What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2024-02-07 compared with 2023-02-03 · 256 added, 803 removed, 729 unchanged (59% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (Continued)

Issuer Purchases of Securities

Issuer Purchases of Equity Securities

In the fourth quarter of 2023, we completed a modest anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation granted during 2023.

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

The program authorized repurchases of up to 51 million shares of Ford Common Stock.

As shown in the rightmost column of the table below, we do not intend to make any further purchases under this program because its anti-dilutive purpose was fulfilled after purchasing only 31 million shares.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly-Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs

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November 1, 2023 through November 30, 2023 6,713,291 10.25 6,713,291 44,286,709

December 1, 2022 through December 31, 2022 — — — —

December 1, 2023 through December 31, 2023 24,286,709 10.95 24,286,709 20,000,000 (a)

Total / Average 31,000,000 $ 10.80 31,000,000

(a) The share repurchase program announced November 20, 2023 authorized repurchases of up to 51 million shares of Ford Common Stock.

Although we have repurchased 31 million shares and the program was authorized for up to 51 million, we do not intend to make any further purchases under this program because its anti-dilutive purpose has been fulfilled.

In December 2023, our Board of Directors approved a modest anti-dilutive share repurchase program to offset the dilutive effect of share-based compensation expected to be granted during 2024.

The program authorizes repurchases of up to 53 million shares of Ford Common Stock.

The Company may repurchase shares of Common Stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to satisfy the conditions of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

The timing and total amount of repurchases of Ford Common Stock under this program will depend upon business, economic, and market conditions, corporate, legal, and regulatory requirements, prevailing stock prices, trading volume, and other considerations.

The share repurchase program may be suspended or discontinued at any time, and does not obligate the Company to acquire any amount of Common Stock.

To the extent the Company elects to make purchases under the share repurchase program, the Company expects to utilize its existing cash and cash equivalents to fund such repurchases.

The table below shows the dividends we paid per share of Common and Class B Stock for each quarterly period in 2022 and 2023:

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Quarter First

Quarter Second

Quarter Third

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$ 0.10 $ 0.10 $ 0.15 $ 0.15 $ 0.80 $ 0.15 $ 0.15 $ 0.15

(a) In the first quarter of 2023, in addition to a regular dividend of $0.15 per share, we paid a supplemental dividend of $0.65 per share.

On February 6, 2024, we declared a regular dividend of $0.15 per share and a supplemental dividend of $0.18 per share.

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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 higher costs and production shortfalls.

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 73 .

Production and Supply Chain.

Although we saw improvements in our supply chain throughout 2023, including easing of the semiconductor shortage, we continue to face some production issues due to, among other things, labor shortages at our suppliers.

Moreover, we have received and continue to receive claims from our supply base related to inflationary pressure and production disruption.

Upon receipt, we evaluate those claims, and, in certain circumstances, in order to ensure continuity of supply and mitigate the impact on our production, have made payments to our suppliers, sometimes under duress.

We continue to reevaluate our supply base and sourcing decisions and may in the future incur charges to improve flexibility and cost competitiveness.

Currency Exchange Rate Volatility.

After aggressively easing monetary policy in response to the COVID-19 pandemic, the Federal Reserve, and other central banks around the world, in 2022 began to withdraw monetary stimulus by raising interest rates.

Periods of monetary policy tightening are often associated with heightened financial market and currency volatility, especially for those markets that are outliers in terms of their economic or monetary policy backdrop.

Globally, central banks have begun shifting from tightening policy by raising interest rates to holding rates steady or, in some markets, beginning to cut rates.

As they do, they need to carefully balance the risk that inflation remains elevated against the heightened financial and economic risks associated with high interest rates.

This is notable for many emerging markets, which may also face increased exposure to commodity prices and political instability, contributing to unpredictable movements in the value of their exchange rates.

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Pricing Pressure.

Over the last year, prices of both new and used vehicles have increased substantially due to strong demand, supply shortages, and inflationary costs.

We have already observed some moderation in the rate of price increases as auto production slowly recovers from the semiconductor shortage, but it is unclear whether prices will decline fully to pre-COVID-19 pandemic levels.

Despite vehicle pricing remaining elevated over the last year due to strong demand, supply shortages, and inflationary costs, we have already observed moderation in the rate of new and used vehicle price increases as auto production recovers from the semiconductor shortage, but it is unclear whether prices will decline fully to pre-COVID-19 pandemic levels.

Over the long term, intense competition and excess capacity are likely to put downward pressure on inflation-adjusted prices for similarly-contented vehicles and contribute to a challenging pricing environment for the automotive industry in most major markets.

Electric Vehicle Market.

Although we continue to invest in our electric vehicle strategy, we have observed lower-than-anticipated industrywide electric vehicle adoption rates and near-term pricing pressures, which has led us and may in the future lead us to adjust our spending, production, and/or product launches to better match the pace of electric vehicle adoption.

As a result of the lower-than-anticipated adoption rates, near-term pricing pressures, and other factors, we recorded about $0.7 billion of charges in 2023 and may continue to incur charges, which could be substantial, related to payments to our electric vehicle-related suppliers (battery, raw material, or otherwise), inventory adjustments, or other matters.

Risk Factors for additional discussion of the risks related to lower-than-anticipated electric vehicle volumes and our planned transition to a greater mix of electric vehicles.

Commodity and Energy Prices.

Prices for commodities remain volatile.

In some cases, spot prices for various commodities have recently diverged somewhat, as anticipated weakening in global industrial activity mitigates price increases for base metals such as steel and aluminum, while precious metals (e.g., palladium), and raw materials that are used in batteries for electric vehicles (e.g., lithium, cobalt, nickel, graphite, and manganese, among other materials, for batteries) remain high.

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

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In the long term, the outcome of de-carbonization and electrification of the vehicle fleet may depress oil demand, but the global energy transition will also contribute to ongoing volatility of oil and other energy prices.

For additional information on commodity costs, see the Outlook section on page 73 .

Vehicle Profitability.

Our financial results depend on the profitability of the vehicles we sell, which may vary significantly by vehicle line.

In general, larger vehicles tend to command higher prices and be more profitable than smaller vehicles, both across and within vehicle segments.

For example, in North America, our larger, more profitable vehicles had an average contribution margin that was 120% of our total average contribution margin across all vehicles, whereas our smaller vehicles had significantly lower contribution margins.

In general, larger vehicles tend to command higher prices and be more profitable than smaller vehicles.

For example, in Ford Blue, our larger, more profitable vehicles had an average contribution margin that was 139% of our total average contribution margin across all vehicles, whereas our smaller vehicles had significantly lower contribution margins.

In addition, government regulations aimed at reducing emissions and increasing fuel efficiency (e.g., ZEV mandates and low emission zones), and other factors that accelerate the transition to electrified vehicles, may increase the cost of vehicles by more than the perceived benefit to consumers and dampen margins.

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To the extent governments in various regions implement or intensify barriers to imports, such as erecting tariff or non-tariff barriers or manipulating their currency, and provide advantages to local exporters selling into the global marketplace, there can be a significant negative impact on manufacturers based in other markets.

