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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 242 added, 144 removed, 393 unchanged (50% of the section changed)

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Certain of our affiliates are variable interest entities in which we are not the primary beneficiary.

Our maximum exposure to any potential losses associated with these affiliates is limited to our investments and loans and was $ 2.8 billion and $ 3 billion at December 31, 2021 and March 31, 2022, respectively.

Our maximum exposure to any potential losses associated with these affiliates is limited to our investments and loans and was $ 2.8 billion and $ 2.9 billion at December 31, 2021 and June 30, 2022, respectively.

On July 13, 2022, Ford, SK On Co., Ltd., and SK Battery America, Inc.

(a wholly owned subsidiary of SK On) completed the creation of BlueOval SK, LLC, a 50/50 joint venture that will build and operate electric vehicle battery plants in Tennessee and Kentucky to supply batteries to Ford and Ford affiliates.

We expect BlueOval SK to be a variable interest entity of which we are not the primary beneficiary, and that we will use the equity method of accounting for our investment.

Ford has agreed to contribute up to $ 6.6 billion in capital to BlueOval SK over a five-year period ending in 2026, subject to any adjustments agreed to by the parties.

COMMITMENTS AND CONTINGENCIES

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Subsequent to initial recognition, the guarantee liability is adjusted at each reporting period to reflect the current estimate of expected payments resulting from possible default events over the remaining life of the guarantee.

The maximum potential payments for financial guarantees were $ 357 million and $ 358 million at December 31, 2021 and March 31, 2022, respectively.

The carrying value of recorded liabilities related to financial guarantees was $ 36 million and $ 35 million at December 31, 2021 and March 31, 2022, respectively.

The maximum potential payments for financial guarantees were $ 357 million and $ 242 million at December 31, 2021 and June 30, 2022, respectively.

The carrying value of recorded liabilities related to financial guarantees was $ 36 million and $ 18 million at December 31, 2021 and June 30, 2022, respectively.

Our financial guarantees consist of debt and lease obligations of certain joint ventures, as well as certain financial obligations of outside third parties, including suppliers, to support our business and economic growth.

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We regularly review our performance risk under these arrangements, and in the event it becomes probable we will be required to perform under a guarantee or indemnity, the amount of probable payment is recorded.

The maximum potential payments for non-financial guarantees were $ 453 million and $ 295 million at December 31, 2021 and March 31, 2022, respectively.

The carrying value of recorded liabilities related to non-financial guarantees was $ 38 million and $ 16 million at December 31, 2021 and March 31, 2022, respectively.

Included in the $ 295 million of maximum potential payments at March 31, 2022 are guarantees for the resale value of vehicles sold in certain arrangements to daily rental companies.

The maximum potential payment of $ 288 million as of March 31, 2022 represents the total proceeds we guarantee the rental company will receive on resale.

Reflecting our present estimate of proceeds the rental companies will receive on resale from third parties, we have recorded $ 16 million as our best estimate of the amount we will have to pay under the guarantee.

The maximum potential payments for non-financial guarantees were $ 453 million and $ 278 million at December 31, 2021 and June 30, 2022, respectively.

The carrying value of recorded liabilities related to non-financial guarantees was $ 38 million and de minimis at December 31, 2021 and June 30, 2022, respectively.

Included in the $ 278 million of maximum potential payments at June 30, 2022 are guarantees for the resale value of vehicles sold in certain arrangements to daily rental companies.

The maximum potential payment of $ 271 million as of June 30, 2022 represents the total proceeds we guarantee the rental company will receive on resale.

Reflecting our present estimate of proceeds the rental companies will receive on resale from third parties, we have recorded a de minimis amount as our best estimate of the amount we will have to pay under the guarantee.

In the ordinary course of business, we execute contracts involving indemnifications standard in the industry and indemnifications specific to a transaction, such as the sale of a business.

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Recoveries are reported in Trade and other receivables, net and Other assets.

The estimate of our future warranty and field service action costs, net of estimated supplier recoveries, for the periods ended March 31 was as follows (in millions):

First Quarter

The estimate of our future warranty and field service action costs, net of estimated supplier recoveries, for the periods ended June 30 was as follows (in millions):

Beginning balance $ 8,172 $ 8,451

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SEGMENT INFORMATION (Continued)

Key financial information for the periods ended or at March 31 was as follows (in millions):

Key financial information for the periods ended or at June 30 was as follows (in millions):

Automotive Mobility Ford Credit Corporate

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on Debt Special Items Adjustments Total

First Quarter 2021

Second Quarter 2021

Revenues $ 24,128 $ 21 $ 2,603 $ — $ — $ — $ — $ 26,752

Income/(Loss) before income taxes ( 97 ) ( 210 ) 1,623 ( 263 ) ( 453 ) 135 (a) — 735

Equity in net income/(loss) of affiliated companies 172 ( 60 ) 5 1 — ( 39 ) (a) — 79

Equity in net income/(loss) of affiliated companies 77 ( 63 ) 9 — — 28 — 51

Total assets 67,513 3,574 138,098 40,411 — — ( 1,064 ) (b) 248,532

First Quarter 2022

Second Quarter 2022

Revenues $ 37,909 $ 25 $ 2,256 $ — $ — $ — $ — $ 40,190

Income/(Loss) before income taxes 3,322 ( 221 ) 939 ( 318 ) ( 312 ) ( 2,619 ) (c) — 791

Equity in net income/(loss) of affiliated companies 139 ( 75 ) 6 1 — ( 104 ) (d) — ( 33 )

Equity in net income/(loss) of affiliated companies 157 ( 83 ) 4 — — ( 20 ) — 58

Total assets 71,291 3,284 127,493 45,008 — — ( 1,321 ) (b) 245,755

(a) Primarily reflects gains/(losses) on investments in equity securities (including a $ 902 million unrealized gain on our Rivian equity investment) and Global Redesign actions.

Automotive Mobility Ford Credit Corporate

Other Interest

on Debt Special Items Adjustments Total

First Half 2021

Revenues $ 57,682 $ 32 $ 5,266 $ — $ — $ — $ — $ 62,980

Income/(loss) before income taxes 3,300 ( 417 ) 2,585 ( 503 ) ( 926 ) 638 (d) — 4,677

Equity in net income/(loss) of affiliated companies 249 ( 123 ) 14 1 — ( 11 ) — 130

First Half 2022

Revenues $ 70,020 $ 109 $ 4,537 $ — $ — $ — $ — $ 74,666

Income/(loss) before income taxes 5,213 ( 463 ) 1,867 ( 569 ) ( 620 ) ( 8,485 ) (c) — ( 3,057 )

Equity in net income/(loss) of affiliated companies 296 ( 158 ) 10 1 — ( 124 ) (e) — 25

(a) Primarily reflects Global Redesign actions, mark-to-market adjustments for our global pension and OPEB plans, and gains/(losses) on investments in equity securities.

(b) Includes eliminations of intersegment transactions occurring in the ordinary course of business and deferred tax netting.

(c) Primarily reflects gains/(losses) on investments in equity securities (including a $ 5.4 billion unrealized loss on our Rivian equity investment).

(d) Primarily reflects the full impairment of our Ford Sollers Netherlands B.V.

(d) Primarily reflects the gain on our Rivian investment, Global Redesign actions, and mark-to-market adjustments for our global pension and OPEB plans.

(e) Primarily reflects the full impairment of our Ford Sollers Netherlands B.V.

(the parent company of our joint venture in Russia) equity method investment, resulting from the ongoing regulatory and economic uncertainty in Russia.

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KEY TRENDS AND ECONOMIC FACTORS AFFECTING FORD AND THE AUTOMOTIVE INDUSTRY

The following supplements the key trends and economic factors discussed on pages 34 and 35 of our 2021 Form 10‑K:

The following supplements the key trends and economic factors discussed on pages 34 and 35 of our 2021 Form 10‑K and page 31 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022:

COVID-19 and Supplier Disruptions.

The impact of COVID-19, including changes in consumer behavior, pandemic fears and market downturns, and restrictions on business and individual activities, has created significant volatility in the global economy.

Recent outbreaks in certain regions, including China where lock-downs due to COVID-19 have been imposed in more than 40 cities, continue to cause intermittent COVID-19-related disruptions in our supply chain and local manufacturing operations.

Recent outbreaks in certain regions continue to cause intermittent COVID-19-related disruptions in our supply chain and local manufacturing operations.

We also continue to face supplier disruptions due to the semiconductor shortage.

Further, actions taken by Russia in Ukraine could impact our suppliers, particularly our lower tier suppliers, as well as our operations in Europe.

Further, actions taken by Russia in Ukraine have impacted and could further impact our suppliers, particularly our lower tier suppliers, as well as our operations in Europe.

For additional information on the impact of supplier disruptions, see the Outlook section on page 57 .

Commodity and Energy Prices.

Prices for commodities remain volatile, and recently we have experienced price increases for base metals (e.g., steel and aluminum), precious metals (e.g., palladium), and raw materials that are used in batteries for electric vehicles (e.g., lithium, cobalt, and nickel for batteries).

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The net impact on us overall has been higher material costs.

To help ensure supply of raw materials for critical components (e.g., batteries), we, like others in the industry, plan to enter into multi-year sourcing agreements.

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.

Similar dynamics are impacting energy markets, with Europe particularly exposed to the risk of both higher prices and constraints on supply of natural gas due to the ongoing conflict in Ukraine.

Such shortages may impact facilities operated by us or our suppliers, which could have an impact on us in Europe and other regions.

For additional information on commodity costs, see the Outlook section on page 57 .

Despite recent increases, interest rates, notably mature market government bond yields, remain low by historical standards.

At the same time, inflation has accelerated and government deficits and debt remain at high levels in many major markets.

In the United States, inflation rose 8.5% annually in March 2022 to a 40-year high as Russia’s invasion of Ukraine drove up energy costs as well as other costs, such as freight premiums.

We are seeing a near-term impact on our business due to inflationary pressure.

We are seeing a near-term impact on our business due to inflationary pressure, and inflation has continued to accelerate in the wake of Russia’s invasion of Ukraine, driving up energy prices, freight premiums, and other operating costs.

Inflation in the United States rose by 9.1% on an annual basis in June, and U.K.

inflation rose 9.4% over the same period, both representing 40-year highs.

Surging energy prices drove the inflation rate for the euro zone 8.6% higher on an annual basis in June.

Interest rates, notably mature market government bond yields, remain low by historical standards but are rising as central banks around the world tighten monetary policy in response to inflation pressures, while government deficits and debt remain at high levels in many major markets.

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 during our plan period.

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RESULTS OF OPERATIONS

In the first quarter of 2022, the net loss attributable to Ford Motor Company was $3,110 million, and Company adjusted EBIT was $2,326 million.

In the second quarter of 2022, the net income attributable to Ford Motor Company was $667 million, and Company adjusted EBIT was $3,722 million.

Net income/(loss) includes certain items (“special items”) that are excluded from Company adjusted EBIT.

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Our pre-tax and tax special items were as follows (in millions):

First Quarter

Second Quarter First Half

2021 2022 2021 2022

Global Redesign

Europe $ (165) $ (27) $ (259) $ (49)

India — (47) — (75)

South America (133) 10 (455) (17)

China (including Taiwan) 158 (12) 157 (12)

Separations and Other (not included above) (4) (31) (3) (12)

Subtotal Global Redesign $ (144) $ (107) $ (560) $ (165)

Mark-to-market gain/(loss) on Rivian investment

Gain/(loss) on Rivian investment (a)

$ — $ (2,447) $ 902 $ (7,896)

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Patent matters related to prior calendar years

Other 26 (33) 21 —

Subtotal Other Items $ 26 $ (2,496) $ 923 $ (8,304)

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separations) $ (970) $ 298 $ (1,315) $ 150

Provision for/(Benefit from) tax special items (a) $ 58 $ (1,192)

(a) Includes related tax effect on special items and tax special items.

We recorded $5.9 billion of pre-tax special item charges in the first quarter of 2022, driven primarily by a mark-to-market loss on our Rivian investment.

Provision for/(Benefit from) tax special items (b) $ 84 $ (537) $ 142 $ (1,729)

(a) As of June 30, 2022, we held 76.7 million Rivian common shares valued at $25.74 per share.

(b) Includes related tax effect on special items and tax special items.

We recorded $2.6 billion of pre-tax special item charges in the second quarter of 2022, driven primarily by a loss on our Rivian investment.

In Note 21 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among the Automotive, Mobility, and Ford Credit segments.

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COMPANY KEY METRICS

The table below shows our first quarter 2022 key metrics for the Company, compared to a year ago.

First Quarter

2021 2022 H / (L)

The table below shows our second quarter and first half 2022 key metrics for the Company, compared to a year ago.

Second Quarter First Half

2021 2022 H / (L) 2021 2022 H / (L)

GAAP Financial Measures

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Net Income/(Loss) ($M) 561 667 $ 106 3,823 (2,443) (6,266)

Net Income/(Loss) Margin (%) 9.0 % (9.0) % (18.0) ppts

Net Income/(Loss) Margin (%) 2.1 % 1.7 % (0.4) ppts 6.1 % (3.3) % (9.4) ppts

EPS (Diluted) $ 0.14 $ 0.16 $ 0.02 $ 0.95 $ (0.61) $ (1.56)

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EBIT ($M) 1,053 3,722 2,669 4,965 6,048 1,083

EBIT Margin (%) 10.8 % 6.7 % (4.1) ppts

EBIT Margin (%) 3.9 % 9.3 % 5.4 ppts 7.9 % 8.1 % 0.2 ppts

Adjusted EPS (Diluted) $ 0.13 $ 0.68 $ 0.55 $ 0.83 $ 1.06 $ 0.23

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(a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.

In the first quarter of 2022, our diluted earnings per share of Common and Class B Stock was a loss of $0.78 and our diluted adjusted earnings per share was $0.38.

Net income/(loss) margin was negative 9.0% in the first quarter of 2022, down 18.0 percentage points from a year ago.

Company adjusted EBIT margin was 6.7% in the first quarter of 2022, down 4.1 percentage points from a year ago.

The year-over-year decrease of $6.4 billion in net income/(loss) in the first quarter of 2022 includes the effect of special items, including a mark-to-market loss on our Rivian investment, as well as lower Automotive EBIT.

The year-over-year decrease of $1.6 billion in Company adjusted EBIT was driven by lower Automotive EBIT.

The table below shows our first quarter 2022 net income/(loss) attributable to Ford and Company adjusted EBIT by segment.

First Quarter

2021 2022 H / (L)

In the second quarter of 2022, our diluted earnings per share of Common and Class B Stock was $0.16 and our diluted adjusted earnings per share was $0.68.

Net income/(loss) margin was 1.7% in the second quarter of 2022, down 0.4 percentage points from a year ago.

Company adjusted EBIT margin was 9.3% in the second quarter of 2022, up 5.4 percentage points from a year ago.

The year-over-year increase of $106 million in net income/(loss) in the second quarter of 2022 was driven by higher Automotive EBIT, partially offset by a loss on our Rivian investment, which is included in special items, and lower Ford Credit EBT.

The year-over-year increase of $2.7 billion in Company adjusted EBIT was driven by higher Automotive EBIT, partially offset by lower Ford Credit EBT.

The table below shows our second quarter and first half 2022 net income/(loss) attributable to Ford and Company adjusted EBIT by segment.

Second Quarter First Half

2021 2022 H / (L) 2021 2022 H / (L)

Automotive $ (97) $ 3,322 $ 3,419 $ 3,300 $ 5,213 $ 1,913

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Automotive Segment

The table below shows our first quarter 2022 Automotive segment EBIT by business unit (in millions).

First Quarter

2021 2022 H / (L)

The table below shows our second quarter and first half 2022 Automotive segment EBIT by business unit (in millions).

Second Quarter First Half

2021 2022 H / (L) 2021 2022 H / (L)

North America $ 192 $ 3,269 $ 3,077 $ 3,135 $ 4,860 $ 1,725

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Automotive Segment $ (97) $ 3,322 $ 3,419 $ 3,300 $ 5,213 $ 1,913

The tables below and on the following pages provide first quarter 2022 key metrics and the change in first quarter 2022 EBIT compared with first quarter 2021 by causal factor for our Automotive segment and its regional business units:

The tables below and on the following pages provide second quarter and first half 2022 key metrics and the change in second quarter 2022 EBIT compared with second quarter 2021 by causal factor for our Automotive segment and its regional business units:

North America, South America, Europe, China (including Taiwan), and the International Markets Group.

For a description of these causal factors, see Definitions and Information Regarding Automotive Causal Factors.

First Quarter

Key Metrics 2021 2022 H / (L)

Market Share (%) 5.3 % 4.8 % (0.6) ppts

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Market Share (%) 4.9 % 5.3 % 0.3 ppts 5.1 % 5.0 % (0.1) ppts

Wholesale Units (000) 764 1,032 268 1,826 1,998 172

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EBIT ($M) (97) 3,322 3,419 3,300 5,213 1,913

EBIT Margin (%) 10.1 % 5.9 % (4.2) ppts

EBIT Margin (%) (0.4) % 8.8 % 9.2 ppts 5.7 % 7.4 % 1.7 ppts

Change in EBIT by Causal Factor (in millions)

First Quarter 2021 EBIT $ 3,397

Second Quarter 2021 EBIT $ (97)

Volume / Mix 4,358

Net Pricing 2,338

Exchange (25)

First Quarter 2022 EBIT $ 1,891

In the first quarter of 2022, wholesales decreased 9% from a year ago, primarily reflecting the impact of supply constraints on production, including semiconductors.

First quarter 2022 revenue decreased 4%, driven by lower wholesales, weaker currencies, and unfavorable mix, partially offset by higher net pricing.

Our first quarter 2022 Automotive segment EBIT was $1.9 billion, a decrease of $1.5 billion from a year ago, and our first quarter 2022 Automotive EBIT margin was 5.9%.

The lower EBIT was driven by inflationary increases on commodity and freight costs, higher warranty expense, unfavorable mix due to supplier constraints on full size pick-up trucks and large SUVs in North America, and lower wholesales.

Higher net pricing was a partial offset.

Second Quarter 2022 EBIT $ 3,322

In the second quarter of 2022, wholesales increased 35% from a year ago, primarily reflecting reduced supply constraints (including semiconductors) on production and the ramp-up of Bronco and Maverick production.

Second quarter 2022 revenue increased 57%, driven by higher wholesales, net pricing, and parts and accessories sales, as well as favorable mix, offset partially by weaker currencies.

Our second quarter 2022 Automotive segment EBIT was $3.3 billion, an increase of $3.4 billion from a year ago, and our second quarter 2022 Automotive EBIT margin was 8.8%.

The higher EBIT was driven by higher wholesales and higher net pricing, offset partially by inflationary increases on commodity, material, and freight costs, and higher volume-related manufacturing and investment-related costs.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

North America

First Quarter

Key Metrics 2021 2022 H / (L)

Market Share (%) 12.5 % 12.0 % (0.5) ppts

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Market Share (%) 10.4 % 12.9 % 2.5 ppts 11.4 % 12.4 % 1.1 ppts

Wholesale Units (000) 327 618 291 861 1,132 271

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EBIT ($M) 192 3,269 3,077 3,135 4,860 1,725

EBIT Margin (%) 12.8 % 7.1 % (5.7) ppts

EBIT Margin (%) 1.3 % 11.3 % 10.0 ppts 8.3 % 9.5 % 1.2 ppts

Change in EBIT by Causal Factor (in millions)

First Quarter 2021 EBIT $ 2,943

Second Quarter 2021 EBIT $ 192

Volume / Mix 4,585

Net Pricing 1,230

Exchange (16)

First Quarter 2022 EBIT $ 1,591

In North America, first quarter 2022 wholesales decreased 4% from a year ago, primarily reflecting the impact of supply constraints on production, including semiconductors.

First quarter 2022 revenue decreased 3%, driven by lower wholesales and unfavorable mix, partially offset by higher net pricing.

North America’s first quarter 2022 EBIT decreased $1.4 billion from a year ago with an EBIT margin of 7.1%.

The lower EBIT was driven by inflationary increases on commodity and freight costs, higher warranty expense, unfavorable mix (due to supplier constraints on full size pick-up trucks and large SUVs), and lower wholesales.

Higher net pricing was a partial offset.

Second Quarter 2022 EBIT $ 3,269

In North America, second quarter 2022 wholesales increased 89% from a year ago, primarily reflecting reduced supply constraints (including semiconductors) on production.

Second quarter 2022 revenue increased 94%, driven by higher wholesales and net pricing, favorable mix, and higher parts and accessories sales.

North America’s second quarter 2022 EBIT was $3.3 billion, an increase of $3.1 billion from a year ago, with an EBIT margin of 11.3%.

The higher EBIT was driven by higher wholesales, higher net pricing, and favorable mix, offset partially by inflationary increases on commodity, material, and freight costs and higher volume-related manufacturing and investment-related costs.

South America

First Quarter

Key Metrics 2021 2022 H / (L)

Market Share (%) 3.6 % 2.2 % (1.4) ppts

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Market Share (%) 2.3 % 2.0 % (0.3) ppts 3.0 % 2.1 % (0.9) ppts

Wholesale Units (000) 18 18 1 35 34 (2)

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EBIT ($M) (86) 104 190 (159) 154 313

EBIT Margin (%) (16.7) % 8.7 % 25.4 ppts

EBIT Margin (%) (15.9) % 14.8 % 30.7 ppts (16.3) % 12.1 % 28.4 ppts

Change in EBIT by Causal Factor (in millions)

First Quarter 2021 EBIT $ (73)

Second Quarter 2021 EBIT $ (86)

Volume / Mix (6)

Net Pricing 206

Exchange (18)

First Quarter 2022 EBIT $ 50

In South America, first quarter 2022 wholesales decreased 14% from a year ago, primarily reflecting the impact of supply constraints on production, including semiconductors.

First quarter 2022 revenue increased 33%, driven by higher net pricing and favorable mix, partially offset by lower wholesales and weaker currencies.

South America’s first quarter 2022 EBIT improved $123 million from a year ago with an EBIT margin of 8.7%.

The EBIT improvement was driven by higher net pricing and structural cost reductions, partially offset by higher material costs, inflationary increases on commodity and freight costs, and weaker currencies.

Second Quarter 2022 EBIT $ 104

In South America, second quarter 2022 wholesales increased 3% from a year ago.

Second quarter 2022 revenue increased 29%, driven by higher net pricing, offset partially by weaker currencies.

South America’s second quarter 2022 EBIT was $104 million, an improvement of $190 million from a year ago, with an EBIT margin of 14.8%.

The EBIT improvement was driven by higher net pricing, lower warranty expense, and structural cost reductions, offset partially by inflationary increases on commodity and material costs.

The strong results in South America reflect our restructuring efforts and pricing and were further aided by currencies, including a balance sheet revaluation, the effect of which is not expected to be sustained.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

First Quarter

Key Metrics 2021 2022 H / (L)

Market Share (%) 7.2 % 6.6 % (0.5) ppts

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Market Share (%) 6.1 % 6.4 % 0.3 ppts 6.6 % 6.5 % (0.1) ppts

Wholesale Units (000) (a) 182 222 40 460 476 16

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EBIT ($M) (284) 10 294 57 217 160

EBIT Margin (%) 4.8 % 3.0 % (1.8) ppts

EBIT Margin (%) (5.1) % 0.2 % 5.3 ppts 0.4 % 1.7 % 1.3 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Turkey (about 13,000 units in Q2 2021 and 17,000 units in Q2 2022).

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Change in EBIT by Causal Factor (in millions)

First Quarter 2021 EBIT $ 341

Second Quarter 2021 EBIT $ (284)

Volume / Mix (52)

Net Pricing 826

First Quarter 2022 EBIT $ 207

In Europe, first quarter 2022 wholesales decreased 9% from a year ago, primarily reflecting the impact of supply constraints on production, including semiconductors.

First quarter 2022 revenue decreased 2%, driven by weaker currencies and lower wholesales, partially offset by higher net pricing and favorable mix.

Europe’s first quarter 2022 EBIT decreased $134 million from a year ago with an EBIT margin of 3.0%.

The lower EBIT was driven by inflationary increases on commodity costs, higher structural costs, and lower wholesales.

Higher net pricing and favorable mix were partial offsets.

Exchange (108)

Second Quarter 2022 EBIT $ 10

In Europe, second quarter 2022 wholesales increased 22% from a year ago, primarily reflecting reduced supply constraints (including semiconductors) on production.

Second quarter 2022 revenue increased 3%, driven by higher wholesales and net pricing, offset partially by weaker currencies and unfavorable mix.

Europe’s second quarter 2022 EBIT was $10 million, an improvement of $294 million from a year ago, with an EBIT margin of 0.2%.

The higher EBIT was driven by higher net pricing and higher wholesales, offset partially by unfavorable mix driven by semiconductor-related supply constraints, inflationary increases on commodity and material costs, and weaker currencies.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

China (Including Taiwan)

First Quarter

Key Metrics 2021 2022 H / (L)

Market Share (%) 2.3 % 2.2 % (0.1) ppts

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Market Share (%) 2.3 % 2.3 % 0.1 ppts 2.3 % 2.3 % — ppts

Wholesale Units (000) (a) 150 114 (36) 301 242 (59)

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EBIT ($M) (123) (121) 2 (138) (174) (36)

EBIT Margin (%) (1.8) % (9.4) % (7.6) ppts

EBIT Margin (%) (22.3) % (27.6) % (5.3) ppts (10.0) % (17.4) % (7.4) ppts

China Unconsolidated Affiliates

Wholesales (000) (b) 140 125 (15)

Wholesale Units (000) (b) 149 111 (38) 289 236 (53)

Ford Equity Income/(Loss) ($M) $ 18 $ 77 $ 59 $ 67 $ 117 $ 50

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Revenue does not include these sales.

(b) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China.

First quarter 2022 also includes Ford brand vehicles produced in Taiwan by Lio Ho Group.

(b) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China and Ford brand vehicles produced in Taiwan by Lio Ho Group.

Change in EBIT by Causal Factor (in millions)

First Quarter 2021 EBIT $ (15)

Second Quarter 2021 EBIT $ (123)

Volume / Mix (64)

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Other (Including Joint Ventures) 54

First Quarter 2022 EBIT $ (53)

In China, first quarter 2022 wholesales decreased 15% from a year ago, driven by weaker industry, a plant changeover, and supply constraints on production, including semiconductors.

First quarter 2022 revenue at our consolidated operations decreased 32%, driven by lower wholesales, partially offset by higher net pricing and favorable mix.

China’s first quarter 2022 EBIT loss increased $38 million from a year ago with an EBIT margin of negative 9.4%.

The higher EBIT loss reflects lower volume, partially offset by higher royalties from our joint ventures, lower total costs, higher net pricing, and favorable mix.

Second Quarter 2022 EBIT $ (121)

In China, second quarter 2022 wholesales decreased 24% from a year ago, driven by COVID-related lockdowns and restrictions.

Second quarter 2022 revenue at our consolidated operations decreased 20%, primarily driven by lower component sales to our joint ventures in China.

China’s second quarter 2022 EBIT loss was $121 million, about flat versus a year ago, with an EBIT margin of negative 27.6%.

Higher profits at our joint ventures and lower costs were offset partially by lower wholesales.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

International Markets Group

First Quarter

Key Metrics 2021 2022 H / (L)

Market Share (%) 1.7 % 1.2 % (0.5) ppts

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Market Share (%) 1.8 % 1.2 % (0.7) ppts 1.8 % 1.2 % (0.6) ppts

Wholesale Units (000) (a) 87 59 (27) 169 114 (54)

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EBIT ($M) 204 60 (144) 405 156 (249)

EBIT Margin (%) 8.9 % 5.5 % (3.4) ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Russia (about 3,000 units in both Q1 2021 and Q1 2022).

EBIT Margin (%) 8.3 % 3.1 % (5.2) ppts 8.6 % 4.2 % (4.4) ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Russia (about 5,000 units in Q2 2021 and 0 units in Q2 2022).

Revenue does not include these sales.

Change in EBIT by Causal Factor (in millions)

First Quarter 2021 EBIT $ 201

Second Quarter 2021 EBIT $ 204

Volume / Mix (104)

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Exchange (21)

First Quarter 2022 EBIT $ 96

In our International Markets Group, first quarter 2022 wholesales decreased 33% from a year ago, primarily reflecting our India restructuring and the impact of supply constraints on production, including semiconductors.

First quarter 2022 revenue decreased 23%, driven by lower wholesales and weaker currencies, partially offset by higher net pricing.

Our International Markets Group’s first quarter 2022 EBIT was $105 million lower than a year ago with an EBIT margin of 5.5%.

The lower EBIT was driven by lower wholesales, inflationary increases on commodity costs, lower joint venture profits due to the suspension of operations in Russia, and weaker currencies.

Higher net pricing and lower warranty expense were partial offsets.

Second Quarter 2022 EBIT $ 60

In our International Markets Group, second quarter 2022 wholesales decreased 32% from a year ago, primarily reflecting lower wholesales in India and Russia and plant changeover for the new Ranger pickup.

Second quarter 2022 revenue decreased 21%, driven by lower wholesales and weaker currencies, offset partially by higher net pricing.

Our International Markets Group’s second quarter 2022 EBIT was $60 million, a decrease of $144 million from a year ago, with an EBIT margin of 3.1%.

The lower EBIT was driven by lower wholesales, inflationary increases on commodity and material costs, and weaker currencies, offset partially by higher net pricing.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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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, 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.

(“JMC”), that are sold to dealerships, and from the second quarter of 2021, Ford badged vehicles produced in Taiwan by Lio Ho Group.

• 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, units manufactured by Ford that are sold to other manufacturers, units distributed by Ford for other manufacturers, local brand units produced by our China joint venture, Jiangling Motors Corporation, Ltd.

(“JMC”), that are sold to dealerships, and Ford badged vehicles produced in Taiwan by Lio Ho Group.

Vehicles sold to daily rental car companies that are subject to a guaranteed repurchase option (i.e., rental repurchase), as well as other sales of finished vehicles for which the recognition of revenue is deferred (e.g., consignments), also are included in wholesale unit volumes.

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The Mobility segment primarily includes development costs for Ford’s autonomous vehicles and related businesses, Ford’s equity ownership in Argo AI (a developer of autonomous driving systems), and other mobility businesses and investments.

In our Mobility segment, our first quarter 2022 EBIT loss was $242 million, a $35 million higher loss than a year ago.

In our Mobility segment, our second quarter 2022 EBIT loss was $221 million, an $11 million higher loss than a year ago.

The loss reflects our strategic investments as we continued to expand our capabilities in autonomous vehicles and support our mobility initiatives.

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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.

The tables below provide first quarter 2022 key metrics and the change in first quarter 2022 EBT compared with first quarter 2021 by causal factor for the Ford Credit segment.

The tables below provide second quarter and first half 2022 key metrics and the change in second quarter 2022 EBT compared with second quarter 2021 by causal factor for the Ford Credit segment.

For a description of these causal factors, see Definitions and Information Regarding Ford Credit Causal Factors.

First Quarter

Key Metrics 2021 2022 H / (L)

Second Quarter First Half

Key Metrics 2021 2022 H / (L) 2021 2022 H / (L)

Total Net Receivables ($B) $ 118 $ 116 (2) % $ 118 $ 116 (2) %

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EBT ($M) 1,623 939 $ (684) 2,585 1,867 $ (718)

ROE (%) 22 % 22 % — ppts

ROE (%) 47 % 26 % (21) ppts 34 % 24 % (10) ppts

Other Balance Sheet Metrics

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retail financing only.

36-month off-lease auction values at Q1 2022 mix.

36-month off-lease second quarter auction values at Q2 2022 mix and YTD amounts at 2022 YTD mix.

Change in EBT by Causal Factor (in millions)

First Quarter 2021 EBT $ 962

Second Quarter 2021 EBT $ 1,623

Volume / Mix (77)

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Lease Residual (428)

First Quarter 2022 EBT $ 928

Ford Credit’s total net receivables were $10 billion lower than a year ago, primarily reflecting lower volume due to supply constraints.

The loss-to-receivables (“LTR”) ratio remained at a low level in the first quarter of 2022, at eight basis points, 14 basis points lower than a year ago.

auction values in the first quarter of 2022 were 32% higher than a year ago, reflecting continued strong demand for used vehicles.

Ford Credit’s first quarter 2022 EBT of $928 million was $34 million lower than a year ago, reflecting unfavorable net financing margin and lower volume due to supply constraints on new vehicle production, partially offset by positive market valuation adjustments to derivatives due to higher interest rates, which is included in Other.

Exchange (17)

Second Quarter 2022 EBT $ 939

Ford Credit’s total net receivables were $2 billion lower than a year ago, primarily reflecting lower volume due to supply constraints and exchange.

The loss-to-receivables (“LTR”) ratio remained at a low level in the second quarter of 2022, at five basis points, 12 basis points higher than a year ago.

auction values in the second quarter of 2022 were 8% higher than a year ago, reflecting continued strong demand for used vehicles.

Ford Credit’s second quarter 2022 EBT of $939 million was $684 million lower than a year ago, primarily reflecting lower lease residual gains driven by lower lease return volume, unfavorable changes in net financing margin, lower volume due to supply constraints on new vehicle production, and lower credit loss reserve releases, partially offset by positive market valuation adjustments to derivatives due to higher interest rates, which is included in Other.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

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These include expenses related to setting and directing global policy, providing oversight and stewardship, and promoting the Company’s interests.

In the first quarter of 2022, Corporate Other had a $251 million loss, compared with a $240 million loss a year ago.

In the second quarter of 2022, Corporate Other had a $318 million loss, compared with a $263 million loss a year ago.

The higher loss was driven by negative fair market value adjustments on our cash equivalent portfolios as a result of higher interest rates and higher administrative and IT-related expenses.

Interest on Debt

Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $308 million in the first quarter of 2022, $165 million lower than a year ago, primarily explained by U.S.

Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $312 million in the second quarter of 2022, $141 million lower than a year ago, primarily explained by U.S.

debt restructuring actions undertaken in the fourth quarter of 2021.

Our Provision for/(Benefit from) income taxes for the first quarter 2022 was a $729 million benefit, resulting in an effective tax rate of 18.9%.

Our first quarter 2022 adjusted effective tax rate, which excludes special items, was 22.9%.

Our Provision for/(Benefit from) income taxes for the second quarter and first half of 2022 was a provision of $153 million and a benefit of $576 million, respectively.

This resulted in effective tax rates of 19.3% and 18.8%, respectively.

Our second quarter and first half of 2022 adjusted effective tax rates, which exclude special items, were 20.2% and 21.2%, respectively.

We regularly review our organizational structure and income tax elections for affiliates in non-U.S.

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LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2022, total balance sheet cash, cash equivalents, marketable securities, and restricted cash (including Ford Credit and entities held for sale) was $41.5 billion.

At June 30, 2022, total balance sheet cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $37.3 billion.

We consider our key balance sheet metrics to be:

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Company excluding Ford Credit

2021 March 31,

2021 June 30,

Balance Sheets ($B)

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Total Funded Status OPEB $ (6.0) $ (5.9)

(a) Balances at March 31, 2022 reflect net funded status at December 31, 2021, updated for service and interest cost, expected return on assets, separation expense, actual benefit payments, and cash contributions.

(a) Balances at June 30, 2022 reflect net funded status at December 31, 2021, updated for service and interest cost, expected return on assets, separation expense, actual benefit payments, and cash contributions.

The discount rate and rate of expected return assumptions are unchanged from year-end 2021.

One of our key priorities is to maintain a strong balance sheet, while at the same time having resources available to invest in and grow our business.

At March 31, 2022, we had Company cash of $28.8 billion and liquidity of $44.6 billion (both of which include our Rivian marketable securities).

Excluding the Rivian marketable securities, Company cash and liquidity at March 31, 2022 were $23.6 billion and $39.4 billion, respectively.

At June 30, 2022, we had Company cash of $28.7 billion and liquidity of $45.1 billion, including approximately $2 billion of Rivian marketable securities.

In the second quarter, we sold approximately 25 million of our Rivian shares resulting in proceeds of about $700 million.

As marketable securities increase or decrease in value, Company cash and liquidity will likewise increase or decrease.

At March 31, 2022, about 91% of Company cash was held by consolidated entities domiciled in the United States.

At June 30, 2022, about 84% of Company cash was held by consolidated entities domiciled in the United States.

To be prepared for an economic downturn, we target an ongoing Company cash balance at or above $20 billion plus significant additional liquidity above our Company cash target.

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We monitor our Company cash levels and average maturity on a daily basis.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Material Cash Requirements.

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 battery 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” in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 of our 2021 Form 10-K Report)

• Marketing incentive payments to dealers

• Payments for warranty and field service actions (for additional information, see Note 20 of the Notes to the Financial Statements herein)

• Debt repayments (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 19 of the Notes the Financial Statements in our 2021 Form 10-K Report)

• Discretionary and mandatory payments to our global pension plans (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 of our 2021 Form 10-K Report, the “Changes in Company Cash” section below, and Note 13 of the Notes to the Financial Statements herein)

• Employee wages, benefits, and incentives

• Operating lease payments (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 18 of the Notes the Financial Statements in our 2021 Form 10-K Report)

• Cash effects related to the global redesign of our business (for additional information, see the “Changes in Company Cash” section below)

• 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 may require the expenditure of a material amount of cash.

Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions, and other matters.

We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Changes in Company Cash.

In managing our business, we classify changes in Company cash into operating and non-operating items.

Operating items include:

Company adjusted EBIT excluding Ford Credit EBT, capital spending, depreciation and tooling amortization, changes in working capital, Ford Credit distributions, interest on debt, cash taxes, and all other and timing differences (including timing differences between accrual-based EBIT and associated cash flows).

Non-operating items include:

global redesign (including separation payments), changes in Company debt excluding Ford Credit, contributions to funded pension plans, shareholder distributions, and other items (including gains and losses on investments in equity securities, acquisitions and divestitures, and other transactions with Ford Credit).

With respect to “Changes in working capital,” in general we carry relatively low Automotive segment trade receivables compared with our trade payables because the majority of our Automotive wholesales are financed (primarily by Ford Credit) immediately upon the sale of vehicles to dealers, which generally occurs shortly after being produced.

In contrast, our Automotive trade payables are based primarily on industry-standard production supplier payment terms of about 45 days.

As a result, our cash flow deteriorates if wholesale volumes (and the corresponding revenue) decrease while trade payables continue to become due.

Conversely, our cash flow improves if wholesale volumes (and the corresponding revenue) increase while new trade payables are generally not due for about 45 days.

For example, the suspension of production at most of our assembly plants and lower industry volumes due to COVID-19 in early 2020 resulted in an initial deterioration of our cash flow, while the subsequent resumption of manufacturing operations and return to pre-COVID-19 production levels at most of our assembly plants resulted in a subsequent improvement of our cash flow.

Even in normal economic conditions, however, these working capital balances generally are subject to seasonal changes that can impact cash flow.

For example, we typically experience cash flow timing differences associated with inventories and payables due to our annual summer and December shutdown periods when production, and therefore inventories and wholesale volumes, are usually at their lowest levels, while payables continue to come due and be paid.

The net impact of this typically results in cash outflows from changes in our working capital balances during these shutdown periods.

Our inventory includes vehicles completed but awaiting installation of components, including semiconductors.

As a result of the shortage, our inventory is higher than in periods prior to the supply shortage.

In response to, or in anticipation of, supplier disruptions, we may stockpile certain components or raw materials to help prevent disruption in our production of vehicles.

Such actions could have a short-term adverse impact on our cash and increase our inventory.

Moreover, in order to secure critical materials for production of electric vehicles, we plan to enter into offtake agreements with raw material suppliers and make investments in certain raw material and battery suppliers, including contributing up to $6.6 billion in capital to BlueOval SK, LLC over a five-year period ending in 2026.

Such investments, which are part of our plan to invest over $50 billion in electric vehicles through 2026, could have an additional adverse impact on our cash in the near-term.

Financial institutions participate in a supply chain finance (“SCF”) program that enables our suppliers, at their sole discretion, to sell their Ford receivables (i.e., our payment obligations to the suppliers) to the financial institutions on a non-recourse basis in order to be paid earlier than our payment terms provide.

Our suppliers’ voluntary inclusion of invoices in the SCF program has no bearing on our payment terms, the amounts we pay, or our liquidity.

We have no economic interest in a supplier’s decision to participate in the SCF program, and we have no direct financial relationship with the SCF financial institutions.

Moreover, we do not provide any guarantees in connection with the SCF program.

As of June 30, 2022, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $218 million.

The amount settled through the SCF program during the first half of 2022 was $605 million.

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):

Second Quarter First Half

2021 2022 2021 2022

Company Excluding Ford Credit

Company Adjusted EBIT excluding Ford Credit (a) $ (0.6) $ 2.8 $ 2.4 $ 4.2

Capital spending $ (1.5) $ (1.5) $ (2.9) $ (2.9)

Depreciation and tooling amortization 1.3 1.3 2.5 2.6

Net spending $ (0.2) $ (0.2) $ (0.4) $ (0.2)

Receivables $ — $ (0.6) $ (0.6) $ (0.6)

Inventory (0.8) 0.3 (3.0) (2.5)

Trade Payables (4.6) 0.4 (3.0) 2.0

Changes in working capital $ (5.4) $ 0.1 $ (6.6) $ (1.1)

Ford Credit distributions $ 4.0 $ 0.6 $ 5.0 $ 1.6

Interest on debt and cash taxes (0.7) (0.6) (1.2) (0.9)

All other and timing differences (2.2) 0.9 (4.8) (0.5)

Company adjusted free cash flow (a) $ (5.1) $ 3.6 $ (5.5) $ 3.0

Global Redesign (including separations) $ (1.0) $ 0.3 $ (1.3) $ 0.2

Changes in debt — (0.6) 2.0 (0.8)

Funded pension contributions (0.2) (0.2) (0.4) (0.3)

Shareholder distributions — (0.4) — (0.8)

All other (b) — (2.8) (0.4) (9.0)

Change in cash $ (6.2) $ — $ (5.7) $ (7.8)

(a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.

(b) Includes a $2.4 billion loss and a $7.9 billion loss on our Rivian investment in the second quarter and first half of 2022, respectively.

Numbers may not sum due to rounding.

Our second quarter 2022 Net cash provided by/(used in) operating activities was positive $2.9 billion, an increase of $2.2 billion from a year ago (see page 62 for additional information), primarily driven by higher trade payables, timing differences, and higher net income, partially offset by lower Ford Credit operating cash flow.

Company adjusted free cash flow was $3.6 billion, $8.7 billion higher than a year ago, driven by higher adjusted EBIT, higher trade payables, and timing differences, partially offset by lower Ford Credit distributions.

Capital spending was $1.5 billion in the second quarter of 2022, unchanged from a year ago.

We continue to expect full year 2022 capital spending to be about $7.0 billion.

Second quarter 2022 working capital impact was $0.1 billion positive, driven by higher trade payables and lower inventory.

All other and timing differences were positive $0.9 billion, reflecting assorted differences including differences between accrual-based EBIT and the associated cash flows (e.g., pension and OPEB income or expense;

compensation payments;

marketing incentive and warranty payments to dealers).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements