What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-03 compared with 2022-10-27 · 119 added, 173 removed, 407 unchanged (42% of the section changed)

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Non-operating items include:

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

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

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

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

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

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

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

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

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

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

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

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

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The terms of the offtake agreements we have entered into, and those we may enter into in the future, vary by transaction, though they generally obligate us to purchase a certain percentage or minimum amount of output produced by the counterparty over an agreed upon period of time.

The purchase price mechanism included in the offtake agreement is typically based on the market price of the material at the time of delivery or an agreed upon formula or market index.

The terms also include conditions to our obligation to purchase the materials, such as quality or minimum output.

The purchase price mechanism included in the offtake agreement is typically based on the market price of the material at the time of delivery.

The terms may also include conditions to our obligation to purchase the materials, such as quality or minimum output.

Subject to satisfaction of those conditions, we will be obligated to purchase the materials at the cost determined by the purchase price mechanism.

As of March 31, 2023, our forecasted expenditures for the maximum quantity that we are committed to purchase under these offtake agreements, subject to certain conditions, total about $4.3 billion through 2030 based on our present pricing forecast;

however, our forecasted prices could fluctuate significantly from period to period, which would result in volatility in the estimate of our overall obligation.

In addition, we plan to continue to enter into offtake agreements with raw material suppliers, the costs under which we expect to be significant.

Based on the offtake agreements we have entered into thus far, the earliest date by which we could be obligated to purchase any output, subject to satisfaction of the applicable conditions, will be in 2024.

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

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

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

As of September 30, 2022, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $228 million.

The amount settled through the SCF program during the first nine months of 2022 was $971 million.

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 was $265 million.

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

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

Changes in Company cash excluding Ford Credit are summarized below (in billions):

Third Quarter First Nine Months

2021 2022 2021 2022

First Quarter

Company Excluding Ford Credit

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Company adjusted free cash flow (a) $ (0.6) $ 0.7

Global Redesign (including separations) $ (0.3) $ (0.2) $ (1.6) $ —

Restructuring $ (0.1) $ —

Changes in debt (0.3) (0.2)

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

(b) Includes a $0.6 billion gain and a $7.3 billion loss on our Rivian investment in the third quarter and first nine months of 2022, respectively.

(b) 2022 includes a $5.4B mark-to-market loss on our Rivian investment.

Numbers may not sum due to rounding.

Our third quarter 2022 Net cash provided by/(used in) operating activities was positive $3.8 billion, a decrease of $3.2 billion from a year ago (see page 64 for additional information), driven by lower net income, higher inventory, and less favorable timing differences.

Company adjusted free cash flow was $3.6 billion, $4.2 billion lower than a year ago, driven by higher inventory, lower Ford Credit distributions, less favorable timing differences, and lower adjusted EBIT.

Capital spending was $1.6 billion in the third quarter of 2022, unchanged from a year ago.

We now expect full year 2022 capital spending to be about $6.5 billion.

Third quarter 2022 working capital impact was $2.2 billion positive, driven by higher trade payables, partially offset by higher inventory, each compared to June 30, 2022.

All other and timing differences were positive $0.3 billion, reflecting assorted differences including differences between accrual-based EBIT and the associated cash flows (e.g., pension and OPEB income or expense;

Our first quarter 2023 Net cash provided by/(used in) operating activities was positive $2.8 billion, an increase of $3.9 billion from a year ago (see page 58 for additional information), driven primarily by higher net income.

Company adjusted free cash flow was $0.7 billion, $1.3 billion higher than a year ago, driven by higher adjusted EBIT excluding Ford Credit and favorable timing differences, offset partially by lower Ford Credit distributions and higher capital spending.

Capital spending was $1.8 billion in the first quarter of 2023, an increase of $0.4 billion from a year ago.

We continue to expect full year 2023 capital spending to be in the range of $8 billion to $9 billion.

First quarter 2023 working capital impact was $1.2 billion negative, driven by higher inventory, offset partially by higher trade payables and lower receivables, each compared to December 31, 2022.