While we believe the long-term trend will support the growth of free trade, we will continue to monitor and address developing issues.

While we believe the long-term trend will support the growth of free trade, we will continue to monitor and address the developing role that geopolitical, climate, and labor concerns are playing in trade relations.

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 above normal rates.

We continue to see near-term impacts on our business due to inflation, including ongoing global price pressures in the wake of geopolitical volatility, driving up energy prices, freight premiums, and other operating costs above normal rates.

Although headline inflation in the United States and Europe appears to have peaked, as gasoline and natural gas prices recede from the latest spike, core inflation (excluding food and energy prices) remains elevated and is a source of continued cost pressure on businesses and households.

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At Ford Credit, rising interest rates may impact its ability to source funding and offer financing at competitive rates, which could reduce its financing margin.

Our Automotive segment revenue is generated primarily by sales of vehicles, parts, and accessories.

Company excluding Ford Credit revenue is generated primarily by sales of vehicles, parts, accessories, and services from our Ford Blue, Ford Model e, and Ford Pro segments.

Revenue is recorded when control is transferred to our customers (generally, our dealers and distributors).

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revenue related to other future or stand-ready performance obligations is generally recognized on a straight-line basis over the period in which services are expected to be performed.

Vehicles sold to daily rental car companies with an obligation to repurchase for a guaranteed amount, exercisable at the option of the customer, are accounted for as operating leases, with lease revenue recognized over the term of the lease.

Vehicles sold to daily rental car companies with an obligation to repurchase at an agreed upon amount, exercisable at the option of the customer, are accounted for as operating leases, with lease revenue recognized over the term of the lease.

Proceeds from the sale of vehicles at auction are recognized in revenue upon transfer of control of the vehicle to the buyer.

Most of the vehicles sold by us to our dealers and distributors are financed at wholesale by Ford Credit.

Upon Ford Credit originating the wholesale receivable related to a dealer’s purchase of a vehicle, Ford Credit pays cash to the relevant Automotive legal entity in payment of the dealer’s obligation for the purchase price of the vehicle.

Upon Ford Credit originating the wholesale receivable related to a dealer’s purchase of a vehicle, Ford Credit pays cash to the relevant Ford entity in payment of the dealer’s obligation for the purchase price of the vehicle.

The dealer then pays the wholesale finance receivable to Ford Credit when it sells the vehicle to a retail customer.

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Revenue from operating leases is recognized on a straight-line basis over the term of the lease.

Transactions between our Automotive and Ford Credit segments occur in the ordinary course of business.

Transactions between Ford Credit and our other segments occur in the ordinary course of business.

For example, we offer special retail financing and lease incentives to dealers’ customers who choose to finance or lease our vehicles from Ford Credit.

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Ford Credit recognizes the incentive amount over the life of retail finance contracts as an element of financing revenue and over the life of lease contracts as a reduction to depreciation.

See Note 1 of the Notes to the Financial Statements for a more detailed discussion of transactions between our Automotive and Ford Credit segments.

See Note 1 of the Notes to the Financial Statements for a more detailed discussion of transactions between Ford Credit and our other segments.

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

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Cost of sales and Selling, administrative, and other expenses for full year 2023 were $161.3 billion.

Our Automotive segment’s material and commodity costs make up the largest portion of these costs and expenses, followed by structural costs.

Company excluding Ford Credit’s total material and commodity costs make up the largest portion of these costs and expenses, followed by structural costs.

Although material costs are our largest absolute cost, our margins can be affected significantly by changes in any category of costs.

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RESULTS OF OPERATIONS - 2023

The net loss attributable to Ford Motor Company was $1,981 million in 2022.

The net income attributable to Ford Motor Company was $4,347 million in 2023.

Company adjusted EBIT was $10,416 million.

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

Global Redesign

Restructuring (by Geography)

China $ (380) $ (958)

Europe (151) (978)

India (468) (298)

South America (803) 53

China (including Taiwan) 150 (380)

North America (72) (198)

Subtotal Global Redesign $ (1,720) $ (967)

Ford Credit - Brazil (155) —

Other (a) (436) (87)

Subtotal Restructuring $ (1,122) $ (2,023)

Gain/(loss) on Rivian investment $ (7,377) $ (31)

$ 9,096 $ (7,377)

Debt extinguishment premium (1,692) (135)

AV strategy including Argo impairment (see Note 14) — (2,812)

Ford Credit – Brazil restructuring (see Note 21) 14 (155)

AV strategy including Argo impairment (2,812) —

Transit Connect customs matter — (396)

Russia suspension of operations/asset write-off (158) —

Patent matters related to prior calendar years (124) 8

Other 82 (35)

EV program dispute — (143)

Other (including gains/(losses) on investments) (170) (165)

Subtotal Other Items $ (10,641) $ (727)

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Total EBIT Special Items $ (12,172) $ (5,147)

Cash effect of Global Redesign (incl.

separations) $ (1,935) $ (377)

Provision for/(Benefit from) tax special items (a) $ (1,924) $ (2,573)

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

We recorded $12.2 billion of pre-tax special item charges in 2022, driven by a $7.4 billion mark-to-market net loss on our Rivian investment and a $2.7 billion impairment on our Argo investment.

In Note 26 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among the Automotive, Mobility, and Ford Credit segments.

Provision for/(Benefit from) tax special items (b) $ (2,573) $ (1,273)

(a) 2022 includes $298 million related to restructuring charges in India and $198 million in North America.

2023 includes $28 million related to restructuring charges in India and $41 million in North America.

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

We recorded $5.1 billion of pre-tax special item charges in 2023, driven primarily by pension and OPEB remeasurement, restructuring actions in Europe and China, and the Transit Connect customs matter.

In Note 26 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments.

This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources.

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Adjusted EPS (Diluted) $ 1.88 $ 2.01 $ 0.13

Adjusted ROIC (Trailing Four Qtrs) 9.8 % 11.2 % 1.4 ppts

Adjusted ROIC (Trailing Four Quarters) 11.2 % 13.9 % 2.7 ppts

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

In 2022, our diluted earnings per share of Common and Class B Stock was a loss of $0.49 and our diluted adjusted earnings per share was $1.88.

Net income/(loss) margin was negative 1.3% in 2022, down from 13.2% a year ago.

In 2023, our diluted earnings per share of Common and Class B Stock was $1.08 and our diluted adjusted earnings per share was $2.01.

Net income/(loss) margin was 2.5% in 2023, up from negative 1.3% a year ago.

Company adjusted EBIT margin was 5.9% in 2023, down from 6.6% a year ago.

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2022 2023 H / (L)

Automotive $ 7,397 $ 9,692 $ 2,295

Mobility (1,030) (926) 104

Ford Blue $ 6,847 $ 7,462 $ 615

Ford Model e (2,133) (4,701) (2,568)

Ford Pro 3,222 7,222 4,000

Ford Next (926) (138) 788

Ford Credit 2,657 1,331 (1,326)

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

The year-over-year decrease of $19.9 billion in net income/(loss) in 2022 includes the effect of special items, including the mark-to-market net loss on our Rivian investment and the impairment on our Argo investment, and lower Ford Credit EBT, partially offset by higher Automotive EBIT.

