 2024 — — — 16,570,000 (a) Total / Average 13,700,000 $ 10.91 13,700,000 __________ (a) The share repurchase program announced February 7, 2024 authorized repurchases of up to 53 million shares of Ford Common Stock.
Although we have repurchased 31 million shares and the program was authorized for up to 51 million, we do not intend to make any further purchases under this program because its anti-dilutive purpose has been fulfilled.
Although we have repurchased 36.43 million shares and the program was authorized for up to 53 million, we do not intend to make any further purchases under this program because its anti-dilutive purpose has been fulfilled.
Dividends The table below shows the dividends we paid per share of Common and Class B Stock for each quarterly period in 2022 and 2023: 2022 2023 First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter (a) Second Quarter Third Quarter Fourth Quarter Dividends per share of Ford Common and Class B Stock $ 0.10 $ 0.10 $ 0.15 $ 0.15 $ 0.80 $ 0.15 $ 0.15 $ 0.15 __________ (a) In the first quarter of 2023, in addition to a regular dividend of $0.15 per share, we paid a supplemental dividend of $0.65 per share.
Dividends The table below shows the dividends we paid per share of Common and Class B Stock for each quarterly period in 2023 and 2024: 2023 2024 First Quarter (a) Second Quarter Third Quarter Fourth Quarter First Quarter (a) Second Quarter Third Quarter Fourth Quarter Dividends per share of Ford Common and Class B Stock $ 0.80 $ 0.15 $ 0.15 $ 0.15 $ 0.33 $ 0.15 $ 0.15 $ 0.15 __________ (a) In the first quarter of 2023 and 2024, in addition to a regular dividend of $0.15 per share, we paid a supplemental dividend of $0.65 per share and $0.18 per share, respectively.
On February 6, 2024, we declared a regular dividend of $0.15 per share and a supplemental dividend of $0.18 per share. Subject to legally available funds, we intend to continue to pay a regular quarterly cash dividend on our outstanding Common Stock and Class B Stock.
On February 5, 2025, we declared a regular dividend of $0.15 per share and a supplemental dividend of $0.15 per share. Subject to legally available funds, we intend to continue to pay a regular quarterly cash dividend on our outstanding Common Stock and Class B Stock.
The program authorized repurchases of up to 51 million shares of Ford Common Stock. As shown in the rightmost column of the table below, we do not intend to make any further purchases under this program because its anti-dilutive purpose was fulfilled after purchasing only 31 million shares.
As shown in the rightmost column of the table below, we do not intend to make any further purchases under this program because its anti-dilutive purpose was fulfilled after purchasing only 36.43 million shares.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (Continued) Issuer Purchases of Equity Securities In the fourth quarter of 2023, we completed a modest anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation granted during 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (Continued) Issuer Purchases of Equity Securities In the fourth quarter of 2024, we completed an anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation granted during 2024. The program authorized repurchases of up to 53 million shares of Ford Common Stock.
Removed
In December 2023, our Board of Directors approved a modest anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation expected to be granted during 2024. The program authorizes repurchases of up to 53 million shares of Ford Common Stock.
Removed
The Company may repurchase shares of Common Stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to satisfy the conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.
Removed
The timing and total amount of repurchases of Ford Common Stock under this program will depend upon business, economic, and market conditions, corporate, legal, and regulatory requirements, prevailing stock prices, trading volume, and other considerations. The share repurchase program may be suspended or discontinued at any time, and does not obligate the Company to acquire any amount of Common Stock.
Removed
To the extent the Company elects to make purchases under the share repurchase program, the Company expects to utilize its existing cash and cash equivalents to fund such repurchases.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

149 edited+42 added−25 removed114 unchanged
Biggest changeForward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation: • Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to acquire key components or raw materials, such as lithium, cobalt, nickel, graphite, and manganese, can disrupt Ford’s production of vehicles; • To facilitate access to the raw materials and other components necessary for the production of electric vehicles, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast; • Ford’s long-term competitiveness depends on the successful execution of Ford+; • Ford’s vehicles could be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of our vehicles and services could continue to have an adverse effect on our business; • Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or business strategies; • Ford may not realize the anticipated benefits of restructuring actions and such actions may cause Ford to incur significant charges, disrupt our operations, or harm our reputation; • Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers; • Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, public health issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors; • Failure to develop and deploy secure digital services that appeal to customers could have a negative impact on Ford’s business; • Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints; • Ford’s ability to attract, develop, grow, and reward talent is critical to its success and competitiveness; • Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and its reputation may be harmed if it is unable to achieve the initiatives it has announced; • Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States; • With a global footprint and supply chain, Ford’s results and operations could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events; • Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event; • Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors, particularly for electric vehicles; • Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results; • Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors; • The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback; • Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles; • Economic and demographic experience for pension and OPEB plans (e.g., discount rates or investment returns) could be worse than Ford has assumed; • Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition; • Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise; • Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations; • Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information; and • Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations. 73 Item 7.
Biggest changeForward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation: • Ford’s long-term success depends on delivering the Ford+ plan, including improving cost and competitiveness; • Ford’s vehicles could be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of our vehicles and services and reduce the costs associated therewith could continue to have an adverse effect on our business; • Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to timely acquire key components or raw materials can disrupt Ford’s production of vehicles; • Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, public health issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors; • Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or business strategies or the benefits may take longer than expected to materialize; • Ford may not realize the anticipated benefits of restructuring actions and such actions may cause Ford to incur significant charges, disrupt our operations, or harm our reputation; • Failure to develop and deploy secure digital services that appeal to customers and grow our subscription rates could have a negative impact on Ford’s business; • Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints; • Ford’s ability to attract, develop, grow, support, and reward talent is critical to its success and competitiveness; • Operational information systems, security systems, vehicles, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford, Ford Credit, their suppliers, and dealers; • To facilitate access to the raw materials and other components necessary for the production of electric vehicles, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast; • With a global footprint and supply chain, Ford’s results and operations could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events; • Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and Ford’s reputation may be harmed based on positions it takes or if it is unable to achieve the initiatives it has announced; • Ford may face increased price competition for its products and services, including pricing pressure resulting from industry excess capacity, currency fluctuations, competitive actions, or economic or other factors, particularly for electric vehicles; • Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results; • Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States; • Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event; • The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback; • Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, asset portfolios, or other factors; • Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles; • Economic and demographic experience for pension and OPEB plans (e.g., discount rates or investment returns) could be worse than Ford has assumed; • Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition; • Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise; • Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations; • Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, data access, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information; and • Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations. 73 Item 7.
For a description of these causal factors, see Definitions and Information Regarding Ford Blue, Ford Model e, Ford Pro Causal Factors .
For a description of these causal factors, see Definitions and Information Regarding Ford Blue, Ford Model e, and Ford Pro Causal Factors .
Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, investment-grade corporate securities, investment-grade commercial paper, and debt obligations of a select group of non-U.S. governments, non-U.S. governmental agencies, and supranational institutions. The average maturity of these investments is approximately one year and adjusted based on market conditions and liquidity needs.
Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, investment-grade corporate securities, investment-grade commercial paper, and debt obligations of a select group of non-U.S. governments, non-U.S. governmental agencies, and supranational institutions. The average maturity of these investments is approximately one year and is adjusted based on market conditions and liquidity needs.
Moreover, in order to secure critical materials for production of electric vehicles, we have entered into and we may, in the future, enter into offtake agreements with raw material suppliers and make investments in certain raw material and battery suppliers, including contributing up to a maximum of $6.6 billion in capital to BlueOval SK, LLC over a five-year period ending in 2026.
Moreover, in order to secure critical materials for production of electric vehicles, we have entered into and we may, in the future, enter into offtake agreements with raw material suppliers and make investments in certain raw material and battery suppliers, including contributing up to a maximum of $6.6 billion in capital to BlueOval SK, LLC (“BOSK”) over a five-year period ending in 2026.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Model e Segment 2022 2023 H / (L) Key Metrics Wholesale Units (000) 96 116 20 Revenue ($M) $ 5,253 $ 5,897 $ 644 EBIT ($M) (2,133) (4,701) (2,568) EBIT Margin (%) (40.6) % (79.7) % (39.1) ppts Change in EBIT by Causal Factor (in millions) 2022 Full Year EBIT $ (2,133) Volume / Mix (32) Net Pricing (1,005) Cost (1,765) Exchange 84 Other 150 2023 Full Year EBIT $ (4,701) In 2023, Ford Model e’s wholesales increased 20% from a year ago, primarily reflecting higher production of F-150 Lightning.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Model e Segment 2022 2023 H / (L) Key Metrics Wholesale Units (000) 96 116 20 Revenue ($M) $ 5,253 $ 5,897 $ 644 EBIT ($M) (2,133) (4,701) (2,568) EBIT Margin (%) (40.6) % (79.7) % (39.1) ppts Change in EBIT by Causal Factor (in millions) 2022 Full Year EBIT $ (2,133) Volume / Mix (32) Net Pricing (1,005) Cost (1,765) Exchange 84 Other 150 2023 Full Year EBIT $ (4,701) In 2023, Ford Model e’s wholesales increased 20% from 2022, primarily reflecting higher production of F-150 Lightning.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Changes in Company cash excluding Ford Credit are summarized below (in billions): December 31, 2021 December 31, 2022 December 31, 2023 Company Excluding Ford Credit Company Adjusted EBIT excluding Ford Credit (a) $ 5.3 $ 7.8 $ 9.1 Capital spending $ (6.2) $ (6.5) $ (8.2) Depreciation and tooling amortization 5.1 5.2 5.3 Net spending $ (1.1) $ (1.3) $ (2.9) Receivables $ (0.2) $ (1.0) $ (1.0) Inventory (1.8) (2.5) (1.2) Trade Payables 0.3 3.7 (0.2) Changes in working capital $ (1.7) $ 0.2 $ (2.4) Ford Credit distributions $ 7.5 $ 2.1 $ — Interest on debt and cash taxes (2.3) (1.7) (2.2) All other and timing differences (3.1) 1.9 5.2 Company adjusted free cash flow (a) $ 4.6 $ 9.1 $ 6.8 Restructuring $ (1.9) $ (0.4) $ (0.9) Changes in debt (3.7) (0.4) (0.2) Funded pension contributions (0.8) (0.6) (0.6) Shareholder distributions (0.4) (2.5) (5.3) All other (b) 7.9 (9.5) (3.2) Change in cash $ 5.7 $ (4.3) $ (3.4) __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Changes in Company cash excluding Ford Credit are summarized below (in billions): December 31, 2022 December 31, 2023 December 31, 2024 Company Excluding Ford Credit Company adjusted EBIT excluding Ford Credit (a) $ 7.8 $ 9.1 $ 8.6 Capital spending $ (6.5) $ (8.2) $ (8.6) Depreciation and tooling amortization 5.2 5.3 5.0 Net spending $ (1.3) $ (2.9) $ (3.6) Receivables $ (1.0) $ (1.0) $ (0.3) Inventory (2.5) (1.2) 0.1 Trade payables 3.7 (0.2) (1.3) Changes in working capital $ 0.2 $ (2.4) $ (1.5) Ford Credit distributions $ 2.1 $ — $ 0.5 Interest on debt and cash taxes (1.7) (2.2) (2.1) All other and timing differences 1.9 5.2 4.7 Company adjusted free cash flow (a) $ 9.1 $ 6.8 $ 6.7 Restructuring $ (0.4) $ (0.9) $ (0.8) Changes in debt (0.4) (0.2) 0.5 Funded pension contributions (0.6) (0.6) (1.1) Shareholder distributions (2.5) (5.3) (3.5) All other (b) (9.5) (3.2) (2.0) Change in cash $ (4.3) $ (3.4) $ (0.3) __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.
However, our forecast could fluctuate from period to period based on market prices, which could result in significant increases or decreases in our estimate. The actual price paid for these materials will be recorded on our balance sheet at the time of purchase.
However, our forecast could fluctuate from period to period based on market prices, which may result in significant increases or decreases in our estimate. The actual price paid for these materials will be recorded on our balance sheet at the time of purchase.
Going forward, we expect to: • Limit our pension contributions to offset ongoing service cost, ensure our funded plans remain fully funded in aggregate, and meet regulatory requirements, if any; • Minimize the volatility of the value of our pension assets relative to pension obligations and ensure assets are sufficient to pay plan benefits; and • Evaluate strategic actions to reduce pension liabilities, such as plan design changes, curtailments, or settlements 2022 2023 2023 H / (L) 2022 Pension Funded Status ($B) U.S.
Going forward, we expect to: • Limit our pension contributions to offset ongoing service cost, ensure our funded plans remain fully funded in aggregate, and meet regulatory requirements, if any; • Minimize the volatility of the value of our pension assets relative to pension obligations and ensure assets are sufficient to pay plan benefits; and • Evaluate strategic actions to reduce pension liabilities, such as plan design changes, curtailments, or settlements 2023 2024 2024 H / (L) 2023 Pension Funded Status ($B) U.S.
Change in EBT by Causal Factor (in millions) 2022 Full Year EBT $ 2,657 Volume / Mix 153 Financing Margin (493) Credit Loss (239) Lease Residual (466) Exchange 18 Other (299) 2023 Full Year EBT $ 1,331 Total net receivables at December 31, 2023 were 9% higher than a year ago, primarily reflecting higher consumer and non-consumer financing and currency exchange rates, partially offset by fewer operating leases.
Change in EBT by Causal Factor (in millions) 2022 Full Year EBT $ 2,657 Volume / Mix 153 Financing Margin (493) Credit Loss (239) Lease Residual (466) Exchange 18 Other (299) 2023 Full Year EBT $ 1,331 Total net receivables at December 31, 2023 were 9% higher than at December 31, 2022, primarily reflecting higher consumer and non-consumer financing and currency exchange rates, offset partially by fewer operating leases.
Ford Credit’s material cash requirements include: (1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles; and (2) debt repayments (for additional information on debt, see the “Balance Sheet Liquidity Profile” section below, the “Material Cash Requirements” section in “Liquidity and Capital Resources - Company excluding Ford Credit” above, and Note 19 of the Notes to the Financial Statements).
Ford Credit’s material cash requirements include: (1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles; and (2) debt repayments (for additional information on debt, see the “Balance Sheet Liquidity Profile” section below, the “Material Cash Requirements” section in “Liquidity and Capital Resources - Company Excluding Ford Credit” above, and Note 18 of the Notes to the Financial Statements).
Change in EBIT by Causal Factor (in millions) 2022 Full Year EBIT $ 3,222 Volume / Mix (331) Net Pricing 7,067 Cost (2,353) Exchange 27 Other (410) 2023 Full Year EBIT $ 7,222 In 2023, Ford Pro’s wholesales increased 6% from a year ago, primarily reflecting an improvement in production-related supply constraints, offset partially by production losses during the UAW strike.
Change in EBIT by Causal Factor (in millions) 2022 Full Year EBIT $ 3,222 Volume / Mix (331) Net Pricing 7,067 Cost (2,353) Exchange 27 Other (410) 2023 Full Year EBIT $ 7,222 In 2023, Ford Pro’s wholesales increased 6% from 2022, primarily reflecting an improvement in production-related supply constraints, offset partially by production losses during the UAW strike.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) COMPANY KEY METRICS The table below shows our full year 2023 key metrics for the Company compared to a year ago. 2022 2023 H / (L) GAAP Financial Measures Cash Flows from Operating Activities ($B) $ 6.9 $ 14.9 $ 8.1 Revenue ($M) 158,057 176,191 11 % Net Income/(Loss) ($M) (1,981) 4,347 6,328 Net Income/(Loss) Margin (%) (1.3) % 2.5 % 3.7 ppts EPS (Diluted) $ (0.49) $ 1.08 $ 1.57 Non-GAAP Financial Measures (a) Company Adj.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) COMPANY KEY METRICS The table below shows our full year 2023 key metrics for the Company compared with full year 2022. 2022 2023 H / (L) GAAP Financial Measures Cash Flows from Operating Activities ($B) $ 6.9 $ 14.9 $ 8.1 Revenue ($M) 158,057 176,191 11 % Net Income/(Loss) ($M) (1,981) 4,347 $ 6,328 Net Income/(Loss) Margin (%) (1.3) % 2.5 % 3.7 ppts EPS (Diluted) $ (0.49) $ 1.08 $ 1.57 Non-GAAP Financial Measures (a) Company Adj.
In Note 26 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources. 53 Item 7.
In Note 25 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources. 53 Item 7.
In the long term, the outcome of de-carbonization and electrification of the vehicle fleet may depress oil demand, but the global energy transition will also contribute to ongoing volatility of oil and other energy prices. Vehicle Profitability. Our financial results depend on the profitability of the vehicles we sell, which may vary significantly by vehicle line.
In the long term, the outcome of de-carbonization and electrification of the vehicle fleet may depress oil demand, but geopolitical dynamics and the global energy transition will also contribute to ongoing volatility of oil and other energy prices. Vehicle Profitability. Our financial results depend on the profitability of the vehicles we sell, which may vary significantly by vehicle line.
Ford Credit recognizes the incentive amount over the life of retail finance contracts as an element of financing revenue and over the life of lease contracts as a reduction to depreciation. See Note 1 of the Notes to the Financial Statements for a more detailed discussion of transactions between Ford Credit and our other segments. 41 Item 7.
Ford Credit recognizes the incentive amount over the life of retail finance contracts as an element of financing revenue and over the life of lease contracts as a reduction to depreciation. See Note 1 of the Notes to the Financial Statements for a more detailed discussion of transactions between Ford Credit and our other segments. 42 Item 7.
All wholesale securitization transactions and wholesale receivables are shown maturing in the next 12 months, even if the maturities extend beyond 2024. The retail securitization transactions under certain committed asset-backed facilities are assumed to amortize immediately rather than amortizing after the expiration of the commitment period.
All wholesale securitization transactions and wholesale receivables are shown maturing in the next 12 months, even if the maturities extend beyond 2025. The retail securitization transactions under certain committed asset-backed facilities are assumed to amortize immediately rather than amortizing after the expiration of the commitment period.
These items are discussed in more detail in Note 26 of the Notes to the Financial Statements. We report special items separately to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.
These items are discussed in more detail in Note 25 of the Notes to the Financial Statements. We report special items separately to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.
These items are discussed in more detail in Note 26 of the Notes to the Financial Statements. We report special items separately to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.
These items are discussed in more detail in Note 25 of the Notes to the Financial Statements. We report special items separately to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.
Unlike our historical arrangements with suppliers, under multi-year offtake agreements, the risks associated with lower-than-expected electric vehicle production volumes or changes in battery technology that reduce the need for certain raw materials are borne by Ford rather than our suppliers.
Unlike our standard arrangements with suppliers, under multi-year offtake agreements, the risks associated with lower-than-expected electric vehicle production volumes or changes in battery technology that reduce the need for certain raw materials are borne by Ford rather than our suppliers.
Company excluding Ford Credit’s total material and commodity costs make up the largest portion of these costs and expenses, followed by structural costs. Although material costs are our largest absolute cost, our margins can be affected significantly by changes in any category of costs. 42 Item 7.
Company excluding Ford Credit’s total material and commodity costs make up the largest portion of these costs and expenses, followed by structural costs. Although material costs are our largest absolute cost, our margins can be affected significantly by changes in any category of costs. 43 Item 7.
In general, larger vehicles tend to command higher prices and be more profitable than smaller vehicles. For example, in Ford Blue, our larger, more profitable vehicles had an average contribution margin that was 139% of our total average contribution margin across all vehicles, whereas our smaller vehicles had significantly lower contribution margins.
In general, larger vehicles tend to command higher prices and be more profitable than smaller vehicles. For example, in Ford Blue, our larger, more profitable vehicles had an average contribution margin that was 150% of our total average contribution margin across all vehicles, whereas our smaller vehicles had significantly lower contribution margins.
(b) Long-term debt may have fixed or variable interest rates. For long-term debt with variable-rate interest, we estimate the future interest payments based on projected market interest rates for various floating-rate benchmarks received from third parties. (c) Includes interest payments of $254 million.
(b) Long-term debt may have fixed or variable interest rates. For long-term debt with variable-rate interest, we estimate the future interest payments based on projected market interest rates for various floating-rate benchmarks received from third parties. (c) Includes interest payments of $252 million.
Ford Credit’s leverage is calculated as a separate business as described in the “Liquidity - Ford Credit Segment” section of Item 7. Ford Credit is self-funding and its debt, which is used to fund its operations, is separate from our Company debt excluding Ford Credit. 64 Item 7.
Ford Credit’s leverage is calculated as a separate business as described in the “Liquidity and Capital Resources - Ford Credit Segment” section of Item 7. Ford Credit is self-funding and its debt, which is used to fund its operations, is separate from our Company debt excluding Ford Credit. 64 Item 7.
These costs could be affected by volume for operating pattern actions such as overtime, line-speed, and shift schedules ▪ Engineering and Connectivity – consists primarily of costs for vehicle and software engineering personnel, prototype materials, testing, and outside engineering and software services ▪ Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets, but also includes asset retirements and operating leases ▪ Advertising and Sales Promotions – includes costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows ▪ Administrative, Information Technology, and Selling – includes primarily costs for salaried personnel and purchased services related to our staff activities, information technology, and selling functions ▪ Pension and OPEB – consists primarily of past service pension costs and other postretirement employee benefit costs • Exchange – primarily measures EBIT variance driven by one or more of the following: (i) transactions denominated in currencies other than the functional currencies of the relevant entities, (ii) effects of converting functional currency income to U.S. dollars, (iii) effects of remeasuring monetary assets and liabilities of the relevant entities in currencies other than their functional currency, or (iv) results of our foreign currency hedging • Other – includes a variety of items, such as parts and services earnings, royalties, government incentives, and compensation-related changes In addition, definitions and calculations used in this report include: • Wholesales and Revenue – wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that are sold to dealerships or others, units manufactured by Ford that are sold to other manufacturers, units distributed by Ford for other manufacturers, and local brand units produced by our China joint venture, Jiangling Motors Corporation, Ltd.
These costs could be affected by volume for operating pattern actions such as overtime, line-speed, and shift schedules ▪ Engineering and Connectivity – consists primarily of costs for vehicle and software engineering personnel, prototype materials, testing, and outside engineering and software services ▪ Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets, but also includes asset retirements and operating leases ▪ Advertising and Sales Promotions – includes costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows ▪ Administrative, Information Technology, and Selling – includes primarily costs for salaried personnel and purchased services related to our staff activities, information technology, and selling functions • Exchange – primarily measures EBIT variance driven by one or more of the following: (i) transactions denominated in currencies other than the functional currencies of the relevant entities, (ii) effects of converting functional currency income to U.S. dollars, (iii) effects of remeasuring monetary assets and liabilities of the relevant entities in currencies other than their functional currency, or (iv) results of our foreign currency hedging • Other – includes a variety of items, such as parts and services earnings, royalties, government incentives, compensation-related changes, and regulatory compliance expenses In addition, definitions and calculations used in this report include: • Wholesales and Revenue – wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that are sold to dealerships or others, units manufactured by Ford that are sold to other manufacturers, units distributed by Ford for other manufacturers, and local brand units produced by our China joint venture, Jiangling Motors Corporation, Ltd.
The corporate, supplemental, and 364-day credit agreements include certain sustainability-linked targets, pursuant to which the applicable margin and facility fees may be adjusted if Ford achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, renewable electricity consumption, and Ford Europe CO 2 tailpipe emissions.
The corporate, supplemental, and 364-day credit agreements include certain sustainability-linked targets, pursuant to which the applicable margin and facility fees may be adjusted if Ford achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, carbon-free electricity consumption, and Ford Europe CO 2 tailpipe emissions.
Ford Credit) 20.4 19.9 19.9 Net pension and OPEB liability 6.4 4.7 7.0 Invested capital (end of period) $ 75.4 $ 67.8 $ 69.8 Average invested capital $ 72.1 $ 70.0 $ 68.1 ROIC (a) 18.0 % (5.6) % 9.9 % Adjusted ROIC (Non-GAAP) (b) 9.8 % 11.2 % 13.9 % __________ (a) Calculated as the sum of net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.
Ford Credit) 19.9 19.9 20.7 Net pension and OPEB liability 4.7 7.0 5.0 Invested capital (end of period) $ 67.8 $ 69.8 $ 70.5 Average invested capital $ 70.0 $ 68.1 $ 70.1 ROIC (a) (5.6) % 9.9 % 9.6 % Adjusted ROIC (Non-GAAP) (b) 11.2 % 13.9 % 12.9 % __________ (a) Calculated as the sum of net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.
Full year 2023 revenue increased 19%, driven by higher net pricing and wholesales, offset partially by unfavorable mix. Ford Pro’s 2023 full year EBIT was $7.2 billion, an increase of $4.0 billion from a year ago, with an EBIT margin of 12.4%. The EBIT improvement was driven by higher net pricing, lower commodity costs, and higher wholesales.
Full year 2023 revenue increased 19%, driven by higher net pricing and wholesales, offset partially by unfavorable mix. Ford Pro’s 2023 full year EBIT was $7.2 billion, an increase of $4.0 billion from 2022, with an EBIT margin of 12.4%. The EBIT improvement was driven by higher net pricing, lower commodity costs, and higher wholesales.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) OUTLOOK We provided 2024 Company guidance in our earnings release furnished on Form 8-K dated February 6, 2024. The guidance is based on our expectations as of February 6, 2024, and assumes no material change to our current assumptions for inflation, logistics issues, production, or macroeconomic conditions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) OUTLOOK We provided 2025 Company guidance in our earnings release furnished on Form 8-K dated February 5, 2025. The guidance is based on our expectations as of February 5, 2025, and assumes no material change to our current assumptions for inflation, logistics issues, production, or macroeconomic conditions.
Specifically, we include in cost of sales each of the following: material costs (including commodity costs); freight costs; warranty, including product recall costs; labor and other costs related to the development and production of our vehicles and connectivity, parts, accessories, and services; depreciation and amortization; and other associated costs.
Specifically, we include in cost of sales each of the following: material costs (including commodity costs); freight costs; warranty, including product recall costs; labor and other costs related to the development and production of our vehicles and connectivity, parts, accessories, and services; depreciation and amortization; regulatory compliance expenses; and other associated costs.
Full year 2023 revenue increased 12%, driven by higher wholesales, offset partially by lower net pricing. Ford Model e’s 2023 full year EBIT loss was $4.7 billion, a $2.6 billion higher loss than a year ago, with an EBIT margin of negative 79.7%.
Full year 2023 revenue increased 12%, driven by higher wholesales, offset partially by lower net pricing. Ford Model e’s 2023 full year EBIT loss was $4.7 billion, a $2.6 billion higher loss than in 2022, with an EBIT margin of negative 79.7%.
In Note 26 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources. 43 Item 7.
In Note 25 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources. 44 Item 7.
Ford Credit plans its leverage by considering market conditions and the risk characteristics of its business. At December 31, 2023, Ford Credit’s financial statement leverage was 9.7:1. Ford Credit targets financial statement leverage in the range of 9:1 to 10:1. 68 Item 7.
Ford Credit plans its leverage by considering market conditions and the risk characteristics of its business. At December 31, 2024, Ford Credit’s financial statement leverage was 10.0:1. Ford Credit targets financial statement leverage in the range of 9:1 to 10:1. 68 Item 7.
At December 31, 2023, about 90% of Company cash was held by consolidated entities domiciled in the United States. To be prepared for an economic downturn and other stress scenarios, we target an ongoing Company cash balance at or above $20 billion plus significant additional liquidity above our Company cash target.
At December 31, 2024, about 88% of Company cash was held by consolidated entities domiciled in the United States. To be prepared for an economic downturn and other stress scenarios, we target an ongoing Company cash balance at or above $20 billion plus significant additional liquidity above our Company cash target.
The following table contains the calculation of our ROIC for the years shown (in billions): December 31, 2021 December 31, 2022 December 31, 2023 Adjusted Net Operating Profit/(Loss) After Cash Tax Net income/(loss) attributable to Ford $ 17.9 $ (2.0) $ 4.3 Add: Noncontrolling interest — (0.2) — Less: Income tax 0.1 0.9 0.4 Add: Cash tax (0.6) (0.8) (1.0) Less: Interest on debt (1.8) (1.3) (1.3) Less: Total pension / OPEB income / (cost) 4.9 0.4 (3.1) Add: Pension / OPEB service costs (1.1) (1.0) (0.6) Net operating profit/(loss) after cash tax $ 13.0 $ (3.9) $ 6.7 Less: Special items (excl. pension / OPEB) pre-tax 5.9 (11.7) (2.7) Adjusted net operating profit/(loss) after cash tax $ 7.1 $ 7.8 $ 9.5 Invested Capital Equity $ 48.6 $ 43.2 $ 42.8 Debt (excl.
The following table contains the calculation of our ROIC for the years shown (in billions): December 31, 2022 December 31, 2023 December 31, 2024 Adjusted Net Operating Profit/(Loss) After Cash Tax Net income/(loss) attributable to Ford $ (2.0) $ 4.3 $ 5.9 Add: Noncontrolling interest (0.2) — — Less: Income tax 0.9 0.4 (1.3) Add: Cash tax (0.8) (1.0) (1.2) Less: Interest on debt (1.3) (1.3) (1.1) Less: Total pension / OPEB income / (cost) 0.4 (3.1) (0.1) Add: Pension / OPEB service costs (1.0) (0.6) (0.6) Net operating profit/(loss) after cash tax $ (3.9) $ 6.7 $ 6.7 Less: Special items (excl. pension / OPEB) pre-tax (11.7) (2.7) (2.3) Adjusted net operating profit/(loss) after cash tax $ 7.8 $ 9.5 $ 9.1 Invested Capital Equity $ 43.2 $ 42.8 $ 44.9 Debt (excl.
Partial offsets primarily include higher material costs (related to inflationary cost pressures, new products, and about $80 million of volume-related obligations for batteries), higher warranty costs (reflecting inflationary cost pressures and increased field service actions), and higher structural costs (including volume-related) and supplemental compensation (including the impact of the new UAW collective bargaining agreement). 46 Item 7.
Partial offsets primarily included higher material costs (related to inflationary cost pressures, new products, and about $80 million of volume-related obligations for batteries), higher warranty costs (reflecting inflationary cost pressures and increased field service actions), and higher structural costs (including volume-related) and supplemental compensation (including the impact of the UAW collective bargaining agreement). 56 Item 7.
Key elements of Ford Credit’s funding strategy include: • Maintain strong liquidity and funding diversity • Prudently access public markets • Continue to leverage retail deposit funding in Europe • Flexibility to increase ABS mix as needed; preserving assets and committed capacity • Target financial statement leverage of 9:1 to 10:1 • Maintain self-liquidating balance sheet Ford Credit’s liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet its business and funding requirements.
Key elements of Ford Credit’s funding strategy include: • Maintain strong liquidity and funding diversity • Prudently access public markets • Continue to leverage retail deposits in Europe • Flexibility to increase asset-backed securities mix as needed; preserving assets and committed capacity • Target financial statement leverage of 9:1 to 10:1 • Maintain self-liquidating balance sheet Ford Credit’s liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet its business and funding requirements.
Ford Next has evolved from primarily investing in the development of autonomous vehicle capabilities to focus exclusively on incubating and launching new businesses creating strategic value for Ford. 48 Item 7.
Ford Next has evolved from primarily investing in the development of autonomous vehicle capabilities to focus exclusively on incubating and launching new businesses creating strategic value for Ford.
Partial offsets primarily include higher warranty costs (reflecting inflationary cost pressures and increased field service actions), higher material costs related to new products, higher structural costs and supplemental compensation (including the impact of the new UAW collective bargaining agreement), and weaker currencies. 45 Item 7.
Partial offsets primarily included higher warranty costs (reflecting inflationary cost pressures and increased field service actions), higher material costs related to new products, higher structural costs and supplemental compensation (including the impact of the UAW collective bargaining agreement), and weaker currencies. 55 Item 7.
The flat year-over-year Company adjusted EBIT primarily reflects higher Ford Pro and Ford Blue EBIT and a lower EBIT loss in Ford Next. Offsets included higher EBIT losses in Ford Model e, lower past service pension and OPEB income in Corporate Other, and lower Ford Credit EBT. 44 Item 7.
The flat year-over-year Company adjusted EBIT primarily reflected higher Ford Pro and Ford Blue EBIT and a lower EBIT loss in Ford Next. Offsets included higher EBIT losses in Ford Model e, lower past service pension and OPEB income in Corporate Other, and lower Ford Credit EBT. 54 Item 7.
In 2023, our diluted earnings per share of Common and Class B Stock was $1.08 and our diluted adjusted earnings per share was $2.01. Net income/(loss) margin was 2.5% in 2023, up from negative 1.3% a year ago. Company adjusted EBIT margin was 5.9% in 2023, down from 6.6% a year ago.
In 2023, our diluted earnings per share of Common and Class B Stock was $1.08 and our diluted adjusted earnings per share was $2.01. Net income/(loss) margin was 2.5% in 2023, up from negative 1.3% in 2022. Company adjusted EBIT margin was 5.9% in 2023, down from 6.6% in 2022.
Accordingly, in the event we do not purchase the materials pursuant to the terms of these agreements and we are unable to restructure an agreement or an alternate purchaser is unable to be found, Ford retains its obligation for the cost of those materials.
Accordingly, in the event we do not purchase the materials pursuant to the terms of these agreements, and we are unable to restructure an agreement or an alternate purchaser is unable to be found, Ford retains a financial obligation for those materials.
Our material cash requirements include: • Capital expenditures (for additional information, see the “Changes in Company Cash” section below) and other payments for engineering, software, product development, and implementation of our plans for electric vehicles • Purchase of raw materials and components to support the manufacturing and sale of vehicles (including electric vehicles), parts, and accessories (for additional information, see the Aggregate Contractual Obligations table and the accompanying description of our “Purchase obligations” below) • Marketing incentive payments to dealers • Payments for warranty and field service actions (for additional information, see Note 25 of the Notes to the Financial Statements) • Debt repayments (for additional information, see the Aggregate Contractual Obligations table below and Note 19 of the Notes the Financial Statements) • Discretionary and mandatory payments to our global pension plans (for additional information, see the Aggregate Contractual Obligations table below, the “Changes in Company Cash” section below, and Note 17 of the Notes to the Financial Statements) • Employee wages, benefits, and incentives • Operating lease payments (for additional information, see the Aggregate Contractual Obligations table below and Note 18 of the Notes to the Financial Statements) • Cash effects related to the restructuring of our business • Strategic acquisitions and investments to grow our business, including electrification Subject to approval by our Board of Directors, shareholder distributions in the form of dividend payments and/or a share repurchase program (including share repurchases to offset the anti-dilutive effect of increased shared-based compensation) may require the expenditure of a material amount of cash.
Our material cash requirements include: • Capital expenditures (for additional information, see the “Changes in Company Cash” section below) and other payments for engineering, software, product development, and implementation of our plans for electric vehicles • Purchases of raw materials and components to support the manufacturing and sale of vehicles (including electric vehicles), parts, and accessories (for additional information, see the Aggregate Contractual Obligations table and the accompanying description of our “Purchase obligations” below) • Purchases of regulatory compliance credits • Marketing incentive payments to dealers • Payments for warranty and field service actions (for additional information, see Note 24 of the Notes to the Financial Statements) • Debt repayments (for additional information, see the Aggregate Contractual Obligations table below and Note 18 of the Notes the Financial Statements) • Discretionary and mandatory payments to our global pension plans (for additional information, see the “Liquidity and Capital Resources - Total Company” section below and Note 16 of the Notes to the Financial Statements) • Employee wages, benefits, and incentives • Operating lease payments (for additional information, see the Aggregate Contractual Obligations table below and Note 17 of the Notes to the Financial Statements) • Cash effects related to the restructuring of our business • Strategic acquisitions and investments to grow our business, including electrification Subject to approval by our Board of Directors, shareholder distributions in the form of dividend payments and/or a share repurchase program (including share repurchases to offset the anti-dilutive effect of increased share-based compensation) may require the expenditure of a material amount of cash.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Blue Segment The tables below and on the following pages provide full year 2022 key metrics and the change in full year 2022 EBIT compared with full year 2021 by causal factor for each of our Ford Blue, Ford Model e, and Ford Pro segments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) The tables below and on the following pages provide full year 2024 key metrics and the change in full year 2024 EBIT compared with full year 2023 by causal factor for each of our Ford Blue, Ford Model e, and Ford Pro segments.
As of December 31, 2023, our estimated expenditures for the maximum quantity that we are committed to purchase under these offtake agreements through 2035, subject to certain conditions, consist of approximately $4.5 billion of purchase obligations and approximately $8 billion of contingent purchase obligations based on our present forecast.
As of December 31, 2024, our estimated expenditures for the maximum quantity that we are committed to purchase under these offtake agreements through 2035, subject to certain conditions, consist of approximately $1.8 billion of purchase obligations and approximately $4.9 billion of contingent purchase obligations based on our present forecast.
Our actual results could differ materially from our guidance due to risks, uncertainties, and other factors, including those set forth in “Risk Factors” in Item 1A of Part I. 2024 Guidance Total Company Adjusted EBIT (a) $10 - $12 billion Adjusted Free Cash Flow (a) $6 - $7 billion Capital spending $8 - $9.5 billion Ford Credit EBT About $1.5 billion __________ (a) When we provide guidance for Adjusted EBIT and Adjusted Free Cash Flow, we do not provide guidance for the most comparable GAAP measures because, as described in more detail below in “Non-GAAP Measures That Supplement GAAP Measures,” they include items that are difficult to predict with reasonable certainty.
Our actual results could differ materially from our guidance due to risks, uncertainties, and other factors, including those set forth in “Risk Factors” in Item 1A of Part I. 2025 Guidance Total Company Adjusted EBIT (a) $7.0 - $8.5 billion Adjusted Free Cash Flow (a) $3.5 - $4.5 billion Capital spending $8.0 - $9.0 billion Ford Credit EBT About $2.0 billion __________ (a) When we provide guidance for Adjusted EBIT and Adjusted Free Cash Flow, we do not provide guidance for the most comparable GAAP measures because, as described in more detail below in “Non-GAAP Measures That Supplement GAAP Measures,” they include items that are difficult to predict with reasonable certainty.
At December 31, 2023, the principal amount outstanding of Ford Interest Advantage notes, which may be redeemed at any time at the option of the holders thereof without restriction, and FCE and Ford Bank deposits was $17.2 billion. Ford Credit maintains multiple sources of readily available liquidity to fund the payment of its unsecured short-term debt obligations.
At December 31, 2024, the principal amount outstanding of Ford Interest Advantage notes, which may be redeemed at any time at the option of the holders thereof without restriction, and FCE and Ford Bank deposits was $18.3 billion. Ford Credit maintains multiple sources of readily available liquidity to fund the payment of its unsecured short-term debt obligations.