All other and timing differences were negative $0.1 billion.

Timing differences include differences between accrual-based EBIT and the associated cash flows (e.g., pension and OPEB income or expense;

compensation payments;

marketing incentive and warranty payments to dealers).

In the third quarter of 2022, we contributed $130 million to our global funded pension plans.

We expect to contribute about $600 million to our global funded pension plans in 2022.

Shareholder distributions were $603 million in the third quarter of 2022, all of which was attributable to our regular quarterly dividend.

On October 26, 2022, we announced that we are reinstating a modest anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation.

The plan authorizes repurchases of up to 35 million shares of Ford Common Stock.

We previously announced our plan for the global redesign of our business, pursuant to which we are working to turn around automotive operations, compete like a challenger, and capitalize on our strengths by allocating more capital, more resources, and more talent to our strongest businesses and vehicle franchises.

Beginning with the actions we took in 2018, we expect our global redesign to have a potential cash effect of about $6 billion through 2023.

The cash effect related to our global redesign activities was $3.6 billion through September 30, 2022.

In the first quarter of 2023, we contributed $125 million to our global funded pension plans.

We continue to expect to contribute between $500 million and $600 million to our global funded pension plans in 2023.

Shareholder distributions were $3.2 billion in the first quarter of 2023, all of which was attributable to our regular and supplemental dividend.

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

Available Credit Lines .

Total Company committed credit lines, excluding Ford Credit, at September 30, 2022 were $19.1 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.75 billion of our 364-day revolving credit facility, and $1.9 billion of local credit facilities.

At September 30, 2022, the utilized portion of the corporate credit facility was $25 million, representing amounts utilized for letters of credit, and the utilized portion of our 364-day revolving credit facility was $350 million.

In addition, $1.6 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of September 30, 2022.

Lenders under our corporate revolving credit facility have $3.4 billion of commitments maturing on June 23, 2025 and $10.1 billion of commitments maturing on June 23, 2027.

Lenders under our supplemental revolving credit facility have $0.1 billion of commitments maturing on September 29, 2024 and $1.9 billion of commitments maturing on June 23, 2025.

Lenders under our 364-day revolving credit facility have $1.75 billion of commitments maturing on June 22, 2023.

Total Company committed credit lines, excluding Ford Credit, at March 31, 2023 were $19.3 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.75 billion of our 364-day revolving credit facility, and $2.1 billion of local credit facilities.

At March 31, 2023, the utilized portion of the corporate credit facility was $17 million, representing amounts utilized for letters of credit.

In addition, $1.7 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of March 31, 2023.

Our corporate, supplemental, and 364-day revolving credit facilities were amended as of April 26, 2023 to extend the maturity dates of the commitments under each facility.

Following the corporate credit facility amendment, $3.4 billion of commitments mature on April 26, 2026 and $10.1 billion of commitments mature on April 26, 2028.

Following the supplemental revolving credit facility amendment, $0.1 billion of commitments mature on September 29, 2024 and $1.9 billion of commitments mature on April 26, 2026.

Following the 364-day revolving credit facility amendment, $1.8 billion of commitments mature on April 24, 2024.

The corporate, supplemental, and 364-day credit agreements include certain sustainability-linked targets, pursuant to which the applicable margin and facility fees may be adjusted if Ford achieves, or fails to achieve, the specified targets related to global manufacturing facility greenhouse gas emissions, renewable electricity consumption, and Ford Europe CO 2 tailpipe emissions.

On October 26, 2022, Ford amended its 364-day revolving credit facility to provide for the designation of domestic subsidiary borrowers and designated Ford Credit as a subsidiary borrower.

The corporate credit facility is unsecured and free of material adverse change conditions to borrowing, restrictive financial covenants (for example, interest or fixed-charge coverage ratio, debt-to-equity ratio, and minimum net worth requirements), and credit rating triggers that could limit our ability to obtain funding or trigger early repayment.

The corporate credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the facility.

The terms and conditions of the supplemental and 364-day revolving credit facilities are consistent with our corporate credit facility.

Ford Credit has been designated as a subsidiary borrower under the corporate credit facility and the 364-day revolving credit facility.

Each of the corporate credit facility, supplemental revolving credit facility, and 364-day revolving credit facility include a covenant that requires us to provide guarantees from certain of our subsidiaries in the event that our senior, unsecured, long-term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P.

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Ford Component Sales, LLC;

Ford European Holdings LLC;

Ford European Holdings Inc.;

Ford Global Technologies, LLC;

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Ford Next LLC;

Ford Smart Mobility LLC;

and Ford Trading Company, LLC.

As shown in Note 15 of the Notes to the Financial Statements, at September 30, 2022, Company debt excluding Ford Credit was $20.3 billion, $100 million lower than at December 31, 2021 and $900 million higher than at June 30, 2022.

The increase from the end of the second quarter primarily reflects our $600 million retail bond and $1.8 billion green bond issuances in August, partially offset by our redemption of $1.1 billion of higher-coupon debt and $400 million repayment under our 364-day revolving credit facility in September.

Ford Trading Company, LLC;

and Ford Van Dyke Investment Fund, Inc.

As shown in Note 14 of the Notes to the Financial Statements, at March 31, 2023, Company debt excluding Ford Credit was $19.7 billion.

This balance is $0.2 billion lower than at December 31, 2022.

We manage Company debt (excluding Ford Credit) levels with a leverage framework that targets investment grade credit ratings through a normal business cycle.

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Ford Credit Segment

Ford Credit ended the third quarter of 2022 with $20.9 billion of liquidity.

During the quarter, Ford Credit completed $2 billion of public term funding.

Ford Credit remains well capitalized with a strong balance sheet and funding diversified across platforms and markets.

Ford Credit saw sequential improvement in liquidity, securitized funding mix, and financial statement leverage during the quarter and ended the first quarter of 2023 with $26 billion of liquidity, up $5 billion from year-end.

Ford Credit continues to have robust access to the capital markets, completing $12 billion of public term issuances through May 1, 2023.

Key elements of Ford Credit’s funding strategy include:

• Maintain strong liquidity

• Maintain strong liquidity and funding diversity

• Prudently access public markets

• Continue growth of retail deposits in Europe

• Continue to leverage retail deposit funding in Europe

• Flexibility to increase ABS mix as needed;

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The following table shows funding for Ford Credit’s net receivables (in billions):

September 30,

2022 December 31,

2021 September 30,

2022 March 31,

Funding Structure

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Securitized Funding as Percent of Total Debt 40.8 % 47.4 % 46.0 %

Net receivables were $115.5 billion at September 30, 2022 and were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 45.3% at the end of the third quarter of 2022.

Net receivables were $123.8 billion at March 31, 2023 and were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 46.0% at the end of the first quarter of 2023.

Public Term Funding Plan.

The following table shows Ford Credit’s issuances for full year 2020 and 2021, planned issuances for full year 2022, and its global public term funding issuances through October 25, 2022, excluding short-term funding programs (in billions):

The following table shows Ford Credit’s issuances for full year 2021 and 2022, planned issuances for full year 2023, and its global public term funding issuances through May 1, 2023, excluding short-term funding programs (in billions):

Forecast Through

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For 2023, Ford Credit now projects full year public term funding in the range of $21 billion to $27 billion.

Through October 25, 2022, Ford Credit has completed $13 billion of public term issuances.

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

The following table shows Ford Credit’s liquidity sources and utilization (in billions):

September 30,

2022 December 31,

2021 September 30,

2022 March 31,

Liquidity Sources (a)

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Ford Credit’s net liquidity available for use will fluctuate quarterly based on factors including near-term debt maturities, receivable growth and decline, and timing of funding transactions.

At September 30, 2022, Ford Credit’s net liquidity available for use was $20.9 billion, $11.1 billion lower than year-end 2021.

Ford Credit’s net liquidity remains robust, while reflecting a smaller balance sheet and lower near-term debt maturities following Ford Credit’s $3 billion debt repurchase completed in the second quarter of 2022.

At September 30, 2022, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and unsecured credit facilities, totaled $43.8 billion, down $8.4 billion from year-end 2021.

Ford Credit continues to be well capitalized with a strong balance sheet.

At March 31, 2023, Ford Credit’s net liquidity available for use was $26 billion, $5 billion higher than year-end 2022, reflecting strong access to public funding markets and the addition of $3.1 billion in committed asset-backed capacity.

At March 31, 2023, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and unsecured credit facilities, totaled $53.2 billion, up $2.3 billion from year-end 2022.

Material Cash Requirements.

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(1) the purchase of retail financing and operating lease contracts from dealers and providing wholesale financing for dealers to finance new and used vehicles;

and (2) debt repayments (for additional information on debt, see the “Balance Sheet Liquidity Profile” section below and the “Aggregate Contractual Obligations” table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 19 of the Notes to the Financial Statements in our 2021 Form 10-K Report).

and (2) debt repayments (for additional information on debt, see the “Aggregate Contractual Obligations” table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 19 of the Notes to the Financial Statements in our 2022 Form 10-K Report).

In addition, subject to approval by Ford Credit’s Board of Directors, shareholder distributions may require the expenditure of a material amount of cash.

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Ford Credit plans to utilize its liquidity (as described above) and its cash flows from business operations to fund its material cash requirements.

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

Balance Sheet Liquidity Profile.

Ford Credit defines its balance sheet liquidity profile as the cumulative maturities, including the impact of expected prepayments and allowance for credit losses, of its finance receivables, investment in operating leases, and cash, less the cumulative debt maturities over upcoming annual periods.

Ford Credit’s balance sheet is inherently liquid because of the short-term nature of its finance receivables, investment in operating leases, and cash.

Ford Credit ensures its cumulative debt maturities have a longer tenor than its cumulative asset maturities.

This positive maturity profile is intended to provide Ford Credit with additional liquidity after all of its assets have been funded and is in addition to its liquidity available to protect for stress scenarios.

The following table shows Ford Credit’s cumulative maturities for assets and total debt for the periods presented and unsecured long-term debt maturities in the individual periods presented (in billions):

October - December

2022 2023 2024 2025 and Beyond

Balance Sheet Liquidity Profile

Assets (a) $ 38 $ 69 $ 93 $ 127

Total debt (b) 26 56 76 110

Unsecured long-term debt maturities 3 8 11 25

(a) Includes gross finance receivables less the allowance for credit losses (including certain finance receivables that are reclassified in consolidation to Trade and other receivables, net ), investment in operating leases net of accumulated depreciation, cash and cash equivalents, and marketable securities (excluding amounts related to insurance activities).

Amounts shown include the impact of expected prepayments.

(b) Excludes unamortized debt (discount)/premium, unamortized issuance costs, and fair value adjustments.

Maturities of investment in operating leases consist primarily of the portion of rental payments attributable to depreciation over the remaining life of the lease and the expected residual value at lease termination.

Maturities of finance receivables and investment in operating leases in the table above include expected prepayments for Ford Credit’s retail installment sale contracts and investment in operating leases.

The table above also reflects adjustments to debt maturities to match the asset-backed debt maturities with the underlying asset maturities.

All wholesale securitization transactions and wholesale receivables are shown maturing in the next 12 months, even if the maturities extend beyond third quarter 2023.

The retail securitization transactions under certain committed asset-backed facilities are assumed to amortize immediately rather than amortizing after the expiration of the commitment period.

As of September 30, 2022, Ford Credit had $127 billion of assets, $59 billion of which were unencumbered.

Funding and Liquidity Risks.

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Refer to the “Liquidity - Ford Credit Segment - Funding and Liquidity Risks” section of Item 7 of Part II of our 2022 Form 10-K Report for more information.

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

Ford Credit uses leverage, or the debt-to-equity ratio, to make various business decisions, including evaluating and establishing pricing for finance receivable and operating lease financing, and assessing its capital structure.

The table below shows the calculation of Ford Credit’s financial statement leverage (in billions):

September 30,

2022 December 31,

2021 September 30,

2022 March 31,

Leverage Calculation

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Ford Credit plans its leverage by considering market conditions and the risk characteristics of its business.

At September 30, 2022, Ford Credit’s financial statement leverage was 9.4:1.

At March 31, 2023, Ford Credit’s financial statement leverage was 9.8:1.

Ford Credit targets financial statement leverage in the range of 9:1 to 10:1.

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

Total Company

Pension Plans - Funded Balances.

As of September 30, 2022, our total Company pension overfunded status reported on our consolidated balance sheets was $1.2 billion and reflects the net funded status at December 31, 2021, updated for:

As of March 31, 2023, our total Company pension underfunded status reported on our consolidated balance sheets was $0.2 billion and reflects the net funded status at December 31, 2022, updated for:

service and interest cost;

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Four Quarters Ending

September 30,

2021 September 30,

2022 March 31,

Adjusted Net Operating Profit/(Loss) After Cash Tax

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Each rating agency may have different criteria for evaluating company risk and, therefore, ratings should be evaluated independently for each rating agency.

There have been no rating actions taken by these NRSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

There have been no rating actions taken by these NRSROs since the filing of our 2022 Form 10-K Report.

The following table summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs:

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

We provided 2022 Company guidance in our earnings release furnished on Form 8-K dated October 26, 2022.

We provided 2023 Company guidance in our earnings release furnished on Form 8-K dated May 2, 2023.

Our actual results could differ materially from our guidance due to risks, uncertainties, and other factors, including those set forth in “Risk Factors” in Item 1A of our 2022 Form 10-K Report and as updated by our subsequent filings with the SEC.

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Total Company

Adjusted EBIT (a) About $11.5 billion

Adjusted Free Cash Flow (a) $9.5 - $10.0 billion

Capital spending About $6.5 billion

Pension contributions About $0.6 billion

Global Redesign EBIT charges (b) About $1 billion

Global Redesign cash effects (b) $0.5 - $1.0 billion

Adjusted EBIT (a) $9 - $11 billion

Adjusted Free Cash Flow (a) About $6 billion

Capital spending $8 - $9 billion

EBT About $1.3 billion

(a) When we provide guidance for adjusted EBIT and adjusted free cash flow, we do not provide guidance for the most comparable GAAP measures because, as described in more detail below in “Non-GAAP Measures That Supplement GAAP Measures,” they include items that are difficult to predict with reasonable certainty.

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

Such actions may result in global redesign EBIT charges and cash effects in 2022 that are incremental to those set forth in the table.

For full-year 2022, we now expect adjusted EBIT of about $11.5 billion, which would be about 15% higher than 2021.

We also now expect full-year adjusted free cash flow of $9.5 billion to $10.0 billion, reflecting the strength in the Company’s automotive operations, including our restructured businesses in regions outside of North America.

Our guidance assumes about a 10% year-over-year increase in wholesale shipments;

significantly higher earnings in North America and aggregate profitability in the rest of the world;

and strong, but lower, EBT from Ford Credit of about $2.7 billion.

Other assumptions include:

• No further deterioration in the supply chain

• Continued strong pent-up demand and orders for our newest products

• Persistent strength in pricing

• High commodity and broad-based inflationary costs of about $9 billion

• Strong, though lower, auction values at Ford Credit, along with higher borrowing costs

• Continuation of the strong dollar

For full-year 2023, we continue to expect adjusted EBIT of $9 billion to $11 billion and adjusted free cash flow of about $6 billion.

On a segment basis, we expect:

• Ford Blue to deliver full-year EBIT of about $7 billion.

Cost improvements and higher industry volumes will likely be offset partially by pricing headwinds, as inventory stocks continue to normalize and industry incentives rise throughout the year, along with adverse exchange.

• Ford Model e to report an EBIT loss of around $3 billion, largely reflecting disciplined investments in new products and capacity.

• Ford Pro’s EBIT to nearly double from full-year 2022 to around $6 billion.

The gain is driven by improved pricing and volume, including the benefits from the launch of our all-new Super Duty.

• Ford Credit EBT to be about $1.3 billion.

Our outlook for 2023 assumes the headwinds and tailwinds below.

• Global economic uncertainty

• Higher industrywide customer incentives as vehicle supply and demand rebalances

• Lower past service pension income and exchange

• Growth-related investments (e.g., customer experience, connected services, and capital expenditures)

• Improvement in the supply chain and higher industry volume with a seasonally adjusted annual rate (“SAAR”) of about 15 million in the United States and about 13 million in Europe

• Launch of our all-new Super Duty

• Lower cost of goods sold, including materials and commodities

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

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• Ford and Ford Credit’s financial condition and results of operations have been and may continue to be adversely affected by public health issues, including epidemics or pandemics such as COVID-19;

• Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule, and a shortage of key components, such as semiconductors, or raw materials can disrupt Ford’s production of vehicles;

• Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to acquire key components, such as semiconductors, or raw materials, such as lithium, cobalt, nickel, graphite, and manganese, can disrupt Ford’s production of vehicles;

• To facilitate access to the raw materials necessary for the production of electric vehicles, Ford has entered into, and expects to continue to enter into, multi-year commitments to raw material suppliers that subject Ford to risks associated with lower future demand for such materials as well as costs that fluctuate and are difficult to accurately forecast;

• Ford’s long-term competitiveness depends on the successful execution of Ford+;

• Ford’s vehicles could be affected by defects that result in delays in new model launches, recall campaigns, or increased warranty costs;

• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or new business strategies;

• Operational systems, security systems, vehicles, and services could be affected by cyber incidents, ransomware attacks, and other disruptions;

• Ford’s production, as well as Ford’s suppliers’ production, could be disrupted by labor issues, natural or man-made disasters, financial distress, production difficulties, capacity limitations, or other factors;

• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, restructurings, or new business strategies;

• Operational systems, security systems, vehicles, and services could be affected by cyber incidents, ransomware attacks, and other disruptions and impact Ford and Ford Credit as well as their suppliers and dealers;

• Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors;

• Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;

• Ford’s ability to attract and retain talented, diverse, and highly skilled employees is critical to its success and competitiveness;

• Ford’s new and existing products, digital and physical services, and mobility services are subject to market acceptance and face significant competition from existing and new entrants in the automotive, mobility, and digital services industries;

• Ford’s near-term results are dependent on sales of larger, more profitable vehicles, particularly in the United States;

• With a global footprint, Ford’s results could be adversely affected by economic, geopolitical, protectionist trade policies, or other events, including tariffs;

• Industry sales volume in any of Ford’s key markets can be volatile and could decline if there is a financial crisis, recession, or significant geopolitical event;

• Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries and its reputation may be harmed if it is unable to achieve the initiatives it has announced;

• Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;

• With a global footprint, Ford’s results could be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;

• Industry sales volume can be volatile and could decline if there is a financial crisis, recession, or significant geopolitical event;

• Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors;

• Inflationary pressure and fluctuations in commodity prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results;

• Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results;

• Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;

• Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;

• The impact of government incentives on Ford’s business could be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;

• Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;

• Economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;

• Economic and demographic experience for pension and OPEB plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;

• Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;

• Ford and Ford Credit could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise;

• Ford may need to substantially modify its product plans to comply with safety, emissions, fuel economy, autonomous vehicle, and other regulations;

• Ford may need to substantially modify its product plans and facilities to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations;

• Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, and data protection laws and regulations as well as consumers’ heightened expectations to safeguard their personal information;

• Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.

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

We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized.

19 unchanged sentences

∘ Gains and losses on investments in equity securities ∘ No minimum

∘ 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

∘ Generally $100 million or more

∘ 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 ∘ Generally $100 million or more

∘ Other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities ∘ $500 million or more for individual field service actions;

16 unchanged sentences

The measure contains elements management considers operating activities, including Company excluding Ford Credit capital spending, Ford Credit distributions to its parent, and settlement of derivatives.

The measure excludes cash outflows for funded pension contributions, global redesign (including separations), and other items that are considered operating cash flows under U.S.

The measure excludes cash outflows for funded pension contributions, restructuring actions, and other items that are considered operating cash flows under U.S.

This measure is useful to management and investors because it is consistent with management’s assessment of the Company’s operating cash flow performance.

10 unchanged sentences

Net Income/(Loss) Reconciliation to Adjusted EBIT ($M)

Third Quarter First Nine Months

2021 2022 2021 2022

First Quarter

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

11 unchanged sentences

Earnings per Share Reconciliation to Adjusted Earnings per Share

Third Quarter First Nine Months

2021 2022 2021 2022

First Quarter

Diluted After-Tax Results ($M)

9 unchanged sentences

Adjusted earnings/(loss) per share – diluted (Non-GAAP) $ 0.38 $ 0.63

(a) In the third quarter and first nine months of 2022, there were 38 million and 42 million shares, respectively, excluded from the calculation of diluted

earnings/(loss) per share, due to their anti-dilutive effect.

(a) The first quarter of 2022 calculation excludes 56 million shares of net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt due to their anti-dilutive effect.

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

Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate

Third Quarter First Nine Months

First Quarter

2022 2023 Memo:

4 unchanged sentences

(Provision for)/Benefit from income taxes (GAAP) $ 729 $ (496) $ 864

Impact of special items 460 544 318 2,273 1,924

Impact of special items (a) 1,192 144 2,573

Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ (463) $ (640) $ (1,709)

1 unchanged sentence

Adjusted effective tax rate (Non-GAAP) 22.9 % 20.8 % 18.7 %

(a) The first quarter of 2022 reflects the tax consequences of unrealized losses on marketable securities.

Full Year 2022 reflects the tax consequences of unrealized losses on marketable securities and fourth quarter favorable changes in our valuation allowances.

Net Cash Provided by/(Used in) Operating Activities Reconciliation to Company Adjusted Free Cash Flow ($M)

Third Quarter First Nine Months

2021 2022 2021 2022

First Quarter

Net cash provided by/(used in) operating activities (GAAP) $ (1,084) $ 2,800

2 unchanged sentences

Funded pension contributions (174) (125)

Global Redesign (including separations) (a) (301) (179) (1,545) (492)

Restructuring (including separations) (a) (176) (81)

Ford Credit tax payments/(refunds) under tax sharing agreement — (5)

5 unchanged sentences

Company adjusted free cash flow (Non-GAAP) $ (580) $ 693

(a) Global Redesign excludes cash flows reported in investing activities.

(a) Restructuring excludes cash flows reported in investing activities.

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

2 unchanged sentences

sales by type.

Company excluding Ford Credit includes our Automotive and Mobility reportable segments, Corporate Other, Interest on Debt, and Special Items.

Company excluding Ford Credit includes our Ford Blue, Ford Model e, Ford Pro, and Ford Next reportable segments, Corporate Other, Interest on Debt, and Special Items.

Eliminations, where presented, primarily represent eliminations of intersegment transactions and deferred tax netting.

1 unchanged sentence

The following tables provide supplemental cash flow information (in millions):

For the period ended September 30, 2022

First Nine Months

For the period ended March 31, 2023

First Quarter

Cash flows from operating activities Company excluding Ford Credit Ford Credit Eliminations Consolidated

2 unchanged sentences

Other amortization (8) (264) — (272)

(Gains)/Losses on extinguishment of debt 135 (14) — 121

Held for sale impairment charges 32 — — 32

Provision for/(Benefit from) credit and insurance losses 1 82 — 83

18 unchanged sentences

Collections of finance receivables and operating leases — 11,170 — 11,170

Proceeds from sale of business 435 — — 435

Purchases of marketable and other investments (1,572) (973) — (2,545)

1 unchanged sentence

Settlements of derivatives (72) 31 — (41)

Capital contributions to equity method investments (699) — — (699)

Other 48 — — 48

14 unchanged sentences

The following table provides supplemental income statement information (in millions):

For the period ended September 30, 2022

Third Quarter

Company excluding Ford Credit Ford Credit Consolidated

Revenues $ 37,205 $ 2,187 $ 39,392

Total costs and expenses (a) 37,211 1,677 38,888

Operating income/(loss) (6) 510 504

Interest expense on Company debt excluding Ford Credit 321 — 321

Other income/(loss), net 1,237 81 1,318

Equity in net income/(loss) of affiliated companies (2,634) 8 (2,626)

Income/(Loss) before income taxes (1,724) 599 (1,125)

Provision for/(Benefit from) income taxes (346) 151 (195)

Net income/(loss) (1,378) 448 (930)

Income/(Loss) attributable to noncontrolling interests (103) — (103)

Net income/(loss) attributable to Ford Motor Company $ (1,275) $ 448 $ (827)

For the period ended September 30, 2022

First Nine Months

For the period ended March 31, 2023

First Quarter

Company excluding Ford Credit Ford Credit Consolidated

Revenues $ 39,085 $ 2,389 $ 41,474

Total costs and expenses (a) 104,937 4,406 109,343

Total costs and expenses 37,175 2,186 39,361

Operating income/(loss) 1,910 203 2,113

7 unchanged sentences

Net income/(loss) attributable to Ford Motor Company $ 1,517 $ 240 $ 1,757

(a) Ford Credit excludes a specials charge of $10 million.

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

1 unchanged sentence

The following tables provide supplemental balance sheet information (in millions):

September 30, 2022

March 31, 2023

Assets Company excluding Ford Credit Ford Credit Eliminations Consolidated

4 unchanged sentences

Inventories 16,212 — — 16,212

Assets held for sale 100 — — 100

Other assets 3,119 1,009 — 4,128

13 unchanged sentences

Debt payable within one year 522 47,528 — 48,050

Liabilities held for sale — — —

Payable to other segments 2,049 59 (2,108) —

7 unchanged sentences

Selected Other Information.

At September 30, 2022, total equity attributable to Ford was $42.1 billion, a decrease of $6.4 billion compared with December 31, 2021.

At March 31, 2023, total equity attributable to Ford was $42.4 billion, a decrease of $0.8 billion compared with December 31, 2022.

The detail for this change is shown below (in billions):

2 unchanged sentences

Other comprehensive income/(loss), net 0.6

Common stock issued (including share-based compensation impacts) 0.2

Total $ (0.8)

Sales by Type.

The following table shows third quarter 2022 U.S.

The following table shows first quarter 2023 U.S.

sales volume and U.S.

wholesales segregated by truck, SUV, and car sales.

sales volume reflects transactions with (i) retail and fleet customers (as reported by dealers), (ii) governments, and (iii) Ford management.

wholesales reflect sales to dealers.

Trucks 238,981 257,275

SUVs 215,322 216,655

Cars 10,371 13,037

wholesales segregated by electric, hybrid, and internal combustion vehicles.

sales volume represents primarily sales by dealers, sales to the government, and leases to Ford management, and is based, in part, on estimated vehicle registrations and includes medium and heavy trucks.

Electric Vehicles 10,866 8,473

Hybrid Vehicles 27,064 30,733

Internal Combustion Vehicles 437,976 455,512

Total Vehicles 475,906 494,718

2 unchanged sentences

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 2. Management’s Discussion and Analysis