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Item 1. Financial Statements

2023-05-03 compared with 2022-10-27 · 836 added, 331 removed, 378 unchanged (76% of the section changed)

2 unchanged sentences

NOTES TO THE FINANCIAL STATEMENTS

EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)

Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at September 30, 2022 of $ 223 million are associated with Ford Credit’s investments in Brazil and Argentina that have ceased operations.

For purposes of this report, “Ford,” the “Company,” “we,” “our,” “us,” or similar references mean Ford Motor Company, our consolidated subsidiaries, and our consolidated VIEs of which we are the primary beneficiary, unless the context requires otherwise.

We also make reference to Ford Motor Credit Company LLC, herein referenced to as Ford Credit.

Our consolidated financial statements are presented in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information, instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X.

We reclassified certain prior year amounts in our consolidated financial statements to conform to the current year presentation.

In the opinion of management, these unaudited financial statements reflect a fair statement of our results of operations and financial condition for the periods, and at the dates, presented.

The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K Report”).

NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

Accounting Standards Update (“ASU”) 2022-02, Financial Instruments – Credit Losses, Troubled Debt Restructurings and Vintage Disclosures.

Effective January 1, 2023, we adopted the new standard, which eliminates the troubled debt recognition and measurement guidance and requires disclosure of current period gross charge-offs by year of origination (vintage disclosure).

Adoption of the new standard did not have a material impact to our consolidated financial statements or financial statement disclosures.

ASU 2022-04, Liabilities – Supplier Finance Programs, Disclosure of Supplier Finance Program Obligations.

Effective January 1, 2023, we adopted the new standard, which requires that entities that use supplier finance programs disclose information about the nature and potential magnitude of the programs, activity during the period, and changes from period to period.

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 do not provide any guarantees in connection with it.

As of March 31, 2023, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions, reported in Payables , was $ 265 million.

The amount settled through the SCF program during the first quarter of 2023 was $ 452 million.

We also adopted the following ASUs during 2023, none of which had a material impact to our consolidated financial statements or financial statement disclosures:

ASU Effective Date

2022-01 Derivatives and Hedging – Fair Value Hedging – Portfolio Layer Hedging

January 1, 2023

2022-03 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions January 1, 2023

2018-12 Targeted Improvements to the Accounting for Long Duration Contracts (and related amendments) January 1, 2023

Accounting Standards Issued But Not Yet Adopted

ASUs issued but not yet adopted were assessed and determined to be not applicable or are not expected to have a material impact on our consolidated financial statements or financial statement disclosures.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

The following tables disaggregate our revenue by major source for the periods ended March 31 (in millions):

First Quarter 2022

Company excluding Ford Credit Ford Credit Consolidated

Vehicles, parts, and accessories $ 30,991 $ — $ 30,991

Used vehicles 429 — 429

Services and other revenue (a) 722 19 741

Revenues from sales and services

32,142 19 32,161

Leasing income 53 1,211 1,264

Financing income — 1,040 1,040

Insurance income — 11 11

Total revenues $ 32,195 $ 2,281 $ 34,476

First Quarter 2023

Company excluding

Ford Credit Ford Credit Consolidated

Vehicles, parts, and accessories $ 37,927 $ — $ 37,927

Used vehicles 469 — 469

Services and other revenue (a) 645 17 662

Revenues from sales and services

39,041 17 39,058

Leasing income 44 1,049 1,093

Financing income — 1,301 1,301

Insurance income — 22 22

Total revenues $ 39,085 $ 2,389 $ 41,474

(a) Includes extended service contract revenue.

The amount of consideration we receive and revenue we recognize on our vehicles, parts, and accessories varies with changes in return rights and marketing incentives we offer to our customers and their customers.

Estimates of marketing incentives are based on expected retail and fleet sales volumes, mix of products to be sold, and incentive programs to be offered.

Customer acceptance of products and programs, as well as other market conditions, will impact these estimates.

As a result of changes in our estimate of marketing incentives, we recorded an increase of $ 211 million in the first quarter of 2022 and a decrease of $ 178 million in the first quarter of 2023 related to revenue recognized in prior periods.

We had a balance of $ 4.4 billion and $ 4.5 billion of unearned revenue associated primarily with outstanding extended service contracts reported in Other liabilities and deferred revenue at December 31, 2022 and March 31, 2023, respectively .

We expect to recognize approximately $ 1.1 billion of the unearned amount in the remainder of 2023, $ 1.2 billion in 2024, and $ 2.2 billion thereafter.

We recognized $ 365 million and $ 380 million of unearned amounts from prior years as revenue during the first quarter of 2022 and 2023, respectively.

Amounts paid to dealers to obtain extended service contracts are deferred and recorded as Other assets .

We had a balance of $ 315 million and $ 324 million in deferred costs as of December 31, 2022 and March 31, 2023, respectively.

We recognized $ 22 million and $ 26 million of amortization during the first quarter of 2022 and 2023, respectively .

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

OTHER INCOME/(LOSS)

The amounts included in Other income/(loss), net for the periods ended March 31 were as follows (in millions):

First Quarter

Net periodic pension and OPEB income/(cost), excluding service cost (Note 13)

$ 459 $ ( 165 )

Investment-related interest income 61 348

Interest income/(expense) on income taxes

Realized and unrealized gains/(losses) on cash equivalents, marketable securities, and other investments (a) ( 5,454 ) ( 51 )

Gains/(Losses) on changes in investments in affiliates ( 125 ) 4

Royalty income 144 103

Other 60 ( 11 )

Total $ ( 4,850 ) $ 224

(a) Includes a $ 5.4 billion loss and a $ 25 million loss on our Rivian investment in the first quarter of 2022 and 2023, respectively.

For interim tax reporting, we estimate one single effective tax rate for tax jurisdictions not subject to a valuation allowance, which is applied to the year-to-date ordinary income/(loss).

Tax effects of significant unusual or infrequently occurring items are excluded from the estimated annual effective tax rate calculation and recognized in the interim period in which they occur.

CAPITAL STOCK AND EARNINGS/(LOSS) PER SHARE

Earnings/(Loss) Per Share Attributable to Ford Motor Company Common and Class B Stock

Basic and diluted earnings/(loss) per share were calculated using the following (in millions):

First Quarter

Net income/(loss) attributable to Ford Motor Company $ ( 3,110 ) $ 1,757

Basic and Diluted Shares

Basic shares (average shares outstanding) 4,008 3,990

Net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt (a) — 39

Diluted shares 4,008 4,029

(a) In the first quarter of 2022, there were 56 million shares excluded from the calculation of diluted earnings/(loss) per share, due to their anti-dilutive effect.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES

The fair values of cash, cash equivalents, and marketable securities measured at fair value on a recurring basis were as follows (in millions):

December 31, 2022

Fair Value Level Company excluding Ford Credit Ford Credit Consolidated

Cash and cash equivalents

government 1 $ 3,295 $ 1,045 $ 4,340

government agencies 2 2,245 150 2,395

government and agencies 2 1,048 199 1,247

Other cash equivalents 2 10 — 10

Corporate debt 2 593 792 1,385

Total marketable securities classified as cash equivalents

7,191 2,186 9,377

Cash, time deposits, and money market funds 7,550 8,207 15,757

Total cash and cash equivalents $ 14,741 $ 10,393 $ 25,134

Marketable securities

government 1 $ 4,947 $ 187 $ 5,134

government agencies 2 2,641 221 2,862

government and agencies 2 2,625 658 3,283

Corporate debt 2 6,755 266 7,021

Equities (a) 1 223 — 223

Other marketable securities 2 252 161 413

Total marketable securities $ 17,443 $ 1,493 $ 18,936

Restricted cash $ 79 $ 127 $ 206

March 31, 2023

Fair Value Level Company excluding Ford Credit Ford Credit Consolidated

Cash and cash equivalents

government 1 $ 1,958 $ 1,183 $ 3,141

government agencies 2 2,320 1,045 3,365

government and agencies 2 150 70 220

Other cash equivalents 2 — — —

Corporate debt 2 68 439 507

Total marketable securities classified as cash equivalents

4,496 2,737 7,233

Cash, time deposits, and money market funds 8,333 6,578 14,911

Total cash and cash equivalents $ 12,829 $ 9,315 $ 22,144

Marketable securities

government 1 $ 4,605 $ 173 $ 4,778

government agencies 2 2,300 270 2,570

government and agencies 2 2,245 548 2,793

Corporate debt 2 6,212 421 6,633

Equities (a) 1 182 — 182

Other marketable securities 2 250 163 413

Total marketable securities $ 15,794 $ 1,575 $ 17,369

Restricted cash $ 82 $ 133 $ 215

(a) Includes $ 194 million and $ 147 million of Rivian common shares valued at $ 18.43 and $ 15.48 per share as of December 31, 2022 and March 31, 2023, respectively.

In the first quarter of 2023, we sold 1 million of our Rivian common shares for about $ 21.6 million in total proceeds.

Net unrealized gains/losses recognized during full year 2022 and the first quarter of 2023 on all equity securities held at December 31, 2022 and March 31, 2023 were a $ 968 million loss and a $ 22 million loss, respectively.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

The cash equivalents and marketable securities accounted for as available-for-sale (“AFS”) securities were as follows (in millions):

December 31, 2022

Fair Value of Securities with

Contractual Maturities

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Within 1 Year After 1 Year through

5 Years After 5 Years

Company excluding Ford Credit

government $ 4,797 $ 1 $ ( 145 ) $ 4,653 $ 1,008 $ 3,645 $ —

government agencies 2,508 — ( 119 ) 2,389 1,244 1,109 36

government and agencies 2,248 — ( 132 ) 2,116 294 1,810 12

Corporate debt 7,511 6 ( 197 ) 7,320 3,117 4,195 8

Other marketable securities 246 — ( 9 ) 237 — 181 56

Total $ 17,310 $ 7 $ ( 602 ) $ 16,715 $ 5,663 $ 10,940 $ 112

March 31, 2023

Fair Value of Securities with

Contractual Maturities

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Within 1 Year After 1 Year through

5 Years After 5 Years

Company excluding Ford Credit

government $ 4,557 $ 8 $ ( 109 ) $ 4,456 $ 1,058 $ 3,387 $ 11

government agencies 2,338 — ( 94 ) 2,244 1,122 1,104 18

government and agencies 2,320 2 ( 105 ) 2,217 407 1,798 12

Corporate debt 6,399 13 ( 157 ) 6,255 2,007 4,247 1

Other marketable securities 233 — ( 7 ) 226 — 170 56

$ 15,847 $ 23 $ ( 472 ) $ 15,398 $ 4,594 $ 10,706 $ 98

Sales proceeds and gross realized gains/losses from the sale of AFS securities for the periods ended March 31 were as follows (in millions):

First Quarter

Company excluding Ford Credit

Sales proceeds $ 4,004 $ 1,163

Gross realized gains 6 1

Gross realized losses 6 12

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES (Continued)

The present fair values and gross unrealized losses for cash equivalents and marketable securities accounted for as AFS securities that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position, were as follows (in millions):

December 31, 2022

Less than 1 Year 1 Year or Greater Total

Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses

Company excluding Ford Credit

government $ 2,860 $ ( 52 ) $ 1,570 $ ( 93 ) $ 4,430 $ ( 145 )

government agencies 707 ( 14 ) 1,658 ( 105 ) 2,365 ( 119 )

government and agencies 751 ( 23 ) 1,271 ( 109 ) 2,022 ( 132 )

Corporate debt 4,571 ( 79 ) 1,737 ( 118 ) 6,308 ( 197 )

Other marketable securities 123 ( 4 ) 108 ( 5 ) 231 ( 9 )

$ 9,012 $ ( 172 ) $ 6,344 $ ( 430 ) $ 15,356 $ ( 602 )

March 31, 2023

Less than 1 Year 1 Year or Greater Total

Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses

Company excluding Ford Credit

government $ 1,825 $ ( 22 ) $ 1,684 $ ( 87 ) $ 3,509 $ ( 109 )

government agencies 465 ( 3 ) 1,658 ( 91 ) 2,123 ( 94 )

government and agencies 276 ( 4 ) 1,685 ( 101 ) 1,961 ( 105 )

Corporate debt 3,152 ( 50 ) 2,012 ( 107 ) 5,164 ( 157 )

Other marketable securities 107 ( 3 ) 101 ( 4 ) 208 ( 7 )

$ 5,825 $ ( 82 ) $ 7,140 $ ( 390 ) $ 12,965 $ ( 472 )

We determine credit losses on AFS debt securities using the specific identification method.

During the first quarter of 2023, we did not recognize any credit loss.

The unrealized losses on securities are due to changes in interest rates and market liquidity.

Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash, as reported in the consolidated statements of cash flows, were as follows (in millions):

2022 March 31,

Cash and cash equivalents $ 25,134 $ 22,144

Restricted cash (a) 206 215

Total cash, cash equivalents, and restricted cash $ 25,340 $ 22,359

(a) Included in Other assets in the non-current assets section of our consolidated balance sheets.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES

Ford Credit manages finance receivables as “consumer” and “non-consumer” portfolios.

The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables are recorded at the time of origination or purchase at fair value and are subsequently reported at amortized cost, net of any allowance for credit losses.

For all finance receivables, Ford Credit defines “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date.

Ford Credit finance receivables, net were as follows (in millions):

2022 March 31,

Retail installment contracts, gross $ 66,954 $ 68,259

Finance leases, gross 6,765 6,990

Retail financing, gross 73,719 75,249

Unearned interest supplements ( 2,305 ) ( 2,435 )

Consumer finance receivables 71,414 72,814

Dealer financing 18,054 19,490

Non-Consumer finance receivables 18,054 19,490

Total recorded investment $ 89,468 $ 92,304

Recorded investment in finance receivables $ 89,468 $ 92,304

Allowance for credit losses ( 845 ) ( 870 )

Total finance receivables, net $ 88,623 $ 91,434

Current portion $ 38,720 $ 40,350

Non-current portion 49,903 51,084

Total finance receivables, net $ 88,623 $ 91,434

Net finance receivables subject to fair value (a) $ 82,200 $ 84,812

Fair value (b) 79,521 82,966

(a) Net finance receivables subject to fair value exclude finance leases.

(b) The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Ford Credit’s finance leases are comprised of sales-type and direct financing leases.

Financing revenue from finance leases for the first quarter of 2022 and 2023 was $ 77 million and $ 83 million, respectively, and is included in Ford Credit revenues on our consolidated income statements.

At December 31, 2022 and March 31, 2023, accrued interest was $ 187 million and $ 198 million, respectively, which we report in Other assets in the current assets section of our consolidated balance sheets.

Included in the recorded investment in finance receivables at December 31, 2022 and March 31, 2023, were consumer receivables of $ 43.9 billion and $ 43.9 billion, respectively, and non-consumer receivables of $ 18.2 billion and $ 17.6 billion, respectively, (including Ford Blue, Ford Model e, and Ford Pro receivables sold to Ford Credit, which we report in Trade and other receivables ) that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements.

The receivables are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions;

they are not available to pay the other obligations or the claims of Ford Credit’s other creditors.

Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Credit Quality

Consumer Portfolio.

Credit quality ratings for consumer receivables are based on Ford Credit’s aging analysis.

Consumer receivables credit quality ratings are as follows:

• Pass – current to 60 days past due;

• Special Mention – 61 to 120 days past due and in intensified collection status;

• Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral less costs to sell.

The credit quality analysis of consumer receivables at December 31, 2022 was as follows (in millions):

Amortized Cost Basis by Origination Year

Prior to 2018 2018 2019 2020 2021 2022 Total Percent

31 - 60 days past due $ 41 $ 60 $ 91 $ 181 $ 150 $ 126 $ 649 0.9 %

61 - 120 days past due 9 12 20 39 40 29 149 0.2

Greater than 120 days past due 9 4 5 7 7 6 38 0.1

Total past due 59 76 116 227 197 161 836 1.2

Current 883 2,563 6,137 13,844 18,357 28,794 70,578 98.8

Total $ 942 $ 2,639 $ 6,253 $ 14,071 $ 18,554 $ 28,955 $ 71,414 100.0 %

The credit quality analysis of consumer receivables at March 31, 2023 was as follows (in millions):

Amortized Cost Basis by Origination Year

Prior to 2019 2019 2020 2021 2022 2023 Total Percent

31 - 60 days past due $ 75 $ 72 $ 149 $ 135 $ 150 $ 10 $ 591 0.8 %

61 - 120 days past due 11 13 28 30 36 1 119 0.2

Greater than 120 days past due 12 4 8 10 6 — 40 —

Total past due 98 89 185 175 192 11 750 1.0

Current 2,574 5,065 12,184 16,542 26,921 8,778 72,064 99.0

Total $ 2,672 $ 5,154 $ 12,369 $ 16,717 $ 27,113 $ 8,789 $ 72,814 100.0 %

Gross charge-offs $ 17 $ 12 $ 23 $ 22 $ 22 $ — $ 96

Non-Consumer Portfolio.

The credit quality of dealer financing receivables is evaluated based on Ford Credit’s internal dealer risk rating analysis.

Ford Credit uses a proprietary model to assign each dealer a risk rating.

This model uses historical dealer performance data to identify key factors about a dealer that are considered most significant in predicting a dealer’s ability to meet its financial obligations.

Ford Credit also considers numerous other financial and qualitative factors of the dealer’s operations, including capitalization and leverage, liquidity and cash flow, profitability, and credit history with Ford Credit and other creditors.

Dealers are assigned to one of four groups according to risk ratings as follows:

• Group I – strong to superior financial metrics;

• Group II – fair to favorable financial metrics;

• Group III – marginal to weak financial metrics;

• Group IV – poor financial metrics, including dealers classified as uncollectible.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

The credit quality analysis of dealer financing receivables at December 31, 2022 was as follows (in millions):

Amortized Cost Basis by Origination Year Wholesale Loans

Prior to 2018 2018 2019 2020 2021 2022 Total Total Percent

Group I $ 402 $ 148 $ 35 $ 67 $ 185 $ 224 $ 1,061 $ 13,888 $ 14,949 82.8 %

Group II 2 21 — 5 2 42 72 2,751 2,823 15.6

Group III — — — — — 10 10 233 243 1.4

Group IV — — 1 — — 3 4 35 39 0.2

Total (a) $ 404 $ 169 $ 36 $ 72 $ 187 $ 279 $ 1,147 $ 16,907 $ 18,054 100.0 %

(a) Total past due dealer financing receivables at December 31, 2022 were $ 9 million.

The credit quality analysis of dealer financing receivables at March 31, 2023 was as follows (in millions):

Amortized Cost Basis by Origination Year Wholesale Loans

Prior to 2019 2019 2020 2021 2022 2023 Total Total Percent

Group I $ 516 $ 33 $ 67 $ 179 $ 83 $ 189 $ 1,067 $ 15,951 $ 17,018 87.3 %

Group II 3 — 2 2 1 51 59 2,115 2,174 11.1

Group III — — — — — 10 10 255 265 1.4

Group IV — 1 — — — 3 4 29 33 0.2

Total (a) $ 519 $ 34 $ 69 $ 181 $ 84 $ 253 $ 1,140 $ 18,350 $ 19,490 100.0 %

Gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

(a) Total past due dealer financing receivables at March 31, 2023 were $ 7 million.

Non-Accrual of Revenue.

The accrual of financing revenue is discontinued at the time a receivable is determined to be uncollectible or when it is 90 days past due.

Accounts may be restored to accrual status only when a customer settles all past-due deficiency balances and future payments are reasonably assured.

For receivables in non-accrual status, subsequent financing revenue is recognized only to the extent a payment is received.

Payments are generally applied first to outstanding interest and then to the unpaid principal balance.

Loan Modifications.

Consumer and non-consumer receivables that have a modified interest rate and/or a term extension (including receivables that were modified in reorganization proceedings pursuant to the U.S.

Bankruptcy Code) are typically considered to be loan modifications.

Ford Credit does not grant modifications to the principal balance of the receivables.

If a receivable is modified in a reorganization proceeding, all payment requirements of the reorganization plan need to be met before remaining balances are forgiven.

The use of interest rate modifications and term extensions helps Ford Credit mitigate financial loss.

Term extensions may assist in cases where Ford Credit believes the customer will recover from short-term financial difficulty and resume regularly scheduled payments.

The effect of most loan modifications made to borrowers experiencing financial difficulty is included in the historical trends used to measure the allowance for credit losses.

A loan modification that improves the delinquency status of a borrower reduces the probability of default, which results in a lower allowance for credit losses.

At March 31, 2023, an insignificant portion of Ford Credit's total finance receivables portfolio had been granted a loan modification, and these modifications are generally treated as a continuation of the existing loan.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

FORD CREDIT FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES (Continued)

Allowance for Credit Losses

The allowance for credit losses represents an estimate of the lifetime expected credit losses inherent in finance receivables as of the balance sheet date.

The adequacy of the allowance for credit losses is assessed quarterly.

Adjustments to the allowance for credit losses are made by recording charges to Ford Credit interest, operating, and other expenses on our consolidated income statements.

The uncollectible portion of a finance receivable is charged to the allowance for credit losses at the earlier of when an account is deemed to be uncollectible or when an account is 120 days delinquent, taking into consideration the financial condition of the customer or borrower, the value of the collateral, recourse to guarantors, and other factors .

Charge-offs on finance receivables include uncollected amounts related to principal, interest, late fees, and other allowable charges.

Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses.

In the event Ford Credit repossesses the collateral, the receivable is charged off and the collateral is recorded at its estimated fair value less costs to sell and reported in Other assets on our consolidated balance sheets.