The year-over-year increase of $400 million in Company adjusted EBIT primarily reflects higher Automotive EBIT, offset partially by lower Ford Credit EBT.

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

Automotive Segment

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

2021 2022 H / (L)

North America $ 7,377 $ 9,176 $ 1,799

South America (121) 413 534

Europe (154) 47 201

China (including Taiwan) (327) (572) (245)

International Markets Group 622 628 6

Automotive Segment $ 7,397 $ 9,692 $ 2,295

The tables below and on the following pages provide full year 2022 key metrics and the change in full year 2022 EBIT compared with full year 2021 by causal factor for 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.

2021 2022 H / (L)

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

Wholesale Units (000) 3,942 4,231 289

Revenue ($M) $ 126,150 $ 148,980 $ 22,830

EBIT ($M) 7,397 9,692 2,295

EBIT Margin (%) 5.9 % 6.5 % 0.6 ppts

Change in EBIT by Causal Factor (in millions)

2021 Full Year EBIT $ 7,397

Volume / Mix 4,337

Net Pricing 10,867

Cost (11,954)

Exchange (525)

2022 Full Year EBIT $ 9,692

In 2022, wholesales in our Automotive segment increased 7% from a year ago, primarily reflecting stronger wholesales in North America.

Full year 2022 Automotive revenue increased 18%, driven by higher wholesales and net pricing, offset partially by weaker currencies.

Our full year 2022 Automotive segment EBIT was $9.7 billion, an increase of $2.3 billion from a year ago, with an EBIT margin of 6.5%.

The EBIT improvement was driven by higher net pricing and higher wholesales, offset partially by inflationary increases on commodity, material, and freight costs, higher structural costs (including growth-related investments), unfavorable mix, weaker currencies, and higher warranty costs.

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

North America

2021 2022 H / (L)

Market Share (%) 12.0 % 12.5 % 0.5 ppts

Wholesale Units (000) 2,006 2,335 328

Revenue ($M) $ 87,783 $ 108,727 $ 20,944

EBIT ($M) 7,377 9,176 1,799

EBIT Margin (%) 8.4 % 8.4 % — ppts

Change in EBIT by Causal Factor (in millions)

2021 Full Year EBIT $ 7,377

Volume / Mix 3,968

Net Pricing 6,580

2022 Full Year EBIT $ 9,176

In North America, 2022 wholesales increased 16% from a year ago, primarily reflecting an improvement in production-related supply constraints and a full year of Bronco and Maverick production.

Full year 2022 revenue increased 24%, driven by higher wholesales and net pricing.

North America’s 2022 EBIT was $9.2 billion, an increase of $1.8 billion from a year ago, with an EBIT margin of 8.4%.

South America

2021 2022 H / (L)

Market Share (%) 2.6 % 2.1 % (0.5) ppts

Wholesale Units (000) 81 83 2

Revenue ($M) $ 2,399 $ 3,096 $ 697

EBIT ($M) (121) 413 534

EBIT Margin (%) (5.1) % 13.4 % 18.5 ppts

Change in EBIT by Causal Factor (in millions)

2021 Full Year EBIT $ (121)

Volume / Mix (69)

Net Pricing 927

Exchange (22)

2022 Full Year EBIT $ 413

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

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

South America’s 2022 EBIT was $413 million, an increase of $534 million from a year ago, with an EBIT margin of 13.4%.

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

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

The year-over-year increase of $6.3 billion in net income/(loss) in 2023 was primarily driven by the non-recurrences of the mark-to-market net loss on our Rivian investment and the impairment on our Argo investment (both of which were included in special items in 2022), partially offset by a pension and OPEB remeasurement loss and higher charges for restructuring actions in Europe and China.

The flat year-over-year Company adjusted EBIT primarily reflects higher Ford Pro and Ford Blue EBIT and a lower EBIT loss in Ford Next.

Offsets included higher EBIT losses in Ford Model e, lower past service pension and OPEB income in Corporate Other, and lower Ford Credit EBT.

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

The tables below and on the following pages provide full year 2023 key metrics and the change in full year 2023 EBIT compared with full year 2022 by causal factor for each of our Ford Blue, Ford Model e, and Ford Pro 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

2022 2023 H / (L)

Market Share (%) 6.4 % 6.5 % 0.1 ppts

Wholesale Units (000) (a) 2,834 2,920 86

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EBIT Margin (%) 7.2 % 7.3 % 0.1 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Türkiye (about 61,000 units in 2021 and 76,000 units in 2022).

Revenue does not include these sales.

(a) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 484,000 units in 2022 and 455,000 units in 2023)

Change in EBIT by Causal Factor (in millions)

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2023 Full Year EBIT

In Europe, 2022 wholesales increased 14% from a year ago, primarily reflecting an improvement in production-related supply constraints.

Full year 2022 revenue improved 5%, driven by higher wholesales and net pricing, offset partially by weaker currencies.

Europe’s 2022 EBIT was $47 million, an improvement of $201 million from a year ago, with an EBIT margin of 0.2%.

In 2023, Ford Blue’s wholesales increased 3% from a year ago, primarily reflecting an improvement in production-related supply constraints, offset partially by ceasing production of EcoSport and Fiesta small vehicles and production losses during the UAW strike.

Full year 2023 revenue increased 8%, driven by higher wholesales, favorable mix, and higher net pricing, offset partially by weaker currencies.

Ford Blue’s 2023 full year EBIT was $7.5 billion, an increase of $615 million from a year ago, with an EBIT margin of 7.3%.

The EBIT improvement was driven primarily by favorable mix, lower commodity costs, higher wholesales and net pricing.

Partial offsets primarily include higher warranty costs (reflecting inflationary cost pressures and increased field service actions), higher material costs related to new products, higher structural costs and supplemental compensation (including the impact of the new UAW collective bargaining agreement), and weaker currencies.

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

China (Including Taiwan)

Ford Model e Segment

2022 2023 H / (L)

Market Share (%) 2.4 % 2.1 % (0.3) ppts

Wholesale Units (000) (a) 649 495 (154)

Wholesale Units (000) 96 116 20

Revenue ($M) $ 5,253 $ 5,897 $ 644

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EBIT Margin (%) (40.6) % (79.7) % (39.1) ppts

China Unconsolidated Affiliates

Wholesale Units (000) (b) 633 484 (149)

Ford Equity Income/(Loss) ($M) $ 165 $ 203 $ 38

(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.

Change in EBIT by Causal Factor (in millions)

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Net Pricing (1,005)

Exchange (34)

2023 Full Year EBIT

In China, 2022 wholesales decreased 24% from a year ago, driven by COVID-related restrictions and a weaker commercial vehicle industry.

Full year 2022 revenue at our consolidated operations decreased 31%, primarily driven by lower component sales to our joint ventures in China and lower wholesales.

China’s 2022 EBIT loss was $572 million, a $245 million higher loss than a year ago, with an EBIT margin of negative 32.3%.

The EBIT decrease was driven by lower volume and weaker currency, offset partially by lower costs and higher profits at our joint ventures.

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

International Markets Group

In 2023, Ford Model e’s wholesales increased 20% from a year ago, primarily reflecting higher production of F-150 Lightning.

Full year 2023 revenue increased 12%, driven by higher wholesales, offset partially by lower net pricing.

Ford Model e’s 2023 full year EBIT loss was $4.7 billion, a $2.6 billion higher loss than a year ago, with an EBIT margin of negative 79.7%.

The EBIT deterioration was primarily driven by lower net pricing, higher material cost (including volume-related obligations for batteries of about $310 million, inflationary cost increases, and higher launch-related supplier costs), higher volume/capacity-related manufacturing and spending-related costs, higher warranty costs, and higher engineering costs for future programs, offset partially by lower commodity costs and stronger currencies.

Ford Pro Segment

2022 2023 H / (L)

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

Wholesale Units (000) (a) 1,301 1,377 76

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EBIT Margin (%) 6.6 % 12.4 % 5.9 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Russia (about 22,000 units in 2021 and 3,000 units in 2022).

Revenue does not include these sales.

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 76,000 units in 2022 and 90,000 units in 2023).

Change in EBIT by Causal Factor (in millions)

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Net Pricing 7,067

Exchange (154)

2023 Full Year EBIT

In our International Markets Group, 2022 wholesales decreased 3% from a year ago, primarily reflecting our India restructuring and suspension of our joint venture in Russia, offset partially by the positive impact of the next-generation Ranger and Everest launches.

Full year 2022 revenue increased 10%, driven by market mix and higher net pricing, offset partially by weaker currencies.

Our International Market Group’s 2022 EBIT was $628 million, an increase of $6 million from a year ago, with an EBIT margin of 6.4%.

The EBIT increase was driven by higher net pricing and higher wholesales, offset partially by inflationary increases on commodity, material, and freight costs, weaker currencies, and lower joint venture profits and royalties.

In 2023, Ford Pro’s wholesales increased 6% from a year ago, primarily reflecting an improvement in production-related supply constraints, offset partially by production losses during the UAW strike.

Full year 2023 revenue increased 19%, driven by higher net pricing and wholesales, offset partially by unfavorable mix.

Ford Pro’s 2023 full year EBIT was $7.2 billion, an increase of $4.0 billion from a year ago, with an EBIT margin of 12.4%.

The EBIT improvement was driven by higher net pricing, lower commodity costs, and higher wholesales.

Partial offsets primarily include higher material costs (related to inflationary cost pressures, new products, and about $80 million of volume-related obligations for batteries), higher warranty costs (reflecting inflationary cost pressures and increased field service actions), and higher structural costs (including volume-related) and supplemental compensation (including the impact of the new UAW collective bargaining agreement).

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-year volume and mix and exchange:

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

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

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

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

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.

In our Mobility segment, our 2022 EBIT loss improved $104 million from a year ago.

The $926 million EBIT loss reflects our strategic investments in our autonomous vehicle capabilities and support of our mobility initiatives.

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 starting from 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 second half 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, which is in progress.

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 2023 EBIT loss was $138 million, a $788 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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Lease Residual (466)

Exchange (25)

2023 Full Year EBT

Total net receivables at December 31, 2022 were $5 billion higher than a year ago, primarily reflecting higher non-consumer financing, offset partially by fewer operating leases, lower consumer financing, and currency exchange rates.

Ford Credit’s loss metrics reflected healthy and stable consumer credit conditions and strong auction values.

Total net receivables at December 31, 2023 were 9% higher than a year ago, primarily reflecting higher consumer and non-consumer financing and currency exchange rates, partially offset by fewer operating leases.

Ford Credit’s loss metrics continue to normalize from historic lows.

Ford Credit’s U.S.

36-month auction values for off-lease vehicles were up 8% from a year ago, reflecting strong demand for used vehicles, including the impact of lower new vehicle production due to the semiconductor shortage.

We are planning for full year 2023 auction values to decrease as supply constraints improve.

Ford Credit’s 2022 EBT of $2,657 million was $2,060 million lower than a year ago, reflecting lower credit loss and lease residual reserve releases, lower financing margin, and lower lease return rates.

36-month auction values for off-lease vehicles were down 7% from a year ago.

We are planning for full year 2024 auction values to decrease as vehicle availability continues to improve.

Ford Credit’s 2023 EBT of $1,331 million was $1,326 million lower than a year ago, reflecting lower financing margin, non-recurrence of supplemental depreciation and credit loss reserve releases, lower lease residual performance, unfavorable derivative market valuation, and higher credit losses.

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

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• Financing Margin:

◦ Financing margin variance is the period-to-period change in financing margin yield multiplied by the present period average net receivables excluding the allowance for credit losses at prior period exchange rates.

◦ Financing margin variance is the period-over-period change in financing margin yield multiplied by the present period average net receivables excluding the allowance for credit losses at prior period exchange rates.

This calculation is performed at the product and country level and then aggregated.

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Changes in the allowance for credit losses are primarily driven by changes in historical trends in credit losses and recoveries, changes in the composition and size of Ford Credit’s present portfolio, changes in trends in historical used vehicle values, and changes in forward looking macroeconomic conditions.

For additional information, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of Part II of our 2022 Form 10-K Report

For additional information, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7

• Lease Residual:

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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

For additional information, refer to the “Critical Accounting Estimates - Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7

◦ Reflects changes in EBT driven by the effects of converting functional currency income to U.S.

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In addition, the following definitions and calculations apply to Ford Credit when used in this Report:

• Cash (as shown in the Funding Structure and Liquidity tables) – Cash, cash equivalents, and marketable securities, excluding amounts related to insurance activities

• Cash (as shown in the Funding Structure and Liquidity tables) – Cash, cash equivalents, marketable securities, and restricted cash, excluding amounts related to insurance activities

• Debt (as shown in the Key Metrics and Leverage tables) – Debt on Ford Credit’s balance sheets.

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

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

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.

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

For full year 2022, Corporate Other had a $1,008 million loss, compared with a $1,084 million loss in 2021.

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

For full year 2023, Corporate Other had a $760 million EBIT loss, compared with $748 million of positive EBIT in 2022.

The EBIT deterioration was driven by lower past service pension and OPEB income, partially offset by higher Company excluding Ford Credit interest income, reflecting higher interest rates.

Interest on Debt

Interest on Debt consists of interest expense on Company debt excluding Ford Credit.

Our full year 2022 interest expense on Company debt excluding Ford Credit was $1,259 million, $544 million lower than in 2021, primarily explained by U.S.

debt restructuring actions taken in the fourth quarter of 2021 and during 2022.

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

Our Provision for/(Benefit from) income taxes for full year 2022 was a $864 million benefit, resulting in an effective tax rate of 28.6%.

This includes benefits arising from the reversal of U.S.

valuation allowances, primarily as a result of planning actions.

Our full year 2023 interest expense on Company debt excluding Ford Credit was $1,302 million, $43 million higher than in 2022.

Our Provision for/(Benefit from) income taxes for full year 2023 was a $362 million benefit, resulting in an effective tax rate of negative 9.1%.

This includes benefits arising from U.S.

research tax credits and legal entity restructuring within our leasing operations and China.

Our full year 2023 adjusted effective tax rate, which excludes special items, was 10.0%.

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RESULTS OF OPERATIONS - 2022

The net income attributable to Ford Motor Company was $17,937 million in 2021.

The net loss attributable to Ford Motor Company was $1,981 million in 2022.

Company adjusted EBIT was $10,415 million.

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China (including Taiwan) 150 (380)

Separations and Other (not included above) (94) (74)

North America (72) (198)

Subtotal Global Redesign $ (1,720) $ (967)

Gain on transaction with Argo AI $ 3,454 $ —

Gain on Rivian IPO and mark-to-market

Gains and losses on investments in equity securities (excl.

Rivian) 100 92

Gain/(loss) on Rivian investment

$ 9,096 $ (7,377)

Debt extinguishment premium (1,692) (135)

Takata field service action (610) —

Ford Credit - Brazil and Argentina — 14

AV strategy including Argo impairment — (2,812)

Ford Credit – Brazil restructuring 14 (155)

Russia suspension of operations/asset write-off — (158)

Patent matters related to prior calendar years — (124)

Other 82 (35)

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

For full year 2021, we recorded $9.6 billion of pre-tax special items, primarily reflecting gains on our equity investment in Rivian in connection with Rivian’s initial public offering and mark-to-market valuation adjustments during the year, as well as a remeasurement gain associated with our global pension and OPEB plans.

The gains were partially offset by costs associated with our Global Redesign actions and a debt extinguishment premium associated with the repurchase and redemption of $7.6 billion of our higher-coupon debt.

For full year 2022, we recorded $12.2 billion of pre-tax special item charges, driven by a $7.4 billion mark-to-market net loss on our Rivian investment and a $2.7 billion impairment on our Argo investment.

In Note 26 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments.

This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources.

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Adjusted EPS (Diluted) $ 1.59 $ 1.88 $ 0.29

Adjusted ROIC (Trailing Four Qtrs) 0.7 % 9.8 % 9.1 ppts

Adjusted ROIC (Trailing Four Quarters) 9.8 % 11.2 % 1.4 ppts

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

In 2021, our diluted earnings per share of Common and Class B Stock was $4.45 and our diluted adjusted earnings per share was $1.59.

Net income/(loss) margin was 13.2% in 2021, up from negative 1.0% in 2020.

Company adjusted EBIT margin was 7.3% in 2021, up from 2.0% in 2020.

In 2022, our diluted earnings per share of Common and Class B Stock was a loss of $0.49 and our diluted adjusted earnings per share was $1.88.

Net income/(loss) margin was negative 1.3% in 2022, down from 13.2% in 2021.

Company adjusted EBIT margin was 6.6% in 2022, down from 7.3% in 2021.

The table below shows our full year 2022 net income/(loss) attributable to Ford and Company adjusted EBIT by segment (in millions).

2021 2022 H / (L)

Automotive $ 1,706 $ 7,397 $ 5,691

Mobility (1,052) (1,030) 22

Ford Blue $ 3,293 $ 6,847 $ 3,554

Ford Model e (892) (2,133) (1,241)

Ford Pro 2,665 3,222 557

Ford Next (1,030) (926) 104

Ford Credit 4,717 2,657 (2,060)

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

The year-over-year increase of $19.2 billion in net income/(loss) in 2021 includes the effect of special items, including the Rivian IPO and mark-to-market gain, as well as higher Automotive EBIT and Ford Credit EBT.

The year-over-year increase of $7.5 billion in Company adjusted EBIT was driven by higher Automotive EBIT and Ford Credit EBT.

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

Automotive Segment

The table below shows our full year 2021 Automotive segment EBIT by business unit (in millions).

2020 2021 H / (L)

North America $ 3,710 $ 7,377 $ 3,667

South America (490) (121) 369

Europe (851) (154) 697

China (including Taiwan) (499) (327) 172

International Markets Group (164) 622 786

Automotive Segment $ 1,706 $ 7,397 $ 5,691

The tables below and on the following pages provide full year 2021 key metrics and the change in full year 2021 EBIT compared with full year 2020 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.

2020 2021 H / (L)

Market Share (%) 5.8 % 5.1 % (0.6) ppts

Wholesale Units (000) 4,187 3,942 (245)

Revenue ($M) $ 115,894 $ 126,150 $ 10,256

EBIT ($M) 1,706 7,397 5,691

EBIT Margin (%) 1.5 % 5.9 % 4.4 ppts

Change in EBIT by Causal Factor (in millions)

2020 Full Year EBIT $ 1,706

Volume / Mix (2,853)

Net Pricing 9,700

2021 Full Year EBIT $ 7,397

In 2021, wholesales in our Automotive segment declined 6% from 2020, reflecting semiconductor-related production constraints and the shift to a new business model in South America.

Full year 2021 Automotive revenue increased 9% from 2020, driven by higher net pricing, favorable mix, and stronger currencies, partially offset by lower wholesales.

Our full year 2021 Automotive segment EBIT increased $5.7 billion from 2020 with an EBIT margin of 5.9 percent.

The EBIT improvement was driven by higher net pricing (reflecting the strength of our product portfolio and lower incentives in response to reduced dealer stock levels), lower warranty expense, favorable mix, higher profits from our Ford Customer Service Division business, and stronger currencies, partially offset by lower wholesales and increased commodity costs.

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

North America

2020 2021 H / (L)

Market Share (%) 13.2 % 12.0 % (1.2) ppts

Wholesale Units (000) 2,081 2,006 (75)

Revenue ($M) $ 80,044 $ 87,783 $ 7,739

EBIT ($M) 3,710 7,377 3,667

EBIT Margin (%) 4.6 % 8.4 % 3.8 ppts

Change in EBIT by Causal Factor (in millions)

2020 Full Year EBIT $ 3,710

Volume / Mix (1,661)

Net Pricing 7,858

2021 Full Year EBIT $ 7,377

In North America, 2021 wholesales declined 4% from 2020, primarily reflecting the impact of semiconductor-related production constraints.

Full year 2021 revenue increased 10% from 2020, driven by higher net pricing, favorable mix, and stronger currencies, partially offset by lower wholesales.

North America’s 2021 EBIT increased $3.7 billion from 2020 with an EBIT margin of 8.4%.

The EBIT improvement was driven by higher net pricing, lower warranty expense, and favorable mix, partially offset by increased commodity prices, lower volume, and higher structural costs.

South America

2020 2021 H / (L)

Market Share (%) 6.2 % 2.6 % (3.7) ppts

Wholesale Units (000) 185 81 (104)

Revenue ($M) $ 2,463 $ 2,399 $ (64)

EBIT ($M) (490) (121) 369

EBIT Margin (%) (19.9) % (5.1) % 14.8 ppts

Change in EBIT by Causal Factor (in millions)

2020 Full Year EBIT $ (490)

Volume / Mix (210)

Net Pricing 602

2021 Full Year EBIT $ (121)

In South America, 2021 wholesales declined 56% from 2020, primarily reflecting the shift to the region’s new business model and the impact of semiconductor-related production constraints.

Full year 2021 revenue declined 3% from 2020, driven by lower volume and weaker currencies, partially offset by higher net pricing and favorable mix.

South America’s 2021 EBIT loss improved $369 million from 2020 with an EBIT margin of negative 5.1%.

The EBIT improvement was driven by higher net pricing, partially offset by lower volume.

The year-over-year decrease of $19.9 billion in net income/(loss) in 2022 includes the effect of special items, including

the mark-to-market net loss on our Rivian investment and the impairment on our Argo investment.

The year-over-year increase of $415 million in Company adjusted EBIT primarily reflects higher Ford Blue and Ford Pro EBIT, offset partially by lower Ford Credit EBT, higher EBIT losses in Ford Model e, and lower past service pension and OPEB income in Corporate Other.

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

Ford Blue Segment

The tables below and on the following pages provide full year 2022 key metrics and the change in full year 2022 EBIT compared with full year 2021 by causal factor for each of our Ford Blue, Ford Model e, and Ford Pro segments.

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

2021 2022 H / (L)

Market Share (%) 7.2 % 6.4 % (0.8) ppts

Wholesale Units (000) (a) 2,694 2,834 140

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EBIT Margin (%) 4.1 % 7.2 % 3.1 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Türkiye (about 72,000 units in 2020 and 61,000 units in 2021);

revenue does not include these sales.

(a) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 633,000 units in 2021 and 484,000 units in 2022).

Change in EBIT by Causal Factor (in millions)

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2022 Full Year EBIT

In Europe, 2021 wholesales declined 13% from 2020, primarily reflecting the impact of semiconductor-related production constraints.

Full year 2021 revenue improved 8% from 2020, driven by favorable mix, stronger currencies, and higher net pricing, partially offset by lower volume.

Europe’s 2021 EBIT loss improved $697 million from 2020 with an EBIT margin of negative 0.6%.

The EBIT improvement was driven by higher net pricing, lower material and warranty expenses, and lower structural costs, partially offset by lower volume and increased commodity prices.

In 2022, Ford Blue’s wholesales increased 5% from 2021, primarily reflecting an improvement in production-related supply constraints and a full year of Bronco and Maverick production, offset partially by our India restructuring, suspension of our joint venture in Russia, and COVID-related restrictions in China.

Full year 2022 revenue increased 18%, driven by higher net pricing and wholesales, offset partially by weaker currencies.

Ford Blue’s full year 2022 EBIT was $6.8 billion, an increase of $3.6 billion from 2021, with an EBIT margin of 7.2%.

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

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

China (Including Taiwan)

Ford Model e Segment

2021 2022 H / (L)

Market Share (%) 2.4 % 2.4 % — ppts

Wholesale Units (000) (a) 617 649 31

Wholesale Units (000) 61 96 35

Revenue ($M) $ 3,098 $ 5,253 $ 2,155

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EBIT Margin (%) (28.8) % (40.6) % (11.8) ppts

China Unconsolidated Affiliates

Wholesale Units (000) (b) 564 633 69

Ford Equity Income/(Loss) ($M) $ 49 $ 165 $ 116

(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, from second quarter 2021, Ford brand vehicles produced in Taiwan by Lio Ho Group.

Change in EBIT by Causal Factor (in millions)

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Net Pricing 418

Exchange (94)

2022 Full Year EBIT

In China, 2021 wholesales increased 5% from 2020, driven by higher joint venture volumes.

Full year 2021 consolidated revenue declined 20% from 2020, driven by product localization and the de-consolidation of our operations in Taiwan, partially offset by favorable import mix, higher component sales to our joint ventures in China, and stronger currencies.

China’s 2021 EBIT loss improved $172 million from 2020 with an EBIT margin of negative 12.8%.

The EBIT improvement was driven by favorable mix of imported vehicles, higher joint venture profits and royalties, and higher net pricing, partially offset by lower volume at our consolidated operations.

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

International Markets Group

In 2022, Ford Model e’s wholesales increased 58% from 2021, primarily reflecting the launch of the F-150 Lightning and incremental Mach-E production.

Full year 2022 revenue increased 70%, driven by higher wholesales and net pricing.

Model e’s full year 2022 EBIT loss was $2.1 billion, a $1.2 billion higher loss than in 2021, with an EBIT margin of negative 40.6%.

The lower EBIT was primarily driven by inflationary increases on commodity, material, and freight costs, higher structural costs (including higher engineering cost for future programs), and unfavorable mix.

Partial offsets included higher net pricing and wholesales.

Ford Pro Segment

2021 2022 H / (L)

Market Share (%) 1.7 % 1.8 % — ppts

Wholesale Units (000) (a) 1,187 1,301 114

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EBIT Margin (%) 6.2 % 6.6 % 0.3 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate in Russia (about 14,000 units in 2020 and 22,000 units in 2021).

Revenue does not include these sales.

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 61,000 units in 2021 and 76,000 units in 2022).

Change in EBIT by Causal Factor (in millions)

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Net Pricing 4,267

Exchange (156)

2022 Full Year EBIT

In our International Markets Group, 2021 wholesales increased 11% from 2020, reflecting the non-recurrence of the COVID-related production suspension and higher industry volumes, partially offset by the impact of semiconductor-related supply constraints.

Full year 2021 revenue increased 19% from 2020, driven by higher volume and mix, higher net pricing, and stronger currencies.

Our International Markets Group’s 2021 EBIT improved $786 million from 2020 with an EBIT margin of 6.9%.

The EBIT improvement was driven by stronger currencies, higher net pricing and volume, and lower warranty expense.

In 2022, Ford Pro’s wholesales increased 10% from 2021, primarily reflecting an improvement in production-related supply constraints.

Full year 2022 revenue increased 15%, driven by higher net pricing and wholesales, offset partially by weaker currencies.

Ford Pro’s full year 2022 EBIT was $3.2 billion, an increase of $557 million from 2021, with an EBIT margin of 6.6%.

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

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

Mobility Segment

In our Mobility segment, our 2021 EBIT loss improved $22 million from 2020.

The $1 billion EBIT loss reflected our strategic investments in 2021 as we continued to expand our capabilities in autonomous vehicles and mobility businesses.

Ford Next Segment

In our Ford Next segment (formerly Mobility), our 2022 EBIT loss improved $104 million from 2021.

The $926 million EBIT loss reflected our strategic investments in our autonomous vehicle capabilities and support of our mobility initiatives.

Ford Credit Segment

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EBT ($M) 4,717 2,657 $ (2,060)

ROE (%) (c) 15 % 32 % 17 ppts

ROE (%) 32 % 16 % (16) ppts

Other Balance Sheet Metrics

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Net Liquidity ($B) 32 21 (34) %

Financial Statement Leverage (to 1) (c) 8.8 9.5 0.7

Financial Statement Leverage (to 1) 9.5 10 0.5

retail financing only.

36-month off-lease auction values at full year 2023 mix.

Change in EBT by Causal Factor (in millions)

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Lease Residual (907)

Exchange (25)

2022 Full Year EBT

Total net receivables at December 31, 2021 were $14 billion lower than at December 31, 2020, primarily reflecting lower wholesale receivables as a result of lower dealer inventories due to the semiconductor shortage.

Total net receivables at December 31, 2022 were 3% higher than at December 31, 2021, primarily reflecting higher non-consumer financing, offset partially by fewer operating leases, lower consumer financing, and currency exchange rates.

Ford Credit’s loss metrics reflected healthy and stable consumer credit conditions and strong auction values.

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36-month auction values for off-lease vehicles were up 5% from 2021, reflecting strong demand for used vehicles, including the impact of lower new vehicle production due to the semiconductor shortage.

Ford Credit’s 2021 EBT increased $2,109 million from 2020, explained primarily by favorable operating lease residual performance, the non-recurrence of the 2020 increase to the credit loss reserve due to deterioration in macroeconomic conditions related to COVID-19, and reductions in the credit loss reserve in 2021, partially offset by lower volume driven by the impact of the global semiconductor shortage and lower financing margin.

Ford Credit’s 2022 EBT of $2,657 million was $2,060 million lower than 2021, reflecting lower credit loss and lease residual reserve releases, lower financing margin, and lower lease return rates.

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

Corporate Other

For full year 2021, Corporate Other had a $1,084 million loss, compared with a $726 million loss in 2020.

The higher loss was driven by lower interest income and higher administrative and IT-related expenses.

For full year 2022, Corporate Other EBIT was $748 million, compared with EBIT of $1,247 million in 2021.

The deterioration was driven by lower past service pension and OPEB income.

Interest on Debt

Our full year 2021 interest expense on Company debt excluding Ford Credit was $1,803 million, $154 million higher than in 2020, primarily explained by higher U.S.

unsecured debt interest expense.

Our Provision for/(Benefit from) income taxes for full year 2021 was a $130 million benefit, resulting in an effective tax rate of negative 0.7%.

This includes a benefit of $2.9 billion to recognize deferred tax assets resulting from changes in our global tax structure and a $918 million benefit from the reversal of U.S.

valuation allowances.

Our full year 2022 interest expense on Company debt excluding Ford Credit was $1,259 million, $544 million lower than in 2021, primarily explained by U.S.

debt restructuring actions taken in the fourth quarter of 2021 and during 2022.

Our Provision for/(Benefit from) income taxes for full year 2022 was a $864 million benefit, resulting in an effective tax rate of 28.6%.

This includes benefits arising from the reversal of U.S.

valuation allowances, primarily as a result of planning actions.

Our full year 2022 adjusted effective tax rate, which excludes special items, was 18.7%.

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Total Funded Status OPEB $ (4.5) $ (4.7)

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 December 31, 2022, we had Company cash of $32.3 billion and liquidity of $48.0 billion, including approximately $194 million of Rivian marketable securities.

In 2022, we sold approximately 91 million of our Rivian shares resulting in proceeds of about $3 billion.

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

Our key priority is to maintain a strong balance sheet to withstand potential stress scenarios, while having resources available to invest in and grow our business.

At December 31, 2023, we had Company cash of $28.8 billion and liquidity of $46.4 billion.

At December 31, 2023, about 90% of Company cash was held by consolidated entities domiciled in the United States.

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

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

We expect to have periods when we will be above or below this amount due to:

(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 below and Note 18 of the Notes to the Financial Statements)

• 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 (including share repurchases to offset the anti-dilutive effect of increased shared-based compensation) may require the expenditure of a material amount of cash.

We target shareholder distributions of 40% to 50% of adjusted free cash flow.

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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(e) Amounts represent our estimate of contractually obligated contributions to the Ford-Werke plan.

See Note 17 of the Notes to the Financial Statements for further information regarding our expected 2022 pension contributions and funded status.

See Note 17 of the Notes to the Financial Statements for further information regarding our expected pension contributions.

(f) Purchase obligations under existing offtake agreements for scarce raw materials are not included in the table above.

As of December 31, 2022, our forecasted expenditures for the maximum quantity that may be purchased under these offtake agreements, which are subject to satisfaction of the conditions in the agreements, total about $2.4 billion through 2029 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.

As of December 31, 2023, our estimated expenditures for the maximum quantity that we are committed to purchase under these offtake agreements through 2035, subject to certain conditions, consist of approximately $4.5 billion of purchase obligations and approximately $8 billion of contingent purchase obligations based on our present forecast.

However, our forecast could fluctuate from period to period based on market prices, which could result in significant increases or decreases in our estimate.

The actual price paid for these materials will be recorded on our balance sheet at the time of purchase.

In addition, as market conditions dictate, we may enter into additional offtake agreements with raw material suppliers or seek to renegotiate existing agreements.

For additional information, see the discussion of our offtake agreements below on page 62.

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

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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, equity investments, and other transactions with Ford Credit).

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).

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

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.

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

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

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

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

Our finished product inventory at December 31, 2022 was higher year over year due to production and release scheduling, which resulted in higher sales inventory, in-transit inventory, and units awaiting upfit.

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

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

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

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

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

Our actual capital outlay could vary significantly based on the final project costs and potential financing opportunities.

Such investments could have an additional adverse impact on our cash in the near-term.

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.

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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.

Unlike our historical arrangements with suppliers, under multi-year offtake agreements, the risks associated with lower-than-expected electric vehicle production volumes or changes in battery technology that reduce the need for certain raw materials are borne by Ford rather than our suppliers.

Accordingly, in the event we do not purchase the materials pursuant to the terms of these agreements and we are unable to restructure an agreement or an alternate purchaser is unable to be found, Ford retains its obligation for the cost of those materials.

For additional discussion of the risks related to our offtake agreements and other long-term purchase contracts, see “Item 1A.

Risk Factors.”

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

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

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

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

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 December 31, 2023, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $220 million.

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Company adjusted free cash flow (a) $ 4.6 $ 9.1 $ 6.8

Global Redesign (including separations) $ (0.5) $ (1.9) $ (0.4)

Restructuring $ (1.9) $ (0.4) $ (0.9)

Changes in debt (3.7) (0.4) (0.2)

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2022 includes a $7.4 billion loss on our Rivian investment.

2023 includes $2.6 billion of capital contributions to BlueOval SK, LLC.

Numbers may not sum due to rounding.

Our full year 2022 Net cash provided by/(used in) operating activities was positive $6.9 billion, a decrease of $8.9 billion from a year ago (see page 79 for additional information).

The year-over-year decrease was driven by a decrease in Ford Credit operating cash flow partially offset by favorable timing differences.

Company adjusted free cash flow was $9.1 billion, $4.5 billion higher than a year ago, driven by higher Company adjusted EBIT excluding Ford Credit, timing benefits, improvement in working capital, and lower interest expense, offset partially by lower Ford Credit distributions.

Our full year 2023 Net cash provided by/(used in) operating activities was positive $14.9 billion, an increase of $8.1 billion from a year ago (see page 78 for additional information).

The year-over-year increase was primarily driven by higher net income.

Company adjusted free cash flow was $6.8 billion, $2.3 billion lower than a year ago.

An improvement in Company adjusted EBIT excluding Ford Credit and timing differences were more than offset by the non-repeat of working capital improvements and Ford Credit distributions, as well as higher capital spending.

Capital spending was $8.2 billion in 2023, $1.6 billion higher than a year ago, and is expected to be in the range of $8 billion to $9.5 billion in 2024.

The full year 2022 working capital impact was $0.2 billion positive, driven by higher payables.

The full year 2023 working capital impact was $2.4 billion negative, driven by an increase in inventory and receivables.

All other and timing differences were positive $5.2 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).

Shareholder distributions (including dividends and anti-dilutive share repurchases) were $2.5 billion in 2022.

Timing differences include differences between accrual-based EBIT and the associated cash flows (e.g., marketing incentive and warranty payments to dealers, JV equity income, compensation payments, and pension and OPEB income or expense).

Shareholder distributions (including cash dividends and anti-dilutive share repurchases) were $5.3 billion in 2023.

On February 6, 2024, we declared a regular dividend of $0.15 per share and a supplemental dividend of $0.18 per share.

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.

The cash effect related to our global redesign activities was $3.9 billion through December 31, 2022.

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

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Total Company committed credit lines, excluding Ford Credit, at December 31, 2023 were $19.4 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $1.8 billion of our 364-day revolving credit facility, and $2.2 billion of local credit facilities.

At December 31, 2022, the utilized portion of the corporate credit facility was $19 million, representing amounts utilized for letters of credit, and the full $1.75 billion of our 364-day revolving credit facility was utilized by Ford Credit, in its capacity as a subsidiary borrower under that facility.

At December 31, 2023, the utilized portion of the corporate credit facility was $18 million, representing amounts utilized for letters of credit.

In addition, $1.8 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of December 31, 2023.

As of January 25, 2023, Ford Credit had repaid the full $1.75 billion outstanding under the 364-day revolving credit facility.

Lenders under our corporate 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.

Lenders under our corporate credit facility have $3.4 billion of commitments maturing on April 26, 2026 and $10.1 billion of commitments maturing on April 26, 2028.

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 April 26, 2026.

Lenders under our 364-day revolving credit facility have $1.8 billion of commitments maturing on April 24, 2024.

On August 17, 2023, we entered into a new 364-day revolving credit facility, with $4 billion of commitments maturing on August 15, 2024.

At the time we entered into this credit facility, it provided additional working capital flexibility to manage through uncertainties in the present environment, including a potential labor disruption.

With the ratification of the new UAW contract, this credit facility was terminated as of November 24, 2023.

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.

Ford outperformed the 2021 targets for all three of the sustainability-linked metrics, which impacted pricing beginning in the fourth quarter of 2022.

Ford outperformed the 2022 targets for all three of the sustainability-linked metrics, which favorably impacted pricing beginning in the third quarter of 2023 .

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.

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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.

The following subsidiaries have provided unsecured guarantees to the lenders under the credit facilities:

On October 30, 2023, following the upgrade by S&P of our senior, unsecured, long-term debt credit rating to BBB-, the unsecured guarantees provided by the following subsidiaries to the lenders under the credit facilities were released:

Ford Component Sales, LLC;

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Ford Next LLC;

and Ford Trading Company, LLC.

As shown in Note 19 of the Notes to the Financial Statements, at December 31, 2022, Company debt excluding Ford Credit was $19.9 billion.

This balance is $400 million lower than at December 31, 2021, primarily reflecting the repayment in full of our $1.5 billion delayed draw term loan facility, repayment of the remaining $953 million under our Loan Arrangement and Reimbursement Agreement with the U.S.

Department of Energy, a $1.1 billion redemption of higher coupon debt, and scheduled maturities, partially offset by the £750 million ($903 million as of December 31, 2022) draw on our U.K.

Export Finance term loan credit facility and the issuance of our $1.8 billion green bond and $600 million retail bond.

Ford Trading Company, LLC;

and Ford Van Dyke Investment Fund, Inc.

As shown in Note 19 of the Notes to the Financial Statements, at December 31, 2023, Company debt excluding Ford Credit was $19.9 billion, unchanged from 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 2022 with $21 billion of liquidity.

During the year, Ford Credit completed $16 billion of public term funding.

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

Ford Credit continues to have robust access to the capital markets, and ended 2023 with $25.7 billion of liquidity, up $4.6 billion from 2022.

Key elements of Ford Credit’s funding strategy include:

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• 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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Term asset-backed securities 45.4 56.4 58.0

Ford Interest Advantage / Retail Deposits 9.8 12.9 14.3

Retail Deposits / Ford Interest Advantage 12.9 14.3 17.2

Other (0.1) 2.7 1.4

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Securitized Funding as Percent of Total Debt 38.5 % 47.4 % 44.9 %

Net receivables of $122.3 billion at December 31, 2022 were funded primarily with term debt and term asset-backed securities.

Securitized funding as a percent of total debt was 47.4%.

Net receivables of $133.2 billion at December 31, 2023 were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 44.9% as of December 31, 2023.

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

Public Term Funding Plan.

The following table shows Ford Credit’s issuances for full year 2020, 2021, and 2022, and planned issuances for full year 2023, excluding short-term funding programs (in billions):

The following table shows Ford Credit’s issuances for full year 2021, 2022, and 2023, and its planned issuances for full year 2024, excluding short-term funding programs (in billions):

Unsecured $ 5 $ 6 $ 14 $ 14 - 17

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For 2024, Ford Credit projects full year public term funding in the range of $27 billion to $33 billion.

Through February 1, 2023, Ford Credit has completed $5 billion of public term issuances.

Through February 5, 2024, we completed $5 billion of public term issuances.

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

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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 December 31, 2022, Ford Credit’s net liquidity available for use was $21 billion, $11 billion lower than year-end 2021.

Ford Credit’s net liquidity remains robust and aligns with lower near-term refinancing obligations.

At December 31, 2023, Ford Credit’s net liquidity available for use was $25.7 billion, $4.6 billion higher than year-end 2022, reflecting strong access to public funding markets and the addition of $5.5 billion in committed asset-backed capacity.

Ford Credit’s sources of liquidity include cash, committed asset-backed facilities, and unsecured credit facilities.

At December 31, 2022, Ford Credit’s liquidity sources totaled $50.9 billion, down $1.3 billion from year-end 2021.

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

At December 31, 2023, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and unsecured credit facilities, totaled $56.2 billion, up $5.2 billion from year-end 2022.

Material Cash Requirements.

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Funding and Liquidity Risks.

Ford Credit’s funding plan is subject to risks and uncertainties, many of which are beyond its control, including disruption in the capital markets that could impact both unsecured debt and asset-backed securities and the effects of regulatory changes on the financial markets