In addition, government regulations aimed at reducing emissions and increasing fuel efficiency (e.g., ZEV mandates and low emission zones), and other factors that accelerate the transition to electrified vehicles, may increase the cost of vehicles by more than the perceived benefit to consumers and dampen margins. 40 Item 7.
In addition, government regulations aimed at reducing emissions and increasing fuel efficiency (e.g., ZEV mandates and low emission zones), and other factors that accelerate the transition to electrified vehicles, may increase the cost of vehicles by more than the perceived benefit to consumers and dampen margins. Inflation and Interest Rates.
Despite vehicle pricing remaining elevated over the last year due to strong demand, supply shortages, and inflationary costs, we have already observed moderation in the rate of new and used vehicle price increases as auto production recovers from the semiconductor shortage, but it is unclear whether prices will decline fully to pre-COVID-19 pandemic levels.
Despite vehicle pricing remaining elevated over the last year due to strong demand, supply shortages, and inflationary costs, we have already observed some declines in new and used vehicle prices as auto production recovers from the semiconductor shortage, but it is unclear whether prices will decline fully to pre-COVID-19 pandemic levels.
(b) U.S. 36-month off-lease auction values at full year 2023 mix.
(b) U.S. 36-month off-lease auction values at full year 2024 mix.
(b) U.S. 36-month off-lease auction values at full year 2023 mix.
(b) U.S. 36-month off-lease auction values at full year 2024 mix.
We also expect to make about $400 million of benefit payments to participants in unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. plans in 2024.
We also expect to make about $450 million of benefit payments to participants in unfunded plans. Based on current assumptions and regulations, we do not expect to have a legal requirement to fund our major U.S. pension plans in 2025.
Of the $2.3 billion underfunded status at year-end 2023, our funded plans were $2.1 billion overfunded and our unfunded plans were $4.4 billion underfunded. These unfunded plans are “pay as you go” with benefits paid from Company cash and primarily include certain plans in Germany and U.S. defined benefit plans for senior management.
Of the $0.5 billion underfunded status at year-end 2024, our funded plans were $3.4 billion overfunded and our unfunded plans were $3.9 billion underfunded. These unfunded plans are “pay as you go” with benefits paid from Company cash and primarily include certain plans in Germany and U.S. defined benefit plans for senior management.
For example, structural costs are necessary to grow our business and improve profitability, invest in new products and technologies, respond to increasing industry sales volume, and grow our market share. Cost of sales and Selling, administrative, and other expenses for full year 2023 were $161.3 billion.
For example, structural costs are necessary to grow our business and improve profitability, invest in new products and technologies, respond to increasing industry sales volume, and grow our market share. Cost of sales and Selling, administrative, and other expenses for full year 2024 were $168.7 billion.
Company excluding Ford Credit December 31, 2022 December 31, 2023 Balance Sheets ($B) Company Cash $ 32.3 $ 28.8 Liquidity 48.0 46.4 Debt (19.9) (19.9) Cash Net of Debt 12.3 8.9 Pension Funded Status ($B) Funded Plans $ 4.1 $ 2.1 Unfunded Plans (4.3) (4.4) Total Global Pension $ (0.2) $ (2.3) Total Funded Status OPEB $ (4.5) $ (4.7) Liquidity .
Company Excluding Ford Credit December 31, 2023 December 31, 2024 Balance Sheets ($B) Company Cash $ 28.8 $ 28.5 Liquidity 46.4 46.7 Debt (19.9) (20.7) Cash Net of Debt 8.9 7.9 Pension Funded Status ($B) Funded Plans $ 2.1 $ 3.4 Unfunded Plans (4.4) (3.9) Total Global Pension $ (2.3) $ (0.5) Total Funded Status OPEB $ (4.7) $ (4.4) Liquidity .
Our key priority is to maintain a strong balance sheet to withstand potential stress scenarios, while having resources available to invest in and grow our business. At December 31, 2023, we had Company cash of $28.8 billion and liquidity of $46.4 billion.
Our key priority is to maintain a strong balance sheet to withstand potential stress scenarios, while having resources available to invest in and grow our business. At December 31, 2024, we had Company cash of $28.5 billion and liquidity of $46.7 billion.
Taxes Our Provision for/(Benefit from) income taxes for full year 2023 was a $362 million benefit, resulting in an effective tax rate of negative 9.1%. This includes benefits arising from U.S. research tax credits and legal entity restructuring within our leasing operations and China. Our full year 2023 adjusted effective tax rate, which excludes special items, was 10.0%.
Taxes Our Provision for/(Benefit from) income taxes for full year 2023 was a $362 million benefit, resulting in an effective tax rate of negative 9.1%. This includes benefits arising from U.S. research tax credits and legal entity restructuring within our leasing operations and China.
(f) Purchase obligations under existing offtake agreements for scarce raw materials are not included in the table above.
(f) Purchase obligations under existing offtake agreements for certain battery raw materials are not included in the table above.
The table below shows the calculation of Ford Credit’s financial statement leverage (in billions): December 31, 2021 December 31, 2022 December 31, 2023 Leverage Calculation Debt $ 117.7 $ 119.0 $ 129.3 Equity (a) 12.4 11.9 13.4 Financial statement leverage (to 1) 9.5 10.0 9.7 __________ (a) Total shareholder’s interest reported on Ford Credit’s balance sheets.
The table below shows the calculation of Ford Credit’s financial statement leverage (in billions): December 31, 2022 December 31, 2023 December 31, 2024 Leverage Calculation Debt $ 119.0 $ 129.3 $ 137.9 Equity (a) 11.9 13.4 13.8 Financial statement leverage (to 1) 10.0 9.7 10.0 __________ (a) Total shareholder’s interest reported on Ford Credit’s balance sheets.
The following table shows Ford Credit’s issuances for full year 2021, 2022, and 2023, and its planned issuances for full year 2024, excluding short-term funding programs (in billions): 2021 Actual 2022 Actual 2023 Actual 2024 Forecast Unsecured $ 5 $ 6 $ 14 $ 14 - 17 Securitizations 9 10 14 13 - 16 Total public $ 14 $ 16 $ 28 $ 27 - 33 In 2023, Ford Credit completed $28 billion of public term funding.
The following table shows Ford Credit’s issuances for full year 2022, 2023, and 2024, and its planned issuances for full year 2025, excluding short-term funding programs (in billions): 2022 Actual 2023 Actual 2024 Actual 2025 Forecast Unsecured $ 6 $ 14 $ 17 $ 11 -14 Securitizations 10 14 16 13 -16 Total public $ 16 $ 28 $ 33 $ 24 - 30 In 2024, Ford Credit completed $33 billion of public term funding.
The purchase price mechanism included in the offtake agreement is typically based on the market price of the material at the time of delivery. The terms also may include conditions to our obligation to purchase the materials, such as quality or minimum output.
The purchase price mechanisms included in our offtake agreements are typically based on the market price of the material at the time of delivery. The terms also may include conditions to our obligation to purchase the materials, such as quality or minimum output.
Over the long term, intense competition and excess capacity are likely to put downward pressure on inflation-adjusted prices for similarly-contented vehicles and contribute to a challenging pricing environment for the automotive industry in most major markets. Electric Vehicle Market.
Intense competition and excess capacity are likely to put downward pressure on inflation-adjusted prices, including increased marketing incentives, for similarly-contented vehicles and contribute to a challenging pricing environment for the automotive industry in most major markets. Electric Vehicle Market.
Ford Credit obtains unsecured funding from the sale of demand notes under its Ford Interest Advantage program and through the retail deposit programs at FCE Bank plc (“FCE”) and Ford Bank GmbH (“Ford Bank”).
Ford Credit obtains unsecured funding from the sale of demand notes under its Ford Interest Advantage program and through the retail deposit programs at FCE and Ford Bank.
As of December 31, 2023, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $220 million. The amount settled through the SCF program during 2023 was $1.8 billion. 62 Item 7.
As of December 31, 2024, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $172 million. The amount settled through the SCF program during 2024 was $1.6 billion. 62 Item 7.
The following table shows funding for Ford Credit’s net receivables (in billions): December 31, 2021 December 31, 2022 December 31, 2023 Funding Structure Term unsecured debt $ 59.4 $ 48.3 $ 54.1 Term asset-backed securities 45.4 56.4 58.0 Retail Deposits / Ford Interest Advantage 12.9 14.3 17.2 Other (0.1) 2.7 1.4 Equity 12.4 11.9 13.4 Adjustments for cash (12.5) (11.3) (10.9) Total Net Receivables $ 117.5 $ 122.3 $ 133.2 Securitized Funding as Percent of Total Debt 38.5 % 47.4 % 44.9 % Net receivables of $133.2 billion at December 31, 2023 were funded primarily with term unsecured debt and term asset-backed securities.
The following table shows funding for Ford Credit’s net receivables (in billions): December 31, 2022 December 31, 2023 December 31, 2024 Funding Structure Term unsecured debt $ 48.3 $ 54.1 $ 59.2 Term asset-backed securities 56.4 58.0 60.4 Retail Deposits / Ford Interest Advantage 14.3 17.2 18.3 Other 2.7 1.4 1.2 Equity 11.9 13.4 13.8 Cash (11.3) (10.9) (9.3) Total Net Receivables $ 122.3 $ 133.2 $ 143.6 Securitized Funding as Percent of Total Debt 47.4 % 44.9 % 43.8 % Net receivables of $143.6 billion at December 31, 2024 were funded primarily with term unsecured debt and term asset-backed securities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate 2021 2022 2023 Pre-Tax Results ($M) Income/(Loss) before income taxes (GAAP) $ 17,780 $ (3,016) $ 3,967 Less: Impact of special items 9,583 (12,172) (5,147) Adjusted earnings before taxes (Non-GAAP) $ 8,197 $ 9,156 $ 9,114 Taxes ($M) (Provision for)/Benefit from income taxes (GAAP) (a) $ 130 $ 864 $ 362 Less: Impact of special items (b) 1,924 2,573 1,273 Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ (1,794) $ (1,709) $ (911) Tax Rate (%) Effective tax rate (GAAP) (a) (0.7) % 28.6 % (9.1) % Adjusted effective tax rate (Non-GAAP) 21.9 % 18.7 % 10.0 % _________ (a) 2023 reflects benefits from U.S. research tax credits and legal entity restructuring within our leasing operations and China.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate 2022 2023 2024 Pre-Tax Results ($M) Income/(Loss) before income taxes (GAAP) $ (3,016) $ 3,967 $ 7,233 Less: Impact of special items (12,172) (5,147) (1,860) Adjusted earnings before taxes (Non-GAAP) $ 9,156 $ 9,114 $ 9,093 Taxes ($M) (Provision for)/Benefit from income taxes (GAAP) (a) $ 864 $ 362 $ (1,339) Less: Impact of special items (b) 2,573 1,273 323 Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ (1,709) $ (911) $ (1,662) Tax Rate (%) Effective tax rate (GAAP) (a) 28.6 % (9.1) % 18.5 % Adjusted effective tax rate (Non-GAAP) 18.7 % 10.0 % 18.3 % _________ (a) 2023 reflects benefits from U.S. research tax credits and legal entity restructuring within our leasing operations and China.
Securitized funding as a percent of total debt was 44.9% as of December 31, 2023. 65 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Public Term Funding Plan.
Securitized funding as a percent of total debt was 43.8% as of December 31, 2024. 65 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Public Term Funding Plan.
Net Cash Provided by/(Used in) Operating Activities Reconciliation to Company Adjusted Free Cash Flow ($M) 2021 2022 2023 Net cash provided by/(used in) operating activities (GAAP) $ 15,787 $ 6,853 $ 14,918 Less: Items not included in Company Adjusted Free Cash Flows Ford Credit operating cash flows $ 15,293 $ (5,416) $ 1,180 Funded pension contributions (773) (567) (592) Restructuring (including separations) (a) (1,855) (835) (1,025) Ford Credit tax payments/(refunds) under tax sharing agreement 15 147 169 Other, net (421) (58) 240 Add: Items included in Company Adjusted Free Cash Flows Company excluding Ford Credit capital spending $ (6,183) $ (6,511) $ (8,152) Ford Credit distributions 7,500 2,100 — Settlement of derivatives (255) (90) 7 Company adjusted free cash flow (Non-GAAP) $ 4,590 $ 9,081 $ 6,801 __________ (a) Restructuring excludes cash flows reported in investing activities. 78
Net Cash Provided by/(Used in) Operating Activities Reconciliation to Company Adjusted Free Cash Flow ($M) 2022 2023 2024 Net cash provided by/(used in) operating activities (GAAP) $ 6,853 $ 14,918 $ 15,423 Less: Items not included in Company Adjusted Free Cash Flows Ford Credit operating cash flows $ (5,416) $ 1,180 $ 3,600 Funded pension contributions (567) (592) (1,073) Restructuring (including separations) (a) (835) (1,025) (799) Ford Credit tax payments/(refunds) under tax sharing agreement 147 169 (15) Other, net (58) 240 (877) Add: Items included in Company Adjusted Free Cash Flows Company excluding Ford Credit capital spending $ (6,511) $ (8,152) $ (8,590) Ford Credit distributions 2,100 — 500 Settlement of derivatives (90) 7 175 Company adjusted free cash flow (Non-GAAP) $ 9,081 $ 6,801 $ 6,672 __________ (a) Restructuring excludes cash flows reported in investing activities. 78 Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) RESULTS OF OPERATIONS - 2022 The net loss attributable to Ford Motor Company was $1,981 million in 2022. Company adjusted EBIT was $10,415 million. Net income/(loss) includes certain items (“special items”) that are excluded from Company adjusted EBIT.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) RESULTS OF OPERATIONS - 2024 The net income attributable to Ford Motor Company was $5,879 million in 2024. Company adjusted EBIT was $10,208 million. Net income/(loss) includes certain items (“special items”) that are excluded from Company adjusted EBIT.
The following table shows Ford Credit’s liquidity sources and utilization (in billions): December 31, 2021 December 31, 2022 December 31, 2023 Liquidity Sources (a) Cash $ 12.5 $ 11.3 $ 10.9 Committed asset-backed facilities 37.1 37.4 42.9 Other unsecured credit facilities 2.7 2.3 2.4 Total liquidity sources $ 52.3 $ 51.0 $ 56.2 Utilization of Liquidity (a) Securitization cash and restricted cash $ (3.9) $ (2.9) $ (2.8) Committed asset-backed facilities (12.5) (26.6) (27.5) Other unsecured credit facilities (1.0) (0.8) (0.4) Total utilization of liquidity $ (17.4) $ (30.3) $ (30.7) Gross liquidity $ 34.9 $ 20.7 $ 25.5 Asset-backed capacity in excess of eligible receivables and other adjustments (2.8) 0.4 0.2 Net liquidity available for use $ 32.1 $ 21.1 $ 25.7 __________ (a) See Definitions and Information Regarding Ford Credit Causal Factors section.
The following table shows Ford Credit’s liquidity sources and utilization (in billions): December 31, 2022 December 31, 2023 December 31, 2024 Liquidity Sources (a) Cash $ 11.3 $ 10.9 $ 9.3 Committed asset-backed facilities 37.4 42.9 42.9 Other unsecured credit facilities 2.3 2.4 1.7 Total liquidity sources $ 51.0 $ 56.2 $ 53.9 Utilization of Liquidity (a) Securitization cash and restricted cash $ (2.9) $ (2.8) $ (3.1) Committed asset-backed facilities (26.6) (27.5) (25.6) Other unsecured credit facilities (0.8) (0.4) (0.5) Total utilization of liquidity $ (30.3) $ (30.7) $ (29.2) Available liquidity $ 20.7 $ 25.5 $ 24.7 Other adjustments 0.4 0.2 0.5 Net liquidity available for use $ 21.1 $ 25.7 $ 25.2 __________ (a) See Definitions and Information Regarding Ford Credit Causal Factors section.
Total Company committed credit lines, excluding Ford Credit, at December 31, 2023 were $19.4 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.8 billion of our 364-day revolving credit facility, and $2.2 billion of local credit facilities.
Total Company committed credit lines, excluding Ford Credit, at December 31, 2024 were $20.0 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $2.5 billion of our 364-day revolving credit facility, and $2.0 billion of local credit facilities.
Full year 2023 revenue increased 8%, driven by higher wholesales, favorable mix, and higher net pricing, offset partially by weaker currencies. Ford Blue’s 2023 full year EBIT was $7.5 billion, an increase of $615 million from a year ago, with an EBIT margin of 7.3%.
Full year 2023 revenue increased 8%, driven by higher wholesales, favorable mix, and higher net pricing, offset partially by weaker currencies. Ford Blue’s 2023 full year EBIT was $7.5 billion, an increase of $615 million from 2022, with an EBIT margin of 7.3%. The EBIT improvement was driven primarily by favorable mix, lower commodity costs, higher wholesales and net pricing.
The net impact on us and our suppliers has been higher material costs overall. To help ensure supply of raw materials for critical components (e.g., batteries), we, like others in the industry, have entered into multi-year sourcing agreements and may enter into additional agreements.
The net impact on us and our suppliers has been higher material costs overall. To help ensure supply of raw materials for critical components (e.g., 41 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) batteries), we, like others in the industry, have entered into multi-year sourcing agreements and may enter into additional agreements.
Although headline inflation in the United States and Europe appears to have peaked, as gasoline and natural gas prices recede from the latest spike, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households.
Although headline inflation in the United States and Europe appears to have peaked, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Credit Segment Ford Credit remains well capitalized with a strong balance sheet and funding diversified across platforms and markets. Ford Credit continues to have robust access to the capital markets, and ended 2023 with $25.7 billion of liquidity, up $4.6 billion from 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Credit Segment Ford Credit remains well capitalized with a strong balance sheet and funding diversified across platforms and markets. Ford Credit continues to have robust access to capital markets and ended 2024 with $25.2 billion of liquidity.
In some cases, spot prices for various commodities have recently diverged somewhat, as anticipated weakening in global industrial activity mitigates price increases for base metals such as steel and aluminum, while precious metals (e.g., palladium), and raw materials that are used in batteries for electric vehicles (e.g., lithium, cobalt, nickel, graphite, and manganese, among other materials, for batteries) remain elevated.
Spot prices for various commodities have recently diverged somewhat, as weakening in global industrial activity mitigates price increases for base metals such as steel and aluminum, while precious metals (e.g., palladium), and raw materials that are used in batteries for electric vehicles (e.g., lithium, cobalt, and nickel) have declined from historic highs but remain elevated.
The following table shows Ford Credit’s cumulative maturities for assets and total debt for the periods presented and unsecured long-term debt maturities in the individual periods presented (in billions): 2024 2025 2026 2027 and Beyond Balance Sheet Liquidity Profile Assets (a) $ 76 $ 104 $ 126 $ 149 Total debt (b) 61 88 105 131 Memo: Unsecured long-term debt maturities 12 13 11 21 __________ (a) Includes gross finance receivables less the allowance for credit losses (including certain finance receivables that are reclassified in consolidation to Trade and other receivables ), investment in operating leases net of accumulated depreciation, cash and cash equivalents, and marketable securities (excluding amounts related to insurance activities).
The following table shows Ford Credit’s cumulative maturities for assets and total debt for the periods presented and unsecured long-term debt maturities in the individual periods presented (in billions): 2025 2026 2027 2028 and Beyond Balance Sheet Liquidity Profile Assets (a) $ 79 $ 109 $ 134 $ 160 Total debt (b) 63 91 109 139 Memo: Unsecured long-term debt maturities 13 13 11 25 __________ (a) Includes gross finance receivables less the allowance for credit losses (including certain finance receivables that are reclassified in consolidation to Trade and other receivables ), investment in operating leases net of accumulated depreciation, cash and cash equivalents, and marketable securities (excluding amounts related to insurance activities).
Earnings/(Loss) per Share Reconciliation to Adjusted Earnings/(Loss) per Share 2021 2022 2023 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ 17,937 $ (1,981) $ 4,347 Less: Impact of pre-tax and tax special items (a) 11,507 (9,599) (3,786) Adjusted net income/(loss) - Diluted (Non-GAAP) $ 6,430 $ 7,618 $ 8,133 Basic and Diluted Shares (M) Basic shares (average shares outstanding) 3,991 4,014 3,998 Net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt 43 42 43 Diluted shares 4,034 4,056 4,041 Earnings/(Loss) per share - diluted (GAAP) (b) $ 4.45 $ (0.49) $ 1.08 Less: Net impact of adjustments 2.86 (2.37) (0.93) Adjusted earnings per share - diluted (Non-GAAP) $ 1.59 $ 1.88 $ 2.01 _________ (a) Includes adjustment for noncontrolling interest in 2023.
Earnings/(Loss) per Share Reconciliation to Adjusted Earnings/(Loss) per Share 2022 2023 2024 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ (1,981) $ 4,347 $ 5,879 Less: Impact of pre-tax and tax special items (a) (9,599) (3,786) (1,537) Adjusted net income/(loss) - diluted (Non-GAAP) $ 7,618 $ 8,133 $ 7,416 Basic and Diluted Shares (M) Basic shares (average shares outstanding) 4,014 3,998 3,978 Net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt 42 43 43 Diluted shares 4,056 4,041 4,021 Earnings/(Loss) per share - diluted (GAAP) (b) $ (0.49) $ 1.08 $ 1.46 Less: Net impact of adjustments (2.37) (0.93) (0.38) Adjusted earnings per share - diluted (Non-GAAP) $ 1.88 $ 2.01 $ 1.84 _________ (a) Includes adjustment for noncontrolling interest in 2023.
ITEM 6. [Reserved.] 39 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Key Trends and Economic Factors Affecting Ford and the Automotive Industry Production and Supply Chain.
ITEM 6. [Reserved.] 40 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Key Trends and Economic Factors Affecting Ford and the Automotive Industry Trade Policy.
The fixed income mix was 76% in our U.S. plans and 78% in our non-U.S. plans at year-end 2023. In 2023, we contributed $592 million to our global funded pension plans, an increase of $25 million compared with 2022. During 2024, we expect to contribute about $1 billion of cash to our global funded pension plans.
The fixed income mix was 75% in our U.S. plans and 80% in our non-U.S. plans at year-end 2024. In 2024, we contributed $1,073 million to our global funded pension plans, an increase of $481 million compared with 2023. During 2025, we expect to contribute about $800 million of cash to our global funded pension plans.
(b) 2021 reflects a benefit from recognizing deferred tax assets and favorable changes in our valuation allowances offset by the tax consequences of unrealized gains on marketable securities; 2022 reflects the tax consequences of unrealized losses on marketable securities and favorable changes in our valuation allowances; 2023 reflects benefits from China legal entity restructuring.
(b) 2022 reflects the tax consequences of unrealized losses on marketable securities and favorable changes in our valuation allowances; 2023 reflects benefits from China legal entity restructuring.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following tables provide supplemental cash flow information (in millions): For the Year Ended December 31, 2023 Cash flows from operating activities Company excluding Ford Credit Ford Credit Eliminations Consolidated Net income/(loss) $ 2,996 $ 1,333 $ — $ 4,329 Depreciation and tooling amortization 5,336 2,354 — 7,690 Other amortization 28 (1,195) — (1,167) Provision for/(Benefit from) credit and insurance losses 107 331 — 438 Pension and OPEB expense/(income) 3,052 — — 3,052 Equity method investment dividends received in excess of (earnings)/losses and impairments (29) (4) — (33) Foreign currency adjustments (49) (185) — (234) Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments 236 (31) — 205 Net (gain)/loss on changes in investments in affiliates (9) — — (9) Stock compensation 446 14 — 460 Provision for/(Benefit from) deferred income taxes (1,032) (617) — (1,649) Decrease/(Increase) in finance receivables (wholesale and other) — (4,827) — (4,827) Decrease/(Increase) in intersegment receivables/payables 167 (167) — — Decrease/(Increase) in accounts receivable and other assets (2,512) (108) — (2,620) Decrease/(Increase) in inventory (1,219) — — (1,219) Increase/(Decrease) in accounts payable and accrued and other liabilities 9,602 227 — 9,829 Other 539 134 — 673 Interest supplements and residual value support to Ford Credit (3,921) 3,921 — — Net cash provided by/(used in) operating activities $ 13,738 $ 1,180 $ — $ 14,918 Cash flows from investing activities Capital spending $ (8,156) $ (80) $ — $ (8,236) Acquisitions of finance receivables and operating leases — (54,505) — (54,505) Collections of finance receivables and operating leases — 44,561 — 44,561 Purchases of marketable securities and other investments (6,551) (2,039) — (8,590) Sales and maturities of marketable securities and other investments 9,895 2,805 — 12,700 Settlements of derivatives 7 (145) — (138) Capital contributions to equity method investments (2,733) — — (2,733) Other (687) — — (687) Investing activity (to)/from other segments — (3) 3 — Net cash provided by/(used in) investing activities $ (8,225) $ (9,406) $ 3 $ (17,628) Cash flows from financing activities Cash payments for dividends and dividend equivalents $ (4,995) $ — $ — $ (4,995) Purchases of common stock (335) — — (335) Net changes in short-term debt (115) (1,424) — (1,539) Proceeds from issuance of long-term debt — 51,659 — 51,659 Payments on long-term debt (212) (41,753) — (41,965) Other (102) (139) — (241) Financing activity to/(from) other segments 3 — (3) — Net cash provided by/(used in) financing activities $ (5,756) $ 8,343 $ (3) $ 2,584 Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (262) $ 158 $ — $ (104) 79 Item 7.
Biggest changeThe following tables provide supplemental cash flow information (in millions): For the Year Ended December 31, 2024 Cash flows from operating activities Company excluding Ford Credit Ford Credit Eliminations Consolidated Net income/(loss) $ 4,638 $ 1,256 $ — $ 5,894 Depreciation and tooling amortization 5,038 2,529 — 7,567 Other amortization 39 (1,739) — (1,700) Provision for credit and insurance losses 13 562 — 575 Pension and OPEB expense/(income) 149 — — 149 Equity method investment (earnings)/losses and impairments in excess of dividends received (277) (10) — (287) Foreign currency adjustments 317 (90) — 227 Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments 45 (3) — 42 Stock compensation 493 18 — 511 Provision for/(Benefit from) deferred income taxes 74 276 — 350 Decrease/(Increase) in finance receivables (wholesale and other) — (4,299) — (4,299) Decrease/(Increase) in intersegment receivables/payables 529 (529) — — Decrease/(Increase) in accounts receivable and other assets (2,230) (267) — (2,497) Decrease/(Increase) in inventory 27 — — 27 Increase/(Decrease) in accounts payable and accrued and other liabilities 8,106 319 — 8,425 Other 211 228 — 439 Interest supplements and residual value support to Ford Credit (5,349) 5,349 — — Net cash provided by/(used in) operating activities $ 11,823 $ 3,600 $ — $ 15,423 Cash flows from investing activities Capital spending $ (8,590) $ (94) $ — $ (8,684) Acquisitions of finance receivables and operating leases — (59,720) — (59,720) Collections of finance receivables and operating leases — 45,159 — 45,159 Purchases of marketable securities and other investments (12,026) (274) — (12,300) Sales and maturities of marketable securities and other investments 11,990 356 — 12,346 Settlements of derivatives 175 (443) — (268) Capital contributions to equity method investments (2,323) — — (2,323) Returns of capital from equity method investments 1,465 — — 1,465 Other (45) — — (45) Investing activity (to)/from other segments 500 4 (504) — Net cash provided by/(used in) investing activities $ (8,854) $ (15,012) $ (504) $ (24,370) Cash flows from financing activities Cash payments for dividends and dividend equivalents $ (3,118) $ — $ — $ (3,118) Purchases of common stock (426) — — (426) Net changes in short-term debt 519 (795) — (276) Proceeds from issuance of long-term debt 110 57,202 — 57,312 Payments on long-term debt (152) (45,528) — (45,680) Other (192) (135) — (327) Financing activity to/(from) other segments (4) (500) 504 — Net cash provided by/(used in) financing activities $ (3,263) $ 10,244 $ 504 $ 7,485 Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (191) $ (267) $ — $ (458) 81 Item 7.
Ford Credit’s allowance for credit losses is based on its assumptions regarding: • Probability of default . The expected probability of payment and time to default, which include assumptions about macroeconomic factors and recent performance; and • Loss given default. The percentage of the expected balance due at default that is not recoverable.
Ford Credit’s allowance for credit losses is based on its assumptions regarding: • Probability of default . The expected probability of payment and time to default, which include assumptions about macroeconomic factors and recent performance. • Loss given default. The percentage of the expected balance due at default that is not recoverable.
Assumptions are set at each year-end and are generally not changed during the year unless there is a major plan event, such as a curtailment or settlement that would trigger a plan remeasurement. See Note 17 of the Notes to the Financial Statements for more information regarding pension and OPEB costs and assumptions. Pension Plans Effect of Actual Results .
Assumptions are set at each year-end and are generally not changed during the year unless there is a major plan event, such as a curtailment or settlement that would trigger a plan remeasurement. See Note 16 of the Notes to the Financial Statements for more information regarding pension and OPEB costs and assumptions. Pension Plans Effect of Actual Results .
Due to the uncertainty and potential volatility of the factors used in establishing our estimates, changes in our assumptions could materially affect our financial condition and results of operations. See Note 25 of the Notes to the Financial Statements for information regarding warranty and field service action costs. Pensions and Other Postretirement Employee Benefits Nature of Estimates Required.
Due to the uncertainty and potential volatility of the factors used in establishing our estimates, changes in our assumptions could materially affect our financial condition and results of operations. See Note 24 of the Notes to the Financial Statements for information regarding warranty and field service action costs. Pensions and Other Postretirement Employee Benefits Nature of Estimates Required.
In reality, some of our exposures offset and foreign exchange rates move in different magnitudes and at different times, and any changes in fair value would generally be offset by changes in the underlying exposure. See Note 20 of the Notes to the Financial Statements for more information regarding our foreign currency exchange contracts. Commodity Price Risk.
In reality, some of our exposures offset and foreign exchange rates move in different magnitudes and at different times, and any changes in fair value would generally be offset by changes in the underlying exposure. See Note 19 of the Notes to the Financial Statements for more information regarding our foreign currency exchange contracts. Commodity Price Risk.
In certain instances, we forgo hedge accounting, and in certain other instances, our derivatives do not qualify for hedge accounting. Either situation results in unrealized gains and losses that are recognized in income. For additional information on our derivatives, see Note 20 of the Notes to the Financial Statements.
In certain instances, we forgo hedge accounting, and in certain other instances, our derivatives do not qualify for hedge accounting. Either situation results in unrealized gains and losses that are recognized in income. For additional information on our derivatives, see Note 19 of the Notes to the Financial Statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Sensitivity Analysis. The December 31, 2023 pension funded status and 2024 expense are affected by year-end 2023 assumptions. Sensitivities to these assumptions may be asymmetric and are specific to the time periods noted.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Sensitivity Analysis. The December 31, 2024 pension funded status and 2025 expense are affected by year-end 2024 assumptions. Sensitivities to these assumptions may be asymmetric and are specific to the time periods noted.
We monitor and manage these exposures as an integral part of our overall risk management program, which includes regular reports to a central management committee, the Global Risk Management Committee (“GRMC”). The GRMC is chaired by our Chief Financial Officer, and the committee includes our Controller and Treasurer.
We monitor and manage these exposures as an integral part of our overall risk management program, which includes regular reports to a central management committee, the Global Risk Management Committee (“GRMC”). The GRMC is chaired by our Chief Financial Officer, and the committee includes our Chief Accounting Officer and Treasurer.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Impairment of Long-Lived Assets Asset groups are tested at the level of the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Impairment of Long-Lived Assets Asset groups are tested at the level of the smallest identifiable group of assets that generate cash flows that are largely independent of the cash flows from other assets or groups of assets.
The potential change in the fair value from a 10% change in the underlying exchange rates, in U.S. dollar terms, would have been $3.1 billion at December 31, 2023, compared with $1.9 billion at December 31, 2022. The sensitivity analysis presented is hypothetical and assumes foreign exchange rate changes are instantaneous and adverse across all currencies.
The potential change in the fair value from a 10% change in the underlying exchange rates, in U.S. dollar terms, would have been $2.9 billion at December 31, 2024, compared with $3.1 billion at December 31, 2023. The sensitivity analysis presented is hypothetical and assumes foreign exchange rate changes are instantaneous and adverse across all currencies.
The table below estimates the effect on our funded status of an increase/decrease in discount rates and interest rates (in millions): Basis Point Change Increase/(Decrease) in December 31, 2023 Funded Status Factor U.S. Plans Non-U.S.
The table below estimates the effect on our funded status of an increase/decrease in discount rates and interest rates (in millions): Basis Point Change Increase/(Decrease) in December 31, 2024 Funded Status Factor U.S. Plans Non-U.S.
The table below estimates the effect on pension expense of a higher/lower assumption for these factors (in millions): Basis Point Change Increase/(Decrease) in 2024 Pension Expense Factor U.S. Plans Non-U.S.
The table below estimates the effect on pension expense of a higher/lower assumption for these factors (in millions): Basis Point Change Increase/(Decrease) in 2025 Pension Expense Factor U.S. Plans Non-U.S.
As discussed in greater detail in Item 7, our funding sources include sales of receivables in securitizations and other structured financings, unsecured debt issuances, equity and equity-linked issuances, and bank borrowings. We are exposed to a variety of other risks, such as loss or damage to property, liability claims, and employee injury.
As discussed in greater detail in Item 7, our funding sources include unsecured debt issuances, sales of receivables in securitization transactions and other structured financings, equity and equity-linked issuances, and bank borrowings. We are exposed to a variety of other risks, such as loss or damage to property, liability claims, and employee injury.
The detail for the changes is shown below (in billions): 2022 vs 2021 Increase/ (Decrease) 2023 vs 2022 Increase/ (Decrease) Net income/(loss) $ (2.0) $ 4.3 Shareholder distributions (a) (2.5) (5.4) Other comprehensive income/(loss) (1.0) 0.3 Adoption of accounting standards — — Common stock issued (including share-based compensation impacts) 0.2 0.4 Total $ (5.3) $ (0.4) ________ (a) Includes cash dividends, dividend equivalents, and anti-dilutive share repurchases. 82 Item 7.
The detail for the changes is shown below (in billions): 2023 vs 2022 Increase/ (Decrease) 2024 vs 2023 Increase/ (Decrease) Net income/(loss) $ 4.3 $ 5.9 Shareholder distributions (a) (5.4) (3.6) Other comprehensive income/(loss) 0.3 (0.6) Adoption of accounting standards — — Common stock issued (including share-based compensation impacts) 0.4 0.4 Total $ (0.4) $ 2.1 ________ (a) Includes cash dividends, dividend equivalents, and anti-dilutive share repurchases. 82 Item 7.
If the undiscounted forecasted cash flows are less than the carrying value of the assets, the asset group’s fair value is measured relying primarily on a discounted cash flow method. To the extent available, we will also consider third-party valuations of our long-lived assets that were prepared for other business purposes.
If the undiscounted forecasted cash flows are less than the carrying value of the assets, the asset group’s fair value is measured relying primarily on a discounted cash flow method. To the extent available, we will also consider third-party valuations of our long-lived assets that may have been prepared for other business purposes.
Plans Interest rate - service cost and interest cost +/- 25 bps $25/$(25) $15/$(15) Expected long-term rate of return on assets +/- 25 (75)/75 (55)/55 The effect of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities. The sensitivity of pension expense to a change in discount rate assumptions may not be linear.
Plans Interest rate - service cost and interest cost +/- 25 bps $25/$(25) $15/$(15) Expected long-term rate of return on assets +/- 25 (70)/70 (50)/50 The effect of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities. The sensitivity of pension expense to a change in discount rate assumptions may not be linear.
The potential change in the fair value from a 10% change in the underlying commodity prices would have been $203 million at December 31, 2023, compared with $178 million at December 31, 2022. The sensitivity analysis presented is hypothetical and assumes commodity price changes are instantaneous and adverse across all commodities.
The potential change in the fair value from a 10% change in the underlying commodity prices would have been $189 million at December 31, 2024, compared with $203 million at December 31, 2023. The sensitivity analysis presented is hypothetical and assumes commodity price changes are instantaneous and adverse across all commodities.
Plans Discount rate - obligation +/- 100 bps $2,900/$(3,400) $2,700/$(3,400) Interest rate - fixed income assets +/- 100 (2,800)/3,200 (1,800)/2,200 Net impact on funded status $100/$(200) $900/$(1,200) The fixed income asset sensitivity shown excludes other fixed income return components (e.g., changes in credit spreads, bond coupon and active management excess returns), and growth asset returns.
Plans Discount rate - obligation +/- 100 bps $2,500/$(3,000) $2,300/$(2,800) Interest rate - fixed income assets +/- 100 (2,400)/2,800 (1,700)/2,100 Net impact on funded status $100/$(200) $600/$(700) The fixed income asset sensitivity shown excludes other fixed income return components (e.g., changes in credit spreads, bond coupon and active management excess returns), and growth asset returns.
Quantitative and Qualitative Disclosures About Market Risk (Continued) The net fair value of foreign exchange forward contracts (including adjustments for credit risk) as of December 31, 2023, was a liability of $319 million, compared with an asset of $236 million as of December 31, 2022.
Quantitative and Qualitative Disclosures About Market Risk (Continued) The net fair value of foreign exchange forward contracts (including adjustments for credit risk) as of December 31, 2024 was an asset of $410 million, compared with a liability of $319 million as of December 31, 2023.
Assuming a hypothetical increase in interest rates of one percentage point, the value of our portfolios would be reduced by $222 million, as calculated as of December 31, 2023. This compares to $256 million, as calculated as of December 31, 2022.
Assuming a hypothetical increase in interest rates of one percentage point, the value of our portfolios would be reduced by $233 million, as calculated as of December 31, 2024. This compares to $222 million, as calculated as of December 31, 2023.
Adjustments to depreciation expense result in a change in the depreciation rates of the vehicles subject to operating leases and are recorded prospectively on a straight-line basis. Generally, lease customers have the option to buy the leased vehicle at the end of the lease or to return the vehicle to the dealer. Nature of Estimates Required.
Adjustments to depreciation expense result in a change in the depreciation rates of the vehicles subject to operating leases and are recorded prospectively on a straight-line basis. Generally, lease customers have the option to buy the leased vehicle at the end of the lease or to return the vehicle to the dealer. 89 Item 7.
The net fair value of commodity forward contracts (including adjustments for credit risk) as of December 31, 2023, was a liability of $9 million, compared with a liability of $49 million as of December 31, 2022.
The net fair value of commodity forward contracts (including adjustments for credit risk) as of December 31, 2024 was a liability of $8 million, compared with a liability of $9 million as of December 31, 2023.
Our interest rate sensitivity analysis on our investment portfolios includes cash and cash equivalents and net marketable securities. At December 31, 2023, we had Company cash of $28.8 billion in our investment portfolios, compared to $32.3 billion at December 31, 2022.
Our interest rate sensitivity analysis on our investment portfolios includes cash and cash equivalents and net marketable securities. At December 31, 2024, we had Company cash of $28.5 billion in our investment portfolios, compared to $28.8 billion at December 31, 2023.
The weighted average discount rate used to determine the benefit obligation for worldwide OPEB plans at December 31, 2023 was 5.10%, compared with 5.48% at December 31, 2022, resulting in a worldwide net remeasurement loss of $286 million, which has been recognized within net periodic benefit cost and reported as a special item. Sensitivity Analysis.
The weighted average discount rate used to determine the benefit obligation for worldwide OPEB plans at December 31, 2024 was 5.46%, compared with 5.10% at December 31, 2023, resulting in a worldwide net remeasurement gain of $112 million, which has been recognized within net periodic benefit cost and reported as a special item. Sensitivity Analysis.
Ford and Lincoln operating lease portfolio is as follows (in millions): Assumption Basis Point Change Increase/(Decrease) Future auction values +/- 100 bps $(20)/$20 Return volumes +/- 100 5/(5) Adjustments to the amount of accumulated supplemental depreciation on operating leases are reflected on our balance sheets as Net investment in operating leases and on our income statements in Ford Credit interest, operating, and other expenses.
Ford and Lincoln brand operating lease portfolio at December 31, 2024 is as follows (in millions): Assumption Basis Point Change Increase/(Decrease) in Projected Lifetime Depreciation Future auction values +/- 100 bps $(50)/$50 Return volumes +/- 100 5/(5) Adjustments to the amount of accumulated supplemental depreciation on operating leases are reflected on our balance sheets as Net investment in operating leases and on our income statements in Ford Credit interest, operating, and other expenses.
However, the ultimate realization of our deferred tax assets is subject to a number of variables, including our future profitability within relevant tax jurisdictions, and future tax planning and the related effects on our cash and liquidity position. Accordingly, our valuation allowances may increase or decrease in future periods.
However, realization of our deferred tax assets is impacted by a number of variables, including future profitability within relevant tax jurisdictions, tax law changes, and tax planning and the related effects on our cash and liquidity position. Accordingly, our valuation allowances may increase or decrease in future periods.
Ford and Lincoln retail financing is as follows (in millions): Assumption Basis Point Change Increase/(Decrease) Probability of default (lifetime) +/- 100 bps $230/$(230) Loss given default +/- 100 10/(10) Accumulated Depreciation on Vehicles Subject to Operating Leases Accumulated depreciation on vehicles subject to operating leases reduces the value of the leased vehicles in Ford Credit’s operating lease portfolio from their original acquisition value to their expected residual value at the end of the lease term.
Ford and Lincoln retail financing portfolio at December 31, 2024 is as follows (in millions): Assumption Basis Point Change Increase/(Decrease) in Allowance for Credit Losses Probability of default (lifetime) +/- 100 bps $250/$(250) Loss given default +/- 100 15/(15) Accumulated Depreciation on Vehicles Subject to Operating Leases Accumulated depreciation on vehicles subject to operating leases reduces the value of the leased vehicles in Ford Credit’s operating lease portfolio from their original acquisition value to their expected residual value at the end of the lease term.
An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value. When an impairment loss is recognized for assets to be held and used, the adjusted carrying amounts of those assets are depreciated over their remaining useful life. Assumptions and Approach Used - Held-and-Used Long-Lived Assets.
An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value. When an impairment loss is recognized for assets to be held and used, the adjusted carrying amounts of those assets are depreciated over their remaining useful life. Nature of Estimates Required - Held-for-Sale Operations.
As we transition to a greater mix of electric vehicles, we expect to increase our reliance on lithium, cobalt, nickel, graphite, and manganese, among other materials, for batteries. Our practice is to use derivative instruments to hedge the price risk with respect to forecasted purchases of certain commodities consistent with our overall risk management strategy.
As we transition to a greater mix of electric vehicles, we expect to increase our reliance on battery raw materials (e.g., lithium, cobalt, and nickel). Our practice is to use derivative instruments to hedge the price risk with respect to forecasted purchases of certain commodities consistent with our overall risk management strategy.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selected Other Information. Equity. At December 31, 2022, total equity attributable to Ford was $43.2 billion, a decrease of $5.3 billion compared with December 31, 2021. At December 31, 2023, total equity attributable to Ford was $42.8 billion, a decrease of $0.4 billion compared with December 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selected Other Information. Equity. At December 31, 2023, total equity attributable to Ford was $42.8 billion, a decrease of $0.4 billion compared with December 31, 2022. At December 31, 2024, total equity attributable to Ford was $44.8 billion, an increase of $2.1 billion compared with December 31, 2023.
We presently believe that global valuation allowances of $4.2 billion are required and that we ultimately will recover the remaining $16 billion of deferred tax assets.
We presently believe that global valuation allowances of $3.9 billion are required and that we ultimately will recover the remaining $15.3 billion of deferred tax assets.
The assumptions used in developing the required estimates include the following key factors: • Discount rates. Our discount rate assumptions are based primarily on the results of cash flow matching analyses, which match the future cash outflows for each major plan to a yield curve based on high-quality bonds specific to the country of the plan.
Our discount rate assumptions are based primarily on the results of cash flow matching analyses, which match the future cash outflows for each major plan to a yield curve based on high-quality bonds specific to the country of the plan.
The table below estimates the effect on 2024 OPEB expense of higher/lower assumptions for these factors (in millions): Worldwide OPEB Basis Point Change (Increase)/Decrease 2023 YE Obligation Increase/(Decrease) 2024 Expense Factor Discount rate - obligation +/- 100 bps $450/$(540) N/A Interest rate - service cost and interest cost +/- 25 N/A $5/$(5) Income Taxes Nature of Estimates Required.
The table below estimates the effect on 2025 OPEB expense of higher/lower assumptions for these factors (in millions): Worldwide OPEB Basis Point Change (Increase)/Decrease 2024 YE Obligation Increase/(Decrease) 2025 Expense Factor Discount rate - obligation +/- 100 bps $400/$(475) N/A Interest rate - service cost and interest cost +/- 25 N/A $5/$(5) 85 Item 7.
Plan obligations and expenses are based on existing retirement plan provisions. No assumption is made regarding any potential future changes to benefit provisions beyond those to which we are presently committed (e.g., in existing labor contracts). 83 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Assumptions and Approach Used.
No assumption is made regarding any potential future changes to benefit provisions beyond those to which we are presently committed (e.g., in existing labor contracts). 83 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Assumptions and Approach Used. The assumptions used in developing the required estimates include the following key factors: • Discount rates.
Nature of Estimates Required - Held-and-Used Long-Lived Assets. We test our long-lived asset groups when changes in circumstances indicate their carrying value may not be recoverable.
We test our long-lived asset groups when changes in circumstances indicate their carrying value may not be recoverable.
Each operating lease in Ford Credit’s portfolio represents a vehicle it owns that has been leased to a customer. At the time Ford Credit purchases a lease, it establishes an expected residual value for the vehicle.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Nature of Estimates Required. Each operating lease in Ford Credit’s portfolio represents a vehicle it owns that has been leased to a customer. At the time Ford Credit purchases a lease, it establishes an expected residual value for the vehicle.
Asset groupings for impairment analysis are reevaluated when events occur, such as changes in organizational structure and management reporting. Following the organizational and segment structure change in the beginning of 2023, our asset groups are: Ford Blue North America, Ford Blue Europe, Ford Blue Rest of World, Ford Model e, Ford Pro, Ford Credit, and Ford Next.
Asset groupings for impairment analysis are reevaluated when events occur, such as changes in organizational structure and management reporting. Our asset groups for 2024 were: Ford Blue North America, Ford Blue Europe, Ford Blue Rest of World, Ford Model e, Ford Pro, Ford Credit, and Ford Next. Nature of Estimates Required - Held-and-Used Long-Lived Assets.
We recognize benefits for these uncertain tax positions based upon a process that requires judgment regarding the technical application of the laws, regulations, and various related judicial opinions.
These tax laws and regulations are complex and involve uncertainties in the application to our facts and circumstances that may be open to interpretation. We recognize benefits for these uncertain tax positions based upon a process that requires judgment regarding the technical application of the laws, regulations, and various related judicial opinions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selected Income Statement Information.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selected Cash Flow Information.
Ford Credit estimates the expected residual value by evaluating recent auction values, return volumes for its leased vehicles, industrywide used vehicle prices, marketing incentive plans, and vehicle quality data. Assumptions Used. Ford Credit’s accumulated depreciation on vehicles subject to operating leases is based on assumptions regarding: • Auction value.
Ford Credit estimates the expected residual value by evaluating recent auction values, return volumes for Ford Credit’s leased vehicles, industrywide used vehicle prices, marketing incentive plans, and vehicle quality data and benchmarks to third-party data depending on availability.
The fair value of an asset group is determined from the perspective of a market-participant considering, among other things, appropriate discount rates, valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group.
Assumptions and Approach Used - Held-and-Used Long-Lived Assets. The fair value of an asset group is determined from the perspective of a market participant. Considerations include appropriate discount rates, valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group. 87 Item 7.
We must make estimates and apply judgment in determining the provision for income taxes for financial reporting purposes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Income Taxes Nature of Estimates Required. We must make estimates and apply judgment in determining the provision for income taxes for financial reporting purposes.
If Ford Credit does not believe the models reflect lifetime expected credit losses for the portfolio, an adjustment is made to reflect management judgment regarding qualitative factors, including economic uncertainty, observable changes in portfolio performance, and other relevant factors. 88 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Assumptions Used.
The models vary by portfolio and receivable type including consumer finance receivables, wholesale loans, and dealer loans. If Ford Credit does not believe the models reflect lifetime expected credit losses for the portfolio, an adjustment is made to reflect management judgment regarding qualitative factors, including economic uncertainty, observable changes in portfolio performance, and other relevant factors. Assumptions Used.
We measure the fair value of an asset group based on market prices (i.e., the amount for which the asset could be sold to a third party) when available. When market prices are not available, we generally estimate the fair value of the asset group using the income approach and/or the market approach. The income approach uses cash flow projections.
When market prices are not available, we generally estimate the fair value of the asset group using the income approach and/or the market approach. The income approach uses cash flow projections.
Changes in these estimates and judgments may result in a material increase or decrease to our tax provision, which would be recorded in the period in which the change occurs. 85 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Assumptions and Approach Used.
Changes in these estimates and judgments may result in a material increase or decrease to our tax provision, which would be recorded in the period in which the change occurs. Assumptions and Approach Used. We are subject to the income tax laws and regulations of the many jurisdictions in which we operate.
Events that trigger a test for recoverability include material adverse changes in projected revenues or expenses, present cash flow losses combined with a history of cash flow losses and a forecast that demonstrates significant continuing losses, significant negative industry or economic trends (including a substantial shift in consumer preference), a current expectation that a long-lived asset group will be disposed of significantly before the end of its useful life, a significant adverse change in the manner in which an asset group is used or in its physical condition, or when there is a change in the asset grouping.
Events that trigger a test for recoverability include: • Material adverse changes in projected revenues or expenses, present negative cash flows combined with a history of negative cash flows and a forecast that demonstrates significant continuing losses • Adverse change in legal factors or significant negative industry or regulatory trends (such as overcrowding of market offerings or changes in regulations, resulting in excess capacity relative to market demand) • Current expectation that a long-lived asset group will be disposed of significantly before the end of its useful life • Significant adverse change in the manner in which an asset group is used or in its physical condition • Significant change in the asset grouping In addition, investing in new or emerging products (e.g., EVs) or services (e.g., connectivity) may require substantial upfront capital, which may result in initial forecasted negative cash flows in the near term.
For 2024, the expected long-term rate of return on assets is 5.93% for U.S. plans, down 32 basis points from 2023, reflecting lower capital market return expectations, and 4.53% for non-U.S. plans, up 40 basis points compared with a year ago, reflecting return expectations in those markets and a higher return seeking mix for certain plans. De-risking Strategy .
For 2025, the expected long-term rate of return on assets is 6.37% for U.S. plans, up 44 basis points from 2024, and 5.23% for non-U.S. plans, up 70 basis points compared with a year ago, reflecting higher expected capital market return assumptions, including increased long-term interest rates. De-risking Strategy .
Assumptions regarding general economic conditions are included in and affect our assumptions regarding industry sales and pricing estimates for our vehicles. These macroeconomic assumptions include, but are not limited to, industry sales volumes, inflation, interest rates, prices of raw materials (e.g., commodities), and foreign currency exchange rates.
These macroeconomic assumptions include, but are not limited to, industry sales volumes, inflation, interest rates, prices of raw materials (e.g., commodities), and foreign currency exchange rates. The market approach is another method for measuring the fair value of an asset group.
Allowance for Credit Losses The allowance for credit losses represents Ford Credit’s estimate of the expected lifetime credit losses inherent in finance receivables as of the balance sheet date. The adequacy of Ford Credit’s allowance for credit losses is assessed quarterly, and the assumptions and models used in establishing the allowance are evaluated regularly.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Allowance for Credit Losses The allowance for credit losses represents Ford Credit’s estimate of the expected lifetime credit losses inherent in finance receivables as of the balance sheet date.
Ford Credit’s projection of the market value of the vehicles when sold at the end of the lease; and • Return volume. Ford Credit’s projection of the number of vehicles that will be returned at lease-end.
Ford Credit’s projection of the market value of the vehicles when sold at the end of the lease; and • Return volume. Ford Credit’s projection of the number of vehicles that will be returned at lease-end. See Note 12 of the Notes to the Financial Statements for more information regarding accumulated depreciation on vehicles subject to operating leases. Sensitivity Analysis.
In addition, investing in new, emerging products (e.g., EVs) or services (e.g., connectivity) may require substantial upfront investment, which may result in initial forecasted negative cash flows in the near term. In these instances, near-term negative cash flows on their own may not be indicative of a triggering event for evaluation of impairment.
In these instances, near-term negative cash flows on their own may not be indicative of a triggering event for evaluation of impairment.
Weighted-average cost of capital is an estimate of the overall risk-adjusted pre-tax rate of return expected by equity and debt holders of a business enterprise. 87 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) • Economic projections.
Weighted-average cost of capital is an estimate of the overall risk-adjusted pre-tax rate of return expected by equity and debt holders of a business enterprise. • Economic projections. Assumptions regarding general economic conditions are included in and affect our assumptions regarding industry sales and pricing estimates for our vehicles.
Because credit losses can vary substantially over time, estimating credit losses requires a number of assumptions about matters that are uncertain. Changes in assumptions affect Ford Credit interest, operating, and other expenses on our consolidated income statements and the allowance for credit losses contained within Ford Credit finance receivables, net on our consolidated balance sheets.
Changes in assumptions affect Ford Credit interest, operating, and other expenses on our consolidated income statements and the allowance for credit losses contained within Ford Credit finance receivables, net on our consolidated balance sheets. See Note 10 of the Notes to the Financial Statements for more information regarding allowance for credit losses. Nature of Estimates Required.
The estimation of our defined benefit pension and OPEB plan obligations and expenses requires that we make use of estimates of the present value of the projected future payments to all participants, taking into consideration the likelihood of potential future events, such as demographic experience and health care cost increases.
The estimation of our defined benefit pension and OPEB plan obligations and expenses requires that we utilize the calculated present value of the projected future payments to all participants, taking into consideration valuation assumptions specific to each plan. Plan obligations and expenses are based on existing retirement plan provisions.
See Note 10 of the Notes to the Financial Statements for more information regarding allowance for credit losses. Nature of Estimates Required. Ford Credit estimates the allowance for credit losses for receivables that share similar risk characteristics based on a collective assessment using a combination of measurement models and management judgment.
Ford Credit estimates the allowance for credit losses for receivables that share similar risk characteristics based on a collective assessment using a combination of measurement models and management judgment. The models consider factors such as historical trends in credit losses, recent portfolio performance, and forward-looking macroeconomic conditions.
The market approach is another method for measuring the fair value of an asset group. This approach relies on the market value (i.e., market capitalization) of companies that are engaged in the same or a similar line of business as the asset group being evaluated.
This approach relies on the market value (i.e., market capitalization) of companies that are engaged in the same or a similar line of business as the asset group being evaluated. In addition, to the extent available, we also consider third-party valuations that may have been prepared for other business purposes. During 2024, no triggering events were identified.
Non-U.S. actual return on assets was 5.56%, which was higher than the expected long-term rate of return of 4.13%. The higher returns are explained primarily by gains on fixed income assets.
In 2024, the U.S. actual return on assets was 0.08%, which was lower than the expected long-term rate of return of 5.93%. Non-U.S. actual return on assets was 2.77%, which was lower than the expected long-term rate of return of 4.53%.
In total, lower discount rates compared to year-end 2022, partially offset by asset gains in excess of our assumptions resulted in a net remeasurement loss of $1.8 billion, which has been recognized within net periodic benefit cost and reported as a special item.
The lower returns are explained primarily by lower returns on fixed income assets given the increase in long-term interest rates. In total, higher discount rates, partially offset by asset returns lower than our assumptions, resulted in a net remeasurement gain of $575 million. This gain has been recognized within net periodic benefit cost and reported as a special item.
The year-end 2023 weighted average discount rate was 5.17% for U.S. plans and 3.98% for non-U.S. plans, reflecting decreases of 34 and 44 basis points, respectively, compared with year-end 2022. In 2023, the U.S. actual return on assets was 7.41%, which was higher than the expected long-term rate of return of 6.25%.
The year-end 2024 weighted average discount rate was 5.65% for U.S. plans and 4.51% for non-U.S. plans, reflecting increases of 48 and 53 basis points, respectively, compared with year-end 2023. Higher discount rates lowered the valuations of U.S. and non-U.S. plans.
Pursuant to these warranties and field service actions, we will repair, replace, or adjust parts on a vehicle that are defective in factory-supplied materials or workmanship. We accrue the estimated cost of both base warranty coverages and field service actions at the time of sale.
Software updates are increasingly a component of vehicle service and may be performed during warranty coverage repairs, through field service actions, or through over-the-air updates. We accrue the estimated cost of both base warranty coverages and field service actions at the time of sale.
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 2023 SUPPLEMENTAL INFORMATION The tables below provide supplemental consolidating financial information and other financial information. Company excluding Ford Credit includes our Ford Blue, Ford Model e, Ford Pro, and Ford Next reportable segments, Corporate Other, Interest on Debt, and Special Items.
Added
We perform an impairment test on a disposal group to be discontinued, held for sale, or otherwise disposed of when we have committed to an action and the action is expected to be completed within one year.
Removed
Eliminations, where presented, primarily represent eliminations of intersegment transactions and deferred tax netting. Selected Cash Flow Information.
Added
We estimate fair value to approximate the expected proceeds to be received, less cost to sell, and compare it to the carrying value of the disposal group. An impairment charge is recognized when the carrying value exceeds the estimated fair value.
Removed
The following table provides supplemental income statement information (in millions): For the Year Ended December 31, 2023 Company excluding Ford Credit Ford Credit Consolidated Revenues $ 165,901 $ 10,290 $ 176,191 Total costs and expenses 161,252 9,481 170,733 Operating income/(loss) 4,649 809 5,458 Interest expense on Company debt excluding Ford Credit 1,302 — 1,302 Other income/(loss), net (1,093) 490 (603) Equity in net income/(loss) of affiliated companies 382 32 414 Income/(Loss) before income taxes 2,636 1,331 3,967 Provision for/(Benefit from) income taxes (360) (2) (362) Net income/(loss) 2,996 1,333 4,329 Less: Income/(loss) attributable to noncontrolling interests (18) — (18) Net income/(loss) attributable to Ford Motor Company $ 3,014 $ 1,333 $ 4,347 80 Item 7.
Added
We also assess fair value if circumstances arise that were considered unlikely and, as a result, we decide not to sell a disposal group previously classified as held for sale upon reclassification to held and used.
Removed
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Selected Balance Sheet Information.
Added
When there is a change to a plan of sale, and the assets are reclassified from held for sale to held and used, the long-lived assets are reported at the lower of (i) the carrying amount before a held-for-sale designation, adjusted for depreciation that would have been recognized if the assets had not been classified as held for sale, or (ii) the fair value at the date the assets no longer satisfy the criteria for classification as held for sale.
Removed
The following tables provide supplemental balance sheet information (in millions): December 31, 2023 Assets Company excluding Ford Credit Ford Credit Eliminations Consolidated Cash and cash equivalents $ 14,204 $ 10,658 $ — $ 24,862 Marketable securities 14,520 789 — 15,309 Ford Credit finance receivables, net — 46,425 — 46,425 Trade and other receivables, net 5,771 9,830 — 15,601 Inventories 15,651 — — 15,651 Other assets 2,658 975 — 3,633 Receivable from other segments 1,716 1,773 (3,489) — Total current assets 54,520 70,450 (3,489) 121,481 Ford Credit finance receivables, net — 55,650 — 55,650 Net investment in operating leases 1,052 20,332 — 21,384 Net property 40,551 270 — 40,821 Equity in net assets of affiliated companies 5,431 117 — 5,548 Deferred income taxes 16,795 190 — 16,985 Other assets 9,959 1,482 — 11,441 Receivable from other segments — 30 (30) — Total assets $ 128,308 $ 148,521 $ (3,519) $ 273,310 Liabilities Payables $ 25,092 $ 900 $ — $ 25,992 Other liabilities and deferred revenue 23,273 2,597 — 25,870 Company excluding Ford Credit debt payable within one year 477 — — 477 Ford Credit debt payable within one year — 49,192 — 49,192 Payable to other segments 3,373 116 (3,489) — Total current liabilities 52,215 52,805 (3,489) 101,531 Other liabilities and deferred revenue 26,519 1,895 — 28,414 Company excluding Ford Credit long-term debt 19,467 — — 19,467 Ford Credit long-term debt — 80,095 — 80,095 Deferred income taxes 668 337 — 1,005 Payable to other segments 30 — (30) — Total liabilities $ 98,899 $ 135,132 $ (3,519) $ 230,512 81 Item 7.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) We measure the fair value of an asset group based on market prices (i.e., the amount for which the asset could be sold to a third party) when available.
Removed
We are subject to the income tax laws and regulations of the many jurisdictions in which we operate. These tax laws and regulations are complex and involve uncertainties in the application to our facts and circumstances that may be open to interpretation.
Added
Assumptions and Approach Used - Held-for-sale Operations. In the first quarter of 2024, we entered into an agreement to sell 100% of our equity interest in Ford Sales and Service Korea Company (“FSSK”), and the assets and liabilities of the entity were classified as held for sale.
Removed
In addition, to the extent available we also consider third-party valuations that were prepared for other business purposes. During 2023, we identified triggering events related to our Ford Blue Europe asset group.
Added
However, as of December 31, 2024, FSSK no longer met the held-for-sale criteria as that sale transaction did not close and is no longer probable of occurring. Accordingly, FSSK’s assets and liabilities were reclassified and reported as held and used as of December 31, 2024.
Removed
In each situation in which we experienced a triggering event during the year, we tested our long-lived assets for impairment using our internal economic and business projections, and determined that the carrying values of the long-lived assets were recoverable.
Added
In the third quarter of 2024, we entered into an agreement to sell 100% of our equity interest in Ford Motor Company A/S, our national sales company in Denmark. The entity was classified as held for sale in the fourth quarter of 2024 once all held-for-sale criteria were met.
Removed
If, in future quarters, our economic or business projections were to change as a result of an update to our plans, a deterioration of the economic or business environment, a significant adverse change in the extent or manner in which a long-lived asset is being used, or an expectation that a long-lived asset group will be disposed of significantly before the end of its useful life, we would undertake additional testing, as appropriate, which could result in an impairment of long-lived assets.
Added
Accordingly, as of December 31, 2024, the assets and liabilities of Ford Motor Company A/S were reported as held for sale. We determined that the assets of both FSSK and Ford Motor Company A/S, which were not material, were not impaired. See Note 21 of the Notes to the Financial Statements for more information regarding held-for-sale operations. 88 Item 7.
Removed
The models consider factors such as historical trends in credit losses, recent portfolio performance, and forward-looking macroeconomic conditions. The models vary by portfolio and receivable type including consumer finance receivables, wholesale loans, and dealer loans.
Added
The adequacy of Ford Credit’s allowance for credit losses is assessed quarterly, and the assumptions and models used in establishing the allowance are evaluated regularly. Because credit losses can vary substantially over time, estimating credit losses requires a number of assumptions about matters that are uncertain.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFord Credit’s pre-tax cash flow sensitivity to interest rate movement at December 31 was as follows (in millions): Pre-Tax Cash Flow Sensitivity 2022 2023 One percentage point instantaneous increase in interest rates $ 127 $ 78 One percentage point instantaneous decrease in interest rates (127) (78) While the sensitivity analysis presented is Ford Credit’s best estimate of the impacts of the specified assumed interest rate scenarios, its actual results could differ from those projected.
Biggest changeFord Credit’s pre-tax cash flow sensitivity to interest rate movement at December 31 was as follows (in millions): Pre-Tax Cash Flow Sensitivity 2023 2024 One percentage point instantaneous increase in interest rates $ 78 $ 107 One percentage point instantaneous decrease in interest rates (78) (107) While the sensitivity analysis presented is Ford Credit’s best estimate of the impacts of the specified assumed interest rate scenarios, its actual results could differ from those projected.
As a result of this policy, Ford Credit believes its market risk exposure, relating to changes in currency exchange rates at December 31, 2023, is insignificant. Derivative Fair Values. The net fair value of Ford Credit’s derivative financial instruments at December 31, 2023 was a liability of $1.3 billion, compared to a liability of $2.0 billion at December 31, 2022.
As a result of this policy, Ford Credit believes its market risk exposure, relating to changes in currency exchange rates at December 31, 2024, is insignificant. Derivative Fair Values. The net fair value of Ford Credit’s derivative financial instruments at December 31, 2024 was a liability of $1.2 billion, compared to a liability of $1.3 billion at December 31, 2023.

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