An analysis of the allowance for credit losses related to finance receivables for the periods ended March 31 was as follows (in millions):

First Quarter 2022

Consumer Non-Consumer Total

Allowance for credit losses

Beginning balance $ 903 $ 22 $ 925

Charge-offs ( 62 ) — ( 62 )

Recoveries 43 1 44

Provision for/(Benefit from) credit losses ( 59 ) ( 5 ) ( 64 )

Other (a) 1 1 2

Ending balance $ 826 $ 19 $ 845

First Quarter 2023

Consumer Non-Consumer Total

Allowance for credit losses

Beginning balance $ 838 $ 7 $ 845

Charge-offs ( 96 ) — ( 96 )

Recoveries 38 1 39

Provision for/(Benefit from) credit losses 78 ( 1 ) 77

Other (a) 5 — 5

Ending balance $ 863 $ 7 $ 870

(a) Primarily represents amounts related to translation adjustments.

During the first quarter of 2023, the allowance for credit losses increased $ 25 million, driven by an increase in Ford Credit finance receivables.

Net charge-offs increased from a year ago reflecting normalization from extraordinarily low levels.

The impact of higher inflation and higher interest rates on future credit losses remains uncertain.

Ford Credit will continue to monitor economic trends and conditions and portfolio performance and will adjust the reserve accordingly.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

Inventories were as follows (in millions):

2022 March 31,

Raw materials, work-in-process, and supplies $ 5,997 $ 6,464

Finished products 8,083 9,748

Total inventories $ 14,080 $ 16,212

Our finished product inventory at March 31, 2023 was higher than at December 31, 2022, reflecting higher in-transit and in-plant inventory.

OTHER INVESTMENTS

We have investments in entities not accounted for under the equity method for which fair values are not readily available.

We record these investments at cost (less impairment, if any), adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

We report the carrying value of these investments in Other assets in the non-current assets section of our consolidated balance sheets.

These investments were $ 384 million and $ 350 million at December 31, 2022 and March 31, 2023, respectively.

The cumulative net unrealized gain from adjustments related to Other Investments held at March 31, 2023 was $ 101 million.

The net carrying amount of goodwill was $ 603 million and $ 609 million at December 31, 2022 and March 31, 2023, respectively, and is reported in Other assets in the non-current assets section of our consolidated balance sheets.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

OTHER LIABILITIES AND DEFERRED REVENUE

Other liabilities and deferred revenue were as follows (in millions):

2022 March 31,

Dealer and dealers’ customer allowances and claims $ 9,219 $ 9,881

Deferred revenue 2,404 2,582

Employee benefit plans 2,020 1,505

Accrued interest 935 938

Operating lease liabilities 404 415

OPEB (a) 329 328

Pension (a) 196 198

Other (b) 5,590 5,980

Total current other liabilities and deferred revenue $ 21,097 $ 21,827

Dealer and dealers’ customer allowances and claims $ 6,095 $ 6,538

Pension (a) 5,673 5,835

OPEB (a) 4,130 4,069

Deferred revenue 4,883 4,835

Operating lease liabilities 1,101 1,201

Employee benefit plans 834 829

Other (b) 2,781 2,601

Total non-current other liabilities and deferred revenue $ 25,497 $ 25,908

(a) Balances at March 31, 2023 reflect pension and OPEB liabilities at December 31, 2022, updated for:

service and interest cost;

expected return on assets;

curtailments, settlements, and associated interim remeasurement (where applicable);

separation expense;

actual benefit payments;

and cash contributions.

The discount rate and rate of expected return assumptions are unchanged from year-end 2022.

Included in Other assets are pension assets of $ 5.7 billion and $ 5.8 billion at December 31, 2022 and March 31, 2023, respectively.

(b) Includes current derivative liabilities of $ 1.3 billion at both December 31, 2022 and March 31, 2023.

Includes non-current derivative liabilities of $ 1.7 billion and $ 1.2 billion at December 31, 2022 and March 31, 2023, respectively (see Note 15).

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

RETIREMENT BENEFITS

Defined Benefit Plans - Expense

The pre-tax net periodic benefit cost/(income) for our defined benefit pension and OPEB plans for the periods ended March 31 were as follows (in millions):

First Quarter

Pension Benefits

Plans Non-U.S.

Plans Worldwide OPEB

2022 2023 2022 2023 2022 2023

Service cost $ 125 $ 72 $ 111 $ 61 $ 10 $ 5

Interest cost 263 408 134 237 37 58

Expected return on assets ( 642 ) ( 486 ) ( 268 ) ( 219 ) — —

Amortization of prior service costs/(credits)

— — 7 5 ( 1 ) 1

Net remeasurement (gain)/loss — 113 — — — —

Separation programs/other 4 2 7 4 — —

Settlements and curtailments

Net periodic benefit cost/(income)

$ ( 250 ) $ 151 $ ( 9 ) $ 88 $ 46 $ 64

The service cost component is included in Cost of sales and Selling, administrative, and other expenses .

Other components of net periodic benefit cost/(income) are included in Other income/(loss), net on our consolidated income statements.

In the first quarter of 2023, we paid lump sums for one of our U.S.

pension plans, which resulted in a remeasurement and settlement expenses of $ 113 million and $ 42 million, respectively.

Pension Plan Contributions

During 2023, we continue to expect to contribute between $ 500 million and $ 600 million of cash to our global funded pension plans.

We also expect to make about $ 400 million of benefit payments to participants in unfunded plans.

In the first quarter of 2023, we contributed $ 125 million to our global funded pension plans and made $ 99 million of benefit payments to participants in unfunded plans.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

The carrying value of Company debt excluding Ford Credit and Ford Credit debt was as follows (in millions):

2022 March 31,

Company excluding Ford Credit

Debt payable within one year

Short-term $ 359 $ 186

Long-term payable within one year

Other debt 372 336

Unamortized (discount)/premium ( 1 ) —

Total debt payable within one year 730 522

Long-term debt payable after one year

Public unsecured debt securities 14,935 14,935

Convertible notes (a) 2,300 2,300

Export Finance Program 1,654 1,702

Other debt 682 616

Unamortized (discount)/premium ( 180 ) ( 176 )

Unamortized issuance costs ( 191 ) ( 187 )

Total long-term debt payable after one year 19,200 19,190

Total Company excluding Ford Credit $ 19,930 $ 19,712

Fair value of Company debt excluding Ford Credit (b) $ 18,557 $ 19,046

Debt payable within one year

Short-term $ 19,624 $ 17,890

Long-term payable within one year

Unsecured debt 7,980 10,128

Asset-backed debt 21,839 19,502

Unamortized (discount)/premium — —

Unamortized issuance costs

( 13 ) ( 16 )

Fair value adjustments (c) 4 24

Total debt payable within one year 49,434 47,528

Long-term debt payable after one year

Unsecured debt 39,620 41,237

Asset-backed debt 31,840 32,449

Unamortized (discount)/premium 23 17

Unamortized issuance costs

( 184 ) ( 209 )

Fair value adjustments (c) ( 1,694 ) ( 1,442 )

Total long-term debt payable after one year 69,605 72,052

Total Ford Credit $ 119,039 $ 119,580

Fair value of Ford Credit debt (b) $ 117,214 $ 118,688

(a) As of March 31, 2023, each $ 1,000 principal amount of the notes will be convertible into 63.0921 shares of our Common Stock, which is equivalent to a conversion price of approximately $ 15.85 per share.

We recognized issuance cost amortization of $ 2 million during both the first quarter of 2022 and 2023.

(b) At December 31, 2022 and March 31, 2023, the fair value of debt includes $ 359 million and $ 186 million of Company excluding Ford Credit short-term debt, respectively, and $ 16.9 billion and $ 14.8 billion of Ford Credit short-term debt, respectively, carried at cost, which approximates fair value.

All other debt is categorized within Level 2 of the fair value hierarchy.

(c) These adjustments are related to hedging activity and include discontinued hedging relationship adjustments of $ 31 million and $( 31 ) million at December 31, 2022 and March 31, 2023, respectively.

The carrying value of hedged debt was $ 33.3 billion and $ 36.5 billion at December 31, 2022 and March 31, 2023, respectively.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

In the normal course of business, our operations are exposed to global market risks, including the effect of changes in foreign currency exchange rates, certain commodity prices, and interest rates.

To manage these risks, we enter into highly effective derivative contracts.

We have elected to apply hedge accounting to certain derivatives.

Derivatives that are designated in hedging relationships are evaluated for effectiveness using regression analysis at the time they are designated and throughout the hedge period.

Some derivatives do not qualify for hedge accounting;

for others, we elect not to apply hedge accounting.

Income Effect of Derivative Financial Instruments

The gains/(losses), by hedge designation, reported in income for the periods ended March 31 were as follows (in millions):

First Quarter

Cash flow hedges

Reclassified from AOCI to Cost of sales

Foreign currency exchange contracts (a)

$ ( 90 ) $ 26

Commodity contracts (b)

Fair value hedges

Interest rate contracts

Net interest settlements and accruals on hedging instruments

Fair value changes on hedging instruments ( 986 ) 250

Fair value changes on hedged debt 991 ( 279 )

Cross-currency interest rate swap contracts

Net interest settlements and accruals on hedging instruments

Fair value changes on hedging instruments ( 37 ) 22

Fair value changes on hedged debt 41 ( 19 )

Derivatives not designated as hedging instruments

Foreign currency exchange contracts (c) ( 46 ) ( 3 )

Cross-currency interest rate swap contracts

Interest rate contracts 123 ( 12 )

Commodity contracts 109 ( 11 )

Total $ 9 $ ( 104 )

(a) For the first quarter of 2022 and 2023, a $ 128 million loss and a $ 63 million loss, respectively, were reported in Other comprehensive income/(loss), net of tax .

(b) For the first quarter of 2022 and 2023, a $ 284 million gain and an $ 8 million gain, respectively, were reported in Other comprehensive income/(loss), net of tax .

(c) For the first quarter of 2022 and 2023, a $ 44 million loss and a $ 19 million gain, respectively, were reported in Cost of sales , and a $ 2 million loss and a $ 22 million loss, respectively, were reported in Other income/(loss), net .

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

Balance Sheet Effect of Derivative Financial Instruments

Derivative assets and liabilities are reported on our consolidated balance sheets at fair value and are presented on a gross basis.

The notional amounts of the derivative instruments do not necessarily represent amounts exchanged by the parties and are not a direct measure of our financial exposure.

We also enter into master agreements with counterparties that may allow for netting of exposures in the event of default or breach of the counterparty agreement.

Collateral represents cash received or paid under reciprocal arrangements that we have entered into with our derivative counterparties, which we do not use to offset our derivative assets and liabilities.

The fair value of our derivative instruments and the associated notional amounts were as follows (in millions):

December 31, 2022 March 31, 2023

Notional Fair Value of

Assets Fair Value of

Liabilities Notional Fair Value of

Assets Fair Value of

Cash flow hedges

Foreign currency exchange contracts

$ 11,536 $ 376 $ 52 $ 16,998 $ 316 $ 102

Commodity contracts 990 16 56 1,012 15 40

Fair value hedges

Interest rate contracts 16,883 — 1,653 19,042 15 1,302

Cross-currency interest rate swap contracts

885 — 161 1,421 4 135

Derivatives not designated as hedging instruments

Foreign currency exchange contracts 20,851 162 285 19,718 136 164

Cross-currency interest rate swap contracts

6,635 15 653 6,115 38 528

Interest rate contracts 63,210 931 483 57,312 753 397

Commodity contracts 841 26 35 949 32 39

Total derivative financial instruments, gross (a) (b)

$ 121,831 $ 1,526 $ 3,378 $ 122,567 $ 1,309 $ 2,707

Current portion

$ 1,101 $ 1,656 $ 813 $ 1,462

Non-current portion

425 1,722 496 1,245

Total derivative financial instruments, gross

$ 1,526 $ 3,378 $ 1,309 $ 2,707

(a) At December 31, 2022 and March 31, 2023, we held collateral of $ 210 million and $ 180 million, respectively, and we posted collateral of $ 201 million and $ 203 million, respectively.

(b) At December 31, 2022 and March 31, 2023, the fair value of assets and liabilities available for counterparty netting was $ 451 million and $ 438 million, respectively .

All derivatives are categorized within Level 2 of the fair value hierarchy.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES

We generally record costs associated with voluntary separations at the time of employee acceptance.

We record costs associated with involuntary separation programs when management has approved the plan for separation, the affected employees are identified, and it is unlikely that actions required to complete the separation plan will change significantly.

Costs associated with benefits that are contingent on the employee continuing to provide service are accrued over the required service period.

Company Excluding Ford Credit

Employee separation actions and exit and disposal activities include employee separation costs, facility and other asset-related charges (e.g., impairment, accelerated depreciation), dealer and supplier payments, other statutory and contractual obligations, and other expenses, which are recorded in Cost of sales and Selling, administrative, and other expenses.

Below are actions that have been initiated:

Exited manufacturing operations in 2021 resulting in the closure of facilities in Camaçari, Taubaté, and Troller

Ceased vehicle manufacturing in Sanand in the fourth quarter of 2021 and ceased manufacturing in Chennai in the third quarter of 2022.

A sale of the Sanand vehicle assembly and powertrain plants was completed in the first quarter of 2023 (see Note 17)

Ceased production of the Mondeo at the Valencia plant in the first quarter of 2022

Ceased development of certain product programs in the first quarter of 2023

In addition, we are continuing to reduce our global workforce and take other restructuring actions, including the separation of salaried workers, primarily in Europe, as announced in the first quarter of 2023.

The following table summarizes the activities for the periods ended March 31, which are recorded in Other liabilities and deferred revenue (in millions):

First Quarter

Beginning balance $ 950 $ 588

Changes in accruals (a) 66 629

Payments ( 205 ) ( 83 )

Foreign currency translation 18 ( 8 )

Ending balance $ 829 $ 1,126

(a) Excludes pension costs of $ 7 million and $ 4 million in the first quarter of 2022 and 2023, respectively.

We recorded $ 23 million and $ 48 million in the first quarter of 2022 and 2023, respectively, for accelerated depreciation and other non-cash items.

In addition, we recognized a $ 32 million pre-tax net gain on sale of assets in the first quarter of 2022.

We recorded costs of $ 64 million and $ 681 million in the first quarter of 2022 and 2023, respectively, related to the actions above.

We estimate that we will incur total charges in 2023 that range between $ 1.5 billion and $ 2 billion related to such actions, primarily attributable to employee separations and supplier settlements.

We continue to review our global businesses and may take additional restructuring actions where a path to sustained profitability is not feasible when considering the capital allocation required for those businesses.

Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at March 31, 2023 of $ 223 million are associated with Ford Credit’s investments in Brazil and Argentina that have ceased operations.

We expect to reclassify these losses to income upon substantially complete liquidation of Ford Credit’s investments, which may occur over multiple reporting periods.

In the first nine months of 2022, we reclassified losses of $ 155 million to Other income/(loss), net , upon the liquidation of three investments in Brazil.

In the first quarter of 2022, we reclassified losses of $ 119 million to Other income/(loss), net , upon the liquidation of three investments in Brazil.

Although the timing for the completion of the remaining actions is uncertain, we expect the majority of losses to be recognized in 2024 or later.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

ACQUISITIONS AND DIVESTITURES

Company Excluding Ford Credit

Argo AI, LLC (“Argo AI”).

In October 2022, Ford and Volkswagen AG (“VW”), who held equal interests that together comprised a majority ownership of Argo AI, initiated the process of exiting the joint development of highly automated driving technology (L4) through Argo AI.

Argo AI is in the process of winding down operations.

The carrying value of our equity method investment in Argo AI was $ 0 at both December 31, 2022 and March 31, 2023;

in addition, we had $ 65 million and $ 4 million at December 31, 2022 and March 31, 2023, respectively, in Other liabilities and deferred revenue related to our funding commitment for our share of Argo AI’s expenses previously incurred.

Sanand, India (“Sanand”) Plants.

In the third quarter of 2022, we entered into an agreement to sell our Sanand vehicle assembly and powertrain plants to Tata Passenger Electric Mobility Limited (“Tata”), a subsidiary of Tata Motors Limited.

The sale transaction included the land, buildings, and other fixed assets (excluding the powertrain machinery and equipment) for the plants.

We recognized, in Cost of sales , pre-tax impairment charges of $ 32 million in the third quarter of 2022 to adjust the carrying value of the assets to fair value less costs to sell.

We determined fair value using the market approach, based on the negotiated value of the assets.

Accordingly, we reported $ 88 million of fixed assets for this operation as held for sale for the period ended December 31, 2022, which we report in Other assets in the current assets section of our consolidated balance sheets.

On January 10, 2023, we completed the sale of the plants to Tata.

Ford will continue to operate the powertrain facility by leasing back the associated land and building.

As a result of the sale transaction, we derecognized the fixed assets and recognized the powertrain facility operating lease right-of-use asset and related lease liability in the first quarter of 2023.

The fair value of the cash consideration received approximated the carrying value of the fixed assets at the time of sale.

Ford Romania S.R.L.

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Ford’s portion of the output is expected to be significant;

as a result, there were about $ 100 million of assets, such as embedded leases, and related liabilities that continue to be reported as part of our financial statements.

Sanand, India (“Sanand”) Plants.

The sale transaction will include the land, buildings, and other fixed assets (excluding the powertrain machinery and equipment) for the plants.

Accordingly, we have reported $ 89 million of fixed assets for this operation as held for sale for the period ended September 30, 2022.

We recognized, in Cost of sales , pre-tax impairment charges of $ 32 million in the third quarter of 2022 to adjust the carrying value of the held-for-sale assets to fair value less costs to sell.

We determined fair value using the market approach, estimated based on the negotiated value of the assets.

After the sale to Tata, Ford will continue to operate the powertrain facility by leasing back the associated land and building.

as a result, at the time of the sale there were about $ 100 million of assets, such as embedded leases, and related liabilities that continue to be reported as part of our financial statements.

Skinny Labs Inc., dba Spin (“Spin”).

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The fair value of the preferred equity approximated the carrying value of Spin at the time of the transaction.

Electriphi, Inc.

(“Electriphi”).

On June 18, 2021, we acquired Electriphi, a California-based provider of charging management and fleet monitoring software for electric vehicles.

Assets acquired primarily include goodwill, reported in Other assets , and software, reported in Net property .

The acquisition did not have a material impact on our financial statements.

Ford Lio Ho Motor Co., Ltd.

On April 1, 2021, we completed the sale of our controlling financial interest in FLH and its wholly owned subsidiary FLH Marketing & Service Limited, which resulted in deconsolidation of our Ford Taiwan subsidiary in the second quarter of 2021.

FLH will continue to import, manufacture, and sell Ford-branded vehicles through at least 2025.

We recognized a pre-tax gain of $ 161 million, which was reported in Other income/(loss), net in the second quarter of 2021.

Financial Statements (Continued)

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NOTES TO THE FINANCIAL STATEMENTS

ACQUISITIONS AND DIVESTITURES (Continued)

Getrag Ford Transmissions GmbH (“GFT”).

Prior to March 2021, Ford and Magna International Inc.

(“Magna”) equally owned and operated the GFT joint venture for the purpose of developing, manufacturing, and selling transmissions.

We accounted for our investment in GFT as an equity method investment.

During the first quarter of 2021 and prior to our acquisition, GFT recorded restructuring charges, of which our share was $ 40 million.

These charges are included in Equity in net income/(loss) of affiliated companies .

On March 1, 2021, we acquired Magna’s shares in the restructured GFT.

The purchase price, which was subject to post-closing revisions, was $ 275 million.

The restructured GFT includes the Halewood, UK and Cologne, Germany transmission plants, but excludes the Bordeaux, France transmission plant and China interests acquired by Magna.

We concluded with Magna that these businesses would be better served under separate ownership.

The Sanand, India transmission plant continues under joint Ford/Magna ownership.

As a result of the transaction, we consolidated the restructured GFT, remeasured our prior investment in GFT at its $ 275 million fair value, and recognized in Other income/(loss), ne t a pre-tax gain of $ 178 million during 2021 and post-closing revisions resulting in a pre-tax gain of $ 2 million during the first quarter of 2022.

We estimated the fair value of GFT in negotiations with Magna based on the income approach.

The significant assumptions used in the valuation included GFT’s cash flows that reflect the approved business plan, discounted at a rate typically used for a company like GFT.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The changes in the balances for each component of accumulated other comprehensive income/(loss) attributable to Ford Motor Company for the periods ended September 30 were as follows (in millions):

Third Quarter First Nine Months

2021 2022 2021 2022

The changes in the balances for each component of accumulated other comprehensive income/(loss) attributable to Ford Motor Company for the periods ended March 31 were as follows (in millions):

First Quarter

Foreign currency translation

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(Gains)/Losses reclassified from AOCI to net income (b) 121 ( 2 )

Other comprehensive income/(loss), net of tax (c) ( 302 ) ( 952 ) ( 25 ) ( 1,820 )

Other comprehensive income/(loss), net of tax 146 493

Ending balance $ ( 5,341 ) $ ( 5,923 )

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Net (gains)/losses reclassified from AOCI to net income

( 3 ) 4 ( 14 ) 10

Other comprehensive income/(loss), net of tax ( 253 ) 110

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Tax/(Tax benefit) 7 ( 3 )

Net (gains)/losses reclassified from AOCI to net income (d) 89 27 214 54

Net (gains)/losses reclassified from AOCI to net income (c) 25 ( 14 )

Other comprehensive income/(loss), net of tax 144 ( 55 )

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Ending balance $ ( 2,632 ) $ ( 2,607 )

Total AOCI ending balance at September 30 $ ( 8,245 ) $ ( 10,193 ) $ ( 8,245 ) $ ( 10,193 )

Total AOCI ending balance at March 31 $ ( 8,294 ) $ ( 8,788 )

(a) We do not recognize deferred taxes for a majority of the foreign currency translation gains and losses because we do not anticipate reversal in the foreseeable future.

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(b) Reclassified to Other income/(loss), net.

(c) Excludes a $ 3 million gain and a $ 1 million loss related to noncontrolling interests in the third quarter and first nine months of 2022, respectively.

(d) Reclassified to Cost of sales .

During the next twelve months, we expect to reclassify existing net gains on cash flow hedges of $ 147 million (see Note 15).

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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 $ 510 million at December 31, 2021 and September 30, 2022, respectively.

Our maximum exposure to any potential losses associated with these unconsolidated affiliates is limited to our equity investments, accounts receivable, loans, and guarantees and was $ 1.0 billion and $ 1.6 billion at December 31, 2022 and March 31, 2023, respectively.

Of these amounts, guarantees of $ 113 million at both December 31, 2022 and March 31, 2023 related to certain obligations of our VIEs also are included in Note 20.

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

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BlueOval SK is a variable interest entity of which we are not the primary beneficiary, and we use the equity method of accounting for our investment.

As of September 30, 2022, Ford has contributed to BlueOval SK $ 312 million of its agreed capital contribution of up to $ 6.6 billion through 2026, subject to any adjustments agreed to by the parties.

The decrease in maximum exposure from December 31, 2021 is primarily explained by Argo AI (see Note 10), partially offset by the investment in BlueOval SK.

As of March 31, 2023, Ford has contributed to BlueOval SK $ 1.3 billion of its agreed capital contribution of up to $ 6.6 billion through 2026, subject to any adjustments agreed to by the parties.

Financial Statements (Continued)

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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 $ 395 million at December 31, 2021 and September 30, 2022, respectively.

The carrying value of recorded liabilities related to financial guarantees was $ 36 million and $ 15 million at December 31, 2021 and September 30, 2022, respectively.

The maximum potential payments for financial guarantees were $ 518 million and $ 522 million at December 31, 2022 and March 31, 2023, respectively.

The carrying value of recorded liabilities related to financial guarantees was $ 31 million and $ 55 million at December 31, 2022 and March 31, 2023, 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 $ 273 million at December 31, 2021 and September 30, 2022, respectively.

The carrying value of recorded liabilities related to non-financial guarantees was $ 38 million and $ 0 at December 31, 2021 and September 30, 2022, respectively.

Included in the $ 273 million of maximum potential payments at September 30, 2022 are guarantees for the resale value of vehicles sold in certain arrangements to daily rental companies.

The maximum potential payment of $ 267 million as of September 30, 2022 represents the total proceeds we guarantee the rental company will receive on resale.

The maximum potential payments for non-financial guarantees were $ 273 million and $ 165 million at December 31, 2022 and March 31, 2023, respectively.

The carrying value of recorded liabilities related to non-financial guarantees was $ 0 at both December 31, 2022 and March 31, 2023.

Included in the $ 165 million of maximum potential payments at March 31, 2023 are guarantees for the resale value of vehicles sold in certain arrangements to daily rental companies.

The maximum potential payment of $ 159 million as of March 31, 2023 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 do not expect we will have to pay under the guarantee.

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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 September 30 was as follows (in millions):

First Nine Months

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

Beginning balance $ 8,451 $ 9,193

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We report segment information consistent with the way our chief operating decision maker (“CODM”) evaluates the operating results and performance of the Company.

Accordingly, we analyze the results of our business through the following segments:

Automotive, Mobility, and Ford Credit.

Effective with fourth quarter 2021 reporting, special items include gains and losses on investments in equity securities.

Prior period amounts were adjusted retrospectively to reflect the change.

On January 1, 2023, we implemented a new operating model and reporting structure.

As a result of this change, we analyze the results of our business through the following segments:

Ford Blue, Ford Model e, and Ford Pro (combined, replacing the previous Automotive segment), Ford Next (previously the Mobility segment), and Ford Credit.

Company adjusted earnings before interest and taxes (“EBIT”) include the financial results of these five reportable segments and Corporate Other, and net income comprises the financial results of the five reportable segments and Corporate Other, as well as Interest on Debt, Special Items, and Taxes.

Additionally, past service pension and OPEB income and expense plus related assets, previously reported in the Automotive segment, have been realigned to Corporate Other.

Prior period amounts were adjusted retrospectively to reflect each of the above changes.

Below is a description of our reportable segments and other activities.

Automotive Segment

The Automotive segment primarily includes the sale of Ford and Lincoln vehicles, service parts, and accessories worldwide, together with the associated costs to develop, manufacture, distribute, and service the vehicles, parts, and accessories.

This segment includes revenues and costs related to our electrification vehicle programs and enterprise connectivity.

The segment includes the following regional business units:

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

Mobility Segment

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.

For additional information about our investment in Argo AI, see Note 10.

Ford Blue Segment

Ford Blue primarily includes the sale of Ford and Lincoln internal combustion engine (“ICE”) and hybrid vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services.

This segment focuses on developing Ford and Lincoln ICE and hybrid vehicles.

Additionally, this segment provides hardware engineering and manufacturing capabilities to Ford Model e and manufactures vehicles on behalf of Ford Pro and, in certain cases, Ford Model e.

Ford Blue also includes:

• All sales for markets not presently in scope for Ford Model e or Ford Pro (as further described below)

• In markets outside of the United States and Canada, sales to commercial, government, and rental customers of ICE and hybrid vehicles not considered core to Ford Pro

• Sales of electric vehicles (“EVs”) by our unconsolidated affiliates in China

• All sales of vehicles manufactured and sold to other OEMs

Ford Model e Segment

Ford Model e primarily includes the sale of our electric vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services.

This segment focuses on developing EV and digital vehicle technologies, as well as software development.

Additionally, Ford Model e provides software and connected vehicle technologies on behalf of the enterprise, and manufactures certain EVs, including for Ford Pro.

Ford Model e operates in North America, Europe, and China.

Ford Model e also includes EV and related sales not considered core to Ford Pro to commercial, government, and rental customers in Europe, China, and Mexico.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

SEGMENT INFORMATION (Continued)

Ford Pro Segment

Ford Pro primarily includes the sale of Ford and Lincoln vehicles, service parts, accessories, and services for commercial, government, and rental customers.

Included in this segment are sales of all core Ford Pro vehicles, such as Super Duty and the Transit range of vans in North America and Europe and all sales of Ranger in Europe.

In the United States and Canada, Ford Pro also includes all vehicle sales to commercial, government, and rental customers.

This segment focuses on selling ICE, hybrid, and electric vehicles, and providing digital and physical services to optimize and maintain fleets, including telematics and EV charging solutions.

This segment reflects external sales of vehicles produced by Ford Blue and Ford Model e, and the costs (including intersegment markup) associated with acquiring vehicles for sale and providing services are reflected in this segment.

Ford Pro operates in North America and Europe.

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.

Ford Credit Segment

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Corporate Other

Corporate Other primarily includes corporate governance expenses, interest income (excluding interest earned on our extended service contract portfolio that is included in our Automotive segment) and gains and losses from our cash, cash equivalents, and marketable securities (excluding gains and losses on investments in equity securities), and foreign exchange derivatives gains and losses associated with intercompany lending.

Corporate Other primarily includes corporate governance expenses, past service pension and OPEB income and expense, interest income (excluding Ford Credit interest income and interest earned on our extended service contract portfolio) and gains and losses from our cash, cash equivalents, and marketable securities (excluding gains and losses on investments in equity securities), and foreign exchange derivatives gains and losses associated with intercompany lending.

Corporate governance expenses are primarily administrative, delivering benefit on behalf of the global enterprise, that are not allocated to operating segments.

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Corporate Other assets include:

cash, cash equivalents, and marketable securities;

tax related assets;

other investments;

and other assets managed centrally.

cash, cash equivalents and marketable securities, tax related assets, defined benefit pension plan net assets, and other assets managed centrally.

Interest on Debt

Interest on Debt is presented as a separate reconciling item and consists of interest expense on Company debt excluding Ford Credit.

The underlying liability is reported in the Automotive segment and in Corporate Other.

Special Items

Special Items are presented as a separate reconciling item.

They consist of (i) pension and OPEB remeasurement gains and losses, (ii) gains and losses on investments in equity securities, (iii) significant personnel expenses, dealer-related costs, and facility-related charges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix, and (iv) other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities.

They consist of (i) pension and OPEB remeasurement gains and losses, (ii) gains and losses on investments in equity securities, (iii) significant personnel expenses, supplier- and dealer-related costs, and facility-related charges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix, and (iv) other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities.

Our management ordinarily excludes these items from its review of the results of the operating segments for purposes of measuring segment profitability and allocating resources.

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SEGMENT INFORMATION (Continued)

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

Automotive Mobility Ford Credit Corporate

Segment Revenue, Cost, and Asset Principles for Ford Blue, Ford Model e, and Ford Pro

External vehicle and digital services revenue is generally vehicle-specific and included in the segment responsible for the external vehicle sale.

A majority of parts and accessories revenue and cost is attributed to customer sales channels or vehicle lines based on recent end customer sales and is included in the respective segment.

In the normal course of business, Ford Blue, Ford Model e, and Ford Pro transact between segments and cooperate to leverage synergies, including developing and manufacturing vehicles on behalf of another segment.

When one segment produces a vehicle that is sold externally by another segment, an intersegment transaction occurs.

The producing segment will report intersegment revenue to recoup the costs associated with the unit produced.

This includes material cost, labor and overhead (including depreciation and amortization), inbound freight, and an intersegment markup.

The intersegment markup amount is set to deliver a competitive return to the producing segment for its manufacturing and distribution service.

Costs are reflected in the associated segment externally reporting the vehicle sale, as detailed in the table below:

Income Statement Elements Examples Segment Reporting

Costs specific to a particular vehicle Bill of material cost and initial warranty accrual Reported in the segment externally selling the vehicle

Costs identifiable by product line Manufacturing and logistics costs, depreciation & amortization expense, direct research & development costs Typically identifiable to the product line or production location.

Reported in the segment externally selling the vehicle, based on relative volume

Shared costs Selling, general & administrative expense, and indirect / cross product line research & development costs Typically shared across all segments, generally based on relative volume.

Certain costs clearly linked to a segment are reported in the specific segment

Intersegment markup costs for intersegment vehicle transactions Contract manufacturing and distribution fees Reported in the segment externally selling the vehicle, for each applicable vehicle transaction

Assets are reported in each segment, aligned to the appropriate operational responsibility.

Manufacturing assets, e.g., our plants and the machinery and equipment therein, are included in our Ford Blue and Ford Model e segments.

Manufacturing assets producing only, or primarily, EVs and related components are reflected in Ford Model e.

Manufacturing assets that support the production of ICE and hybrid vehicles, including those producing ICE and electric in the same facility, are included in Ford Blue.

Vendor tooling dedicated to producing EV parts is reported in Ford Model e.

There are no Ford manufacturing assets or vendor tooling reported in Ford Pro.

Regardless of the segment reporting the asset, depreciation and amortization expense is reflected on the basis of production volume and reported in the segment that reports the external vehicle sale.

Equity in net income/(loss) of affiliated companies is included in Income/(Loss) before income taxes , based primarily on which segment the entity supports or has the majority of the entity’s purchases or sales.

The table below shows the segment reporting for our most significant unconsolidated entities:

Ford Blue Ford Model e Ford Pro

∘ Changan Ford Automobile Corporation, Ltd.

∘ BlueOval SK, LLC

∘ Ford Otomotiv Sanayi Anonim Sirketi (“Ford Otosan”)

∘ Jiangling Motors Corporation, Ltd.

∘ AutoAlliance (Thailand) Co., Ltd.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

SEGMENT INFORMATION (Continued)

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

Ford Blue Ford Model e Ford Pro Ford Next Ford Credit Corporate

Other Interest

on Debt Special Items Adjustments Total

Third Quarter 2021

Revenues $ 33,211 $ 38 $ 2,434 $ — $ — $ — $ — $ 35,683

Income/(Loss) before income taxes 2,456 ( 271 ) 1,077 ( 269 ) ( 439 ) ( 669 ) (a) — 1,885

Equity in net income/(loss) of affiliated companies 185 ( 68 ) 9 — — 4 — 130

Total assets 68,291 3,471 135,385 46,695 — — ( 1,165 ) (b) 252,677

Third Quarter 2022

Revenues $ 37,194 $ 11 $ 2,187 $ — $ — $ — $ — $ 39,392

Income/(Loss) before income taxes 1,698 ( 244 ) 599 ( 250 ) ( 321 ) ( 2,607 ) (c) — ( 1,125 )

Equity in net income/(loss) of affiliated companies 185 ( 87 ) 8 — — ( 2,732 ) (e) — ( 2,626 )

Total assets 71,983 415 127,088 48,432 — — ( 999 ) (b) 246,919

Automotive Mobility Ford Credit Corporate

on Debt Special Items Eliminations/Adjustments Total

First Quarter 2022

External Revenues $ 20,810 $ 972 $ 10,324 $ 84 $ 2,281 $ 5 $ — $ — $ — $ 34,476

Intersegment Revenues (a) 7,254 27 — — — — — — ( 7,281 ) —

Total Revenues $ 28,064 $ 999 $ 10,324 $ 84 $ 2,281 $ 5 $ — $ — $ ( 7,281 ) $ 34,476

Income/(Loss) before income taxes $ 1,328 $ ( 380 ) $ 491 $ ( 242 ) $ 928 $ 201 $ ( 308 ) $ ( 5,866 ) (b) $ — $ ( 3,848 )

Equity in net income/(loss) of affiliated companies 56 ( 2 ) 85 ( 75 ) 6 1 — ( 104 ) (c) — ( 33 )

Total assets 58,329 2,951 1,679 3,501 132,582 54,608 — — ( 664 ) (d) 252,986

Ford Blue Ford Model e Ford Pro Ford Next Ford Credit Corporate

Other Interest

on Debt Special Items Adjustments Total

First Nine Months 2021

Revenues $ 90,893 $ 70 $ 7,700 $ — $ — $ — $ — $ 98,663

Income/(loss) before income taxes 5,756 ( 688 ) 3,662 ( 772 ) ( 1,365 ) ( 31 ) (d) — 6,562

on Debt Special Items Eliminations/Adjustments Total

First Quarter 2023

External Revenues $ 25,124 $ 707 $ 13,249 $ 1 $ 2,389 $ 4 $ — $ — $ — $ 41,474

Intersegment Revenues (a) 9,177 9 — — — — — — ( 9,186 ) —

Total Revenues $ 34,301 $ 716 $ 13,249 $ 1 $ 2,389 $ 4 $ — $ — $ ( 9,186 ) $ 41,474

Income/(loss) before income taxes $ 2,623 $ ( 722 ) $ 1,366 $ ( 44 ) $ 303 $ ( 147 ) $ ( 308 ) $ ( 912 ) (e) $ — $ 2,159

Equity in net income/(loss) of affiliated companies 55 ( 3 ) 117 ( 12 ) 7 — — ( 34 ) — 130

First Nine Months 2022

Revenues $ 107,214 $ 120 $ 6,724 $ — $ — $ — $ — $ 114,058

Income/(loss) before income taxes 6,911 ( 707 ) 2,466 ( 819 ) ( 941 ) ( 11,092 ) (c) — ( 4,182 )

Equity in net income/(loss) of affiliated companies 481 ( 245 ) 18 1 — ( 2,856 ) (e) — ( 2,601 )

(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 our Rivian investment and the impairment of our Argo AI equity method investment.

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

(e) Primarily reflects the impairment of our Argo AI equity method investment.

Total assets 57,990 7,242 2,668 371 138,225 52,427 — — ( 2,123 ) (d) 256,800

(a) Intersegment revenues only reflect finished vehicle transactions between Ford Blue, Ford Model e, and Ford Pro where there is an intersegment markup and are recognized at the time of the intersegment transaction.

(b) Primarily reflects gains/(losses) on our Rivian investment.

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

(d) Primarily includes eliminations of intersegment transactions occurring in the ordinary course of business.

(e) Primarily reflects restructuring actions in Europe and China and mark-to-market adjustments for our global pension and OPEB plans.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

KEY TRENDS AND ECONOMIC FACTORS AFFECTING FORD AND THE AUTOMOTIVE INDUSTRY

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.

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 labor shortages and other production issues, in addition to the continuing semiconductor shortage.

Our inconsistent production schedule has been disruptive to our suppliers’ operations, which, in turn, has led to a limited availability of certain parts and delivery delays.

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 59 .

Commodity and Energy Prices.

Prices for commodities remain volatile but spot prices 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, and nickel for batteries) remain at historically elevated price levels.

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.

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 59 .

Inflation and Interest Rates.

We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures in the wake of Russia’s invasion of Ukraine, driving up energy prices, freight premiums, and other operating costs.

Inflation in the United States peaked at a year-over-year rate of 9.1% in June, before moderating to a still-elevated 8.2% in September as gasoline prices eased.

In Europe, energy price pressures and inflation have remained on an upward path, with September U.K.

inflation rebounding to 10.1% and Euro Area inflation at 9.9%, both on a year-over-year basis.

Interest rates have increased quickly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation, while government deficits and debt remain at high levels in many global 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 for the business.

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

RESULTS OF OPERATIONS

In the third quarter of 2022, the net loss attributable to Ford Motor Company was $827 million, and Company adjusted EBIT was $1,803 million.

In the first quarter of 2023, the net income attributable to Ford Motor Company was $1,757 million, and Company adjusted EBIT was $3,379 million.

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

These items are discussed in more detail in Note 21 of the Notes to the Financial Statements.

We report special items separately to allow investors analyzing our results to identify certain items that they may wish to exclude when considering the trend of ongoing operating results.

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.

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

Third Quarter First Nine Months

2021 2022 2021 2022

Global Redesign

First Quarter

Restructuring

Europe $ (22) $ (370)

India (369) (175) (369) (250)

South America (211) (9) (666) (26)

China (including Taiwan) (5) (17) 152 (37)

North America (29) (180) (39) (210)

China — (309)

Ford Credit - Brazil (119) —

Other (36) 12

Subtotal Global Redesign $ (702) $ (391) $ (1,262) $ (564)

Gain/(loss) on Rivian investment (a)

Subtotal Restructuring $ (177) $ (667)

Pension and OPEB Gain/(Loss)

Pension and OPEB remeasurement $ — $ (113)

Pension settlements and curtailments — (46)

Subtotal Pension and OPEB Gain/(Loss) $ — $ (159)

Gain/(loss) on Rivian investment

$ (5,449) $ (25)

Debt extinguishment premium — (135) — (135)

Argo impairment (see Note 10) — (2,708) — (2,708)

Ford Credit – Brazil restructuring (see Note 17) — — — (155)

Russia suspension of operations/asset write-off (138) —

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Subtotal Other Items $ (5,689) $ (86)

Pension and OPEB Gain/(Loss)

Pension and OPEB remeasurement $ 40 $ (7) $ 364 $ (23)

Pension settlements and curtailments (7) — (56) —

Subtotal Pension and OPEB Gain/(Loss) $ 33 $ (7) $ 308 $ (23)

Total EBIT Special Items $ (5,866) $ (912)

Cash effect of Global Redesign (incl.

separations) $ (293) $ (185) $ (1,608) $ (35)

Provision for/(Benefit from) tax special items (b) $ (460) $ (544) $ (318) $ (2,273)

(a) As of September 30, 2022, we held 24.8 million Rivian common shares valued at $32.91 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 third quarter of 2022, driven by an impairment on our Argo investment.

For additional information on the impairment on our Argo investment, see Note 10 of the Notes to the Financial Statements.

In Note 22 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.

Provision for/(Benefit from) tax special items (a) $ (1,192) $ (144)

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

We recorded $912 million of pre-tax special item charges in the first quarter of 2023, driven primarily by restructuring actions in Europe and China.

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 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.

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COMPANY KEY METRICS

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

Third Quarter First Nine Months

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

The table below shows our first quarter 2023 key metrics for the Company, compared to a year ago.

First Quarter

2022 2023 H / (L)

GAAP Financial Measures

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Net Income/(Loss) ($M) (3,110) 1,757 $ 4,867

Net Income/(Loss) Margin (%) 5.1 % (2.1) % (7.2) ppts 5.7 % (2.9) % (8.6) ppts

Net Income/(Loss) Margin (%) (9.0) % 4.2 % 13.2 ppts

EPS (Diluted) $ (0.78) $ 0.44 $ 1.22

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EBIT ($M) 2,326 3,379 1,053

EBIT Margin (%) 8.4 % 4.6 % (3.8) ppts 8.1 % 6.9 % (1.2) ppts

EBIT Margin (%) 6.7 % 8.1 % 1.4 ppts

Adjusted EPS (Diluted) $ 0.38 $ 0.63 $ 0.25

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

In the third quarter of 2022, our diluted earnings per share of Common and Class B Stock was a loss of $0.21 and our diluted adjusted earnings per share was $0.30.

Net income/(loss) margin was negative 2.1% in the third quarter of 2022, down 7.2 percentage points from a year ago.

Company adjusted EBIT margin was 4.6% in the third quarter of 2022, down 3.8 percentage points from a year ago.

The year-over-year decrease of $2.7 billion in net income/(loss) in the third quarter of 2022 was driven by an impairment on our Argo investment, which is included in special items, and lower Automotive EBIT and Ford Credit EBT.

The year-over-year decrease of $1.2 billion in Company adjusted EBIT was driven by lower Automotive EBIT and lower Ford Credit EBT.

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

Third Quarter First Nine Months

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

Automotive $ 2,456 $ 1,698 $ (758) $ 5,756 $ 6,911 $ 1,155

Mobility (271) (244) 27 (688) (707) (19)

In the first quarter of 2023, our diluted earnings per share of Common and Class B Stock was $0.44, and our diluted adjusted earnings per share was $0.63.

Net income/(loss) margin was 4.2% in the first quarter of 2023, up 13.2 percentage points from a year ago.

Company adjusted EBIT margin was 8.1% in the first quarter of 2023, up 1.4 percentage points from a year ago.

The year-over-year increase of $4.9 billion in net income/(loss) in the first quarter of 2023 was driven by the non-recurrence of a mark-to-market loss on our Rivian investment (included in special items in the first quarter of 2022) and higher Ford Blue and Ford Pro EBIT.

The year-over-year increase of $1.1 billion in Company adjusted EBIT was driven by higher Ford Blue and Ford Pro EBIT as well as a lower loss in Ford Next.

Partial offsets included lower Ford Credit EBT, lower past service pension and OPEB income in Corporate Other, and lower Ford Model e EBIT.

The table below shows our first quarter 2023 net income/(loss) attributable to Ford and Company adjusted EBIT by segment.

First Quarter

2022 2023 H / (L)

Ford Blue $ 1,328 $ 2,623 $ 1,295

Ford Model e (380) (722) (342)

Ford Pro 491 1,366 875

Ford Next (242) (44) 198

Ford Credit 928 303 (625)

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

Automotive Segment

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

Third Quarter First Nine Months

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

North America $ 2,420 $ 1,309 $ (1,111) $ 5,555 $ 6,169 $ 614

South America 2 149 147 (157) 303 460

Europe (52) 204 256 5 421 416

China (including Taiwan) (39) (193) (154) (177) (367) (190)

International Markets Group 125 229 104 530 385 (145)

Automotive Segment $ 2,456 $ 1,698 $ (758) $ 5,756 $ 6,911 $ 1,155

The tables below and on the following pages provide third quarter and first nine months 2022 key metrics and the change in third quarter 2022 EBIT compared with third 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.

Third Quarter First Nine Months

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

Market Share (%) 4.9 % 4.9 % — ppts 5.1 % 5.0 % (0.1) ppts

Wholesale Units (000) 1,012 1,086 74 2,838 3,084 246

Revenue ($M) $ 33,211 $ 37,194 $ 3,983 $ 90,893 $ 107,214 $ 16,321

EBIT ($M) 2,456 1,698 (758) 5,756 6,911 1,155

EBIT Margin (%) 7.4 % 4.6 % (2.8) ppts 6.3 % 6.4 % 0.1 ppts

Change in EBIT by Causal Factor (in millions)

Third Quarter 2021 EBIT $ 2,456

Volume / Mix (277)

Net Pricing 3,398

Exchange (127)

Third Quarter 2022 EBIT $ 1,698

In the third quarter of 2022, wholesales increased 7% from a year ago, driven by reduced supply constraints (including semiconductors) on production and electric vehicle scaling.

Third quarter 2022 revenue increased 12%, driven by higher net pricing and wholesales, offset partially by weaker currencies.

Our third quarter 2022 Automotive segment EBIT was $1.7 billion, a decrease of $758 million from a year ago, and our third quarter 2022 Automotive EBIT margin was 4.6%.

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

Our results include inflation-related supplier payments of $1.3 billion, primarily in North America, which were about $1 billion higher than originally expected, as indicated in our Current Report on Form 8-K dated September 19, 2022.

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

North America

Third Quarter First Nine Months

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

Market Share (%) 11.2 % 12.8 % 1.7 ppts 11.3 % 12.6 % 1.3 ppts

Wholesale Units (000) 546 568 22 1,407 1,700 293

Revenue ($M) $ 24,032 $ 26,340 $ 2,308 $ 61,992 $ 77,714 $ 15,722

EBIT ($M) 2,420 1,309 (1,111) 5,555 6,169 614

EBIT Margin (%) 10.1 % 5.0 % (5.1) ppts 9.0 % 7.9 % (1.1) ppts

Change in EBIT by Causal Factor (in millions)

Third Quarter 2021 EBIT $ 2,420

Volume / Mix (672)

Net Pricing 2,061

Third Quarter 2022 EBIT $ 1,309

In North America, third quarter 2022 wholesales increased 4% from a year ago.

Third quarter 2022 revenue increased 10%, driven by higher net pricing and wholesales, offset partially by unfavorable mix.

North America’s third quarter 2022 EBIT was $1.3 billion, a decrease of $1.1 billion from a year ago, with an EBIT margin of 5.0%.

The lower EBIT was driven by inflationary increases on commodity, material, and freight costs and unfavorable mix, offset partially by higher net pricing.

Our results include inflation-related supplier payments of $1.2 billion, which were about $1 billion higher than originally expected, as indicated in our Current Report on Form 8-K dated September 19, 2022.

South America

Third Quarter First Nine Months

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

Market Share (%) 2.4 % 2.0 % (0.5) ppts 2.8 % 2.1 % (0.7) ppts

Wholesale Units (000) 20 23 3 55 57 1

Revenue ($M) $ 627 $ 883 $ 256 $ 1,605 $ 2,160 $ 555

EBIT ($M) 2 149 147 (157) 303 460

EBIT Margin (%) 0.3 % 16.9 % 16.6 ppts (9.8) % 14.0 % 23.8 ppts

Change in EBIT by Causal Factor (in millions)

Third Quarter 2021 EBIT $ 2

Volume / Mix (16)

Net Pricing 302

Exchange (14)

Third Quarter 2022 EBIT $ 149

In South America, third quarter 2022 wholesales increased 17% from a year ago.

Third quarter 2022 revenue increased 41%, driven by higher net pricing, offset partially by weaker currencies.

South America’s third quarter 2022 EBIT was $149 million, an improvement of $147 million from a year ago, with an EBIT margin of 16.9%.

The EBIT improvement was driven by higher net pricing, offset partially by inflationary increases on commodity, material, and freight 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)

Third Quarter First Nine Months

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

Market Share (%) 6.2 % 6.6 % 0.4 ppts 6.5 % 6.5 % — ppts

The tables below and on the following pages provide first quarter 2023 key metrics and the change in first quarter 2023 EBIT compared with first quarter 2022 by causal factor for each of our segments.

For a description of these causal factors, see Definitions and Information Regarding Ford Blue, Ford Model e, Ford Pro Causal Factors.

Ford Blue Segment

First Quarter

Key Metrics 2022 2023 H / (L)

Wholesale Units (000) (a) 663 706 43

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EBIT ($M) 1,328 2,623 1,295

EBIT Margin (%) (0.9) % 3.0 % 3.9 ppts 0.0 % 2.2 % 2.2 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Turkey (about 12,000 units in Q3 2021 and 18,000 units in Q3 2022).

Revenue does not include these sales.

EBIT Margin (%) 6.4 % 10.4 % 4.1 ppts

(a) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 128,000 units in Q1 2022 and 97,000 units in Q1 2023).

Change in EBIT by Causal Factor (in millions)

Third Quarter 2021 EBIT $ (52)

First Quarter 2022 EBIT $ 1,328

Volume / Mix 2,230

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Exchange (133)

Third Quarter 2022 EBIT $ 204

In Europe, third quarter 2022 wholesales increased 25% from a year ago, primarily reflecting reduced supply constraints (including semiconductors) on production.

Third quarter 2022 revenue increased 11%, driven by higher wholesales and net pricing, offset partially by weaker currencies.

Europe’s third quarter 2022 EBIT was $204 million, an improvement of $256 million from a year ago, with an EBIT margin of 3.0%.

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

First Quarter 2023 EBIT $ 2,623

In the first quarter of 2023, Ford Blue’s wholesales increased 6% from a year ago, driven by improvements in production-related supply constraints (including semiconductors).

First quarter 2023 revenue increased 21%, driven by favorable mix as well as higher wholesales and net pricing, offset partially by weaker currencies.

Ford Blue’s first quarter 2023 EBIT was $2.6 billion, an increase of $1.3 billion from a year ago, with an EBIT margin of 10.4%.

The higher EBIT was driven by favorable mix as well as higher wholesales and net pricing.

Partial offsets included inflationary cost increases on commodities, materials, and freight, higher material costs for new products, as well as higher volume-related structural costs, weaker currencies, and higher warranty costs.

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

China (Including Taiwan)

Third Quarter First Nine Months

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

Market Share (%) 2.5 % 2.0 % (0.5) ppts 2.3 % 2.2 % (0.2) ppts

Wholesale Units (000) (a) 162 137 (26) 463 378 (84)

Ford Model e Segment

First Quarter

Key Metrics 2022 2023 H / (L)

Wholesale Units (000) 18 12 (6)

Revenue ($M) $ 972 $ 707 $ (265)

EBIT ($M) (380) (722) (342)

EBIT Margin (%) (6.6) % (44.7) % (38.1) ppts (9.0) % (25.6) % (16.6) ppts

China Unconsolidated Affiliates

Wholesale Units (000) (b) 160 134 (27) 449 370 (79)

Ford Equity Income/(Loss) ($M) $ 77 $ 58 $ (19) $ 144 $ 175 $ 31

(a) Includes vehicles produced and sold by our unconsolidated affiliates.

Revenue does not include these sales.

(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.

EBIT Margin (%) (39.1) % (102.1) % (63.0) ppts

Change in EBIT by Causal Factor (in millions)

Third Quarter 2021 EBIT $ (39)

First Quarter 2022 EBIT $ (380)

Volume / Mix (42)

Net Pricing 7

Exchange (33)

Other (Including Joint Ventures) (41)

Third Quarter 2022 EBIT $ (193)

In China, third quarter 2022 wholesales decreased 16% from a year ago, driven by lower commercial vehicle and compact segment sales.

Third quarter 2022 revenue at our consolidated operations decreased 27%, primarily driven by lower component sales to our joint ventures in China.

China’s third quarter 2022 EBIT loss was $193 million, a $154 million higher loss than a year ago, with an EBIT margin of negative 44.7%.

The EBIT decrease was driven by lower volume, weaker currencies, higher marketing expenses on new products, and lower profits at our joint ventures.

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

International Markets Group

Third Quarter First Nine Months

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

Market Share (%) 1.8 % 1.4 % (0.4) ppts 1.8 % 1.2 % (0.5) ppts

First Quarter 2023 EBIT $ (722)

In the first quarter of 2023, Ford Model e’s wholesales decreased 32% from a year ago, driven by downtime at the Cuautitlan assembly plant for changes to increase production capacity of Mustang Mach-E.

First quarter 2023 revenue decreased 27%, primarily driven by lower wholesales, offset partially by favorable mix.

Ford Model e’s first quarter 2023 EBIT loss was $722 million, a $342 million higher loss than a year ago, with an EBIT margin of negative 102.1%.

The lower EBIT was driven by higher engineering and spending-related expense, inflationary cost increases on commodities and materials, and lower wholesales.

Ford Pro Segment

First Quarter

Key Metrics 2022 2023 H / (L)

Wholesale Units (000) (a) 285 337 53

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EBIT ($M) 491 1,366 875

EBIT Margin (%) 6.6 % 8.2 % 1.6 ppts 8.0 % 5.9 % (2.1) ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Russia (about 5,000 units in Q3 2021 and 0 units in Q3 2022).

Revenue does not include these sales.

EBIT Margin (%) 4.8 % 10.3 % 5.6 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 13,000 units in Q1 2022 and 22,000 units in Q1 2023).

Change in EBIT by Causal Factor (in millions)

Third Quarter 2021 EBIT $ 125

First Quarter 2022 EBIT $ 491

Volume / Mix 497

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Exchange (58)

Third Quarter 2022 EBIT $ 229

In our International Markets Group, third quarter 2022 wholesales increased 30% from a year ago, primarily reflecting the positive impact of the next generation Ranger and Everest launches.

Third quarter 2022 revenue increased 47%, driven by higher wholesales and net pricing and favorable mix, offset partially by weaker currencies.

Our International Markets Group’s third quarter 2022 EBIT was $229 million, an increase of $104 million from a year ago, with an EBIT margin of 8.2%.

The EBIT increase was driven by higher net pricing and wholesales, offset partially by higher material cost for our new products, inflationary increases on commodity, material, and freight costs, and weaker currencies.

First Quarter 2023 EBIT $ 1,366

In the first quarter of 2023, Ford Pro’s wholesales increased 18% from a year ago, driven by improvements in production-related supply constraints (including semiconductors).

First quarter 2023 revenue increased 28%, driven by higher net pricing and wholesales, offset partially by weaker currencies.

Ford Pro’s first quarter 2023 EBIT was $1.4 billion, an increase of $875 million from a year ago, with an EBIT margin of 10.3%.

The improvement in EBIT was driven by higher net pricing and wholesales.

Partial offsets included inflationary cost increases (including commodities), new Super Duty product and launch expense, as well as higher volume-related structural costs, weaker currencies, and higher warranty costs.

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

Definitions and Information Regarding Automotive Causal Factors

In general, we measure year-over-year change in Automotive segment EBIT using the causal factors listed below, with net pricing and cost variances calculated at present-period volume and mix and exchange:

Definitions and Information Regarding Ford Blue, Ford Model e, Ford Pro Causal Factors

In general, we measure year-over-year change in Ford Blue, Ford Model e, and Ford Pro EBIT using the causal factors listed below, with net pricing and cost variances calculated at present-period volume and mix and exchange:

• Market Factors (exclude the impact of unconsolidated affiliate wholesale units):

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▪ 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

▪ Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets and capital project expense, 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:

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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, 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.

• 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.

(“JMC”), that are sold to dealerships or others.

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.

Revenue from certain vehicles in wholesale unit volumes (specifically, Ford badged vehicles produced and distributed by our unconsolidated affiliates, as well as JMC brand vehicles) are not included in our revenue.

Excludes transactions between Ford Blue, Ford Model e, and Ford Pro segments

• Industry Volume and Market Share – based, in part, on estimated vehicle registrations;

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

Mobility Segment

In our Mobility segment, our third quarter 2022 EBIT loss was $244 million, a $27 million improvement from a year ago.

The loss reflects our strategic investments in our autonomous vehicle capabilities and support of our mobility initiatives.

Although Argo AI has made progress on developing highly automated driving technology (L4), to achieve commercially viable scale, Argo AI’s technology requires significant additional capital investment and time.

In the third quarter of 2022, we made the strategic decision to shift our capital spending from L4 technology being developed by Argo AI to advanced L2/L3 systems, which we believe will ultimately be essential to achieve profitable commercialization of L4 autonomy at scale in the future.

Additionally, because of the significant additional capital and time required to achieve commercialization of L4, as well as other macroeconomic factors, Argo AI has been unable to attract new investors.

After performing external outreach in the third quarter to assess market interest in acquiring either Argo AI or its technology components and conducting internal reviews to evaluate opportunities to leverage Argo AI’s technology, Ford determined that Argo AI no longer has value as a going concern.

As a result, we reassessed the carrying value of our investment in Argo AI as of September 30, 2022, and in October, Ford and VW initiated the process of exiting the joint development of L4 technology through Argo AI.

Accordingly, in the third quarter of 2022, we recorded as a special item a $2.7 billion pre-tax impairment on our Argo AI investment, and on October 26, 2022, we announced that Argo AI plans to wind down operations.

Ford Next Segment

The Ford Next segment (formerly Mobility) primarily includes expenses and investments for emerging business initiatives aimed at creating value for Ford in vehicle-adjacent market segments.

In this segment, our first quarter 2023 EBIT loss was $44 million, a $198 million improvement from a year ago.

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.

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

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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 third quarter and year-to-date 2022 key metrics and the change in third quarter 2022 EBT compared with third quarter 2021 by causal factor for the Ford Credit segment.

The tables below provide first quarter 2023 key metrics and the change in first quarter 2023 EBT compared with first quarter 2022 by causal factor for the Ford Credit segment.

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

Third Quarter First Nine Months

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

First Quarter

Key Metrics 2022 2023 H / (L)

Total Net Receivables ($B) $ 117 $ 124 6 %

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EBT ($M) 928 303 $ (625)

ROE (%) 29 % 15 % (14) ppts 32 % 21 % (11) ppts

ROE (%) 22 % 8 % (14) ppts

Other Balance Sheet Metrics

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retail financing only.

36-month off-lease third quarter auction values at Q3 2022 mix and first nine months amounts at first nine months 2022 mix.

36-month off-lease first quarter auction values at Q1 2023 mix.

Change in EBT by Causal Factor (in millions)

Third Quarter 2021 EBT $ 1,077

First Quarter 2022 EBT $ 928

Volume / Mix 23

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Lease Residual (139)

Exchange (15)

Third Quarter 2022 EBT $ 599

Ford Credit’s total net receivables of $116 billion were $1 billion (1%) lower than a year ago, reflecting the impact of currency exchange rates, lower consumer financing, and fewer operating leases, offset partially by increased non-consumer financing.

The loss-to-receivables (“LTR”) ratio remained at a low level in the third quarter of 2022, at 18 basis points, though higher than a year ago as losses begin to normalize from historic lows.

auction values in the third quarter of 2022 were about flat compared to a year ago.

Ford Credit’s third quarter 2022 EBT of $599 million was $478 million lower than a year ago, primarily reflecting lower lease residual gains driven by lower lease return volume, unfavorable changes in net financing margin, and lower credit loss reserve releases, offset partially by positive market valuation adjustments to derivatives, which is included in Other.

First Quarter 2023 EBT $ 303

Ford Credit’s total net receivables of $124 billion were $7 billion higher than a year ago, reflecting the impact of increased non-consumer financing and consumer financing, partially offset by fewer operating leases.

The loss-to-receivables (“LTR”) ratio remained at a low level in the first quarter of 2023, at 35 basis points, though higher than a year ago as losses begin to normalize from historic lows.

auction values in the first quarter of 2023 were lower compared to a year ago.

Ford Credit’s first quarter 2023 EBT of $303 million was $625 million lower than a year ago, primarily reflecting lower financing margin due to higher borrowing costs, higher credit losses, the non-recurrence of credit loss reserve releases, unfavorable lease residual performance, the non-recurrence of market valuation gains, and unfavorable market valuation adjustments to derivatives (included in Other).

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

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Changes in accumulated supplemental depreciation are primarily driven by changes in Ford Credit’s estimate of the expected auction value at the end of the lease term and changes in Ford Credit’s estimate of the number of vehicles that will be returned to it and sold.

Accumulated depreciation reflects early termination losses on operating leases due to customer default events.

Depreciation on vehicles subject to operating leases includes early termination losses on operating leases due to customer default events.

For additional information, refer to the “Critical Accounting Estimates - Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2022 Form 10-K Report

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Corporate Other

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.

In the third quarter of 2022, Corporate Other had a $250 million loss, compared with a $269 million loss a year ago.

The improvement was driven by higher Automotive interest income due to increases in interest rates (primarily Fed Funds).

In the first quarter of 2023, Corporate Other had a $147 million loss, compared with a $201 million profit a year ago.

The loss was driven by lower past service pension and OPEB income, which was partially offset by higher Company excluding Ford Credit interest income due to increases in interest rates (primarily Fed Funds).

Interest on Debt

Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $321 million in the third quarter of 2022, $118 million lower than a year ago, primarily explained by U.S.

debt restructuring actions undertaken during the fourth quarter of 2021 and third quarter of 2022.

Our Provision for/(Benefit from) income taxes for the third quarter and first nine months of 2022 was a benefit of $195 million and $771 million, respectively.

This resulted in effective tax rates of 17.3% and 18.4%, respectively.

Our third quarter and first nine months of 2022 adjusted effective tax rates, which exclude special items, were 23.5% and 21.7%, respectively.

Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $308 million in the first quarter of 2023, unchanged from a year ago.

Our Provision for/(Benefit from) income taxes for the first quarter of 2023 was a provision of $496 million, resulting in an effective tax rate of 23.0%.

Our first quarter 2023 adjusted effective tax rate, which excludes special items, was 20.8%.

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 September 30, 2022, total balance sheet cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $40.3 billion.

At March 31, 2023, total balance sheet cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $39.7 billion.

We consider our key balance sheet metrics to be:

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Company excluding Ford Credit

2021 September 30,

2022 March 31,

Balance Sheets ($B)

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Total Funded Status OPEB $ (4.5) $ (4.4)

(a) Balances at September 30, 2022 reflect net funded status at December 31, 2021, updated for service and interest cost;

(a) Balances at March 31, 2023 reflect net funded status at December 31, 2022, updated for service and interest cost;

expected return on assets;

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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 September 30, 2022, we had Company cash of $32.0 billion and liquidity of $49.2 billion, including approximately $800 million of Rivian marketable securities.

In the third quarter, we sold approximately 52 million of our Rivian shares resulting in proceeds of about $1.8 billion.

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

At September 30, 2022, about 91% of Company cash was held by consolidated entities domiciled in the United States.

At March 31, 2023, we had Company cash of $28.7 billion and liquidity of $46.2 billion.

At March 31, 2023, about 90% 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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(i) future cash flow expectations, such as for investments in future opportunities, capital investments, debt maturities, pension contributions, or restructuring requirements, (ii) short-term timing differences, and (iii) changes in the global economic environment.

Our Company cash investments (excluding the Rivian marketable securities) primarily include U.S.

Our Company cash investments primarily include U.S.

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.

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• 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 to the Financial Statements in our 2022 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)

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

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.

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.

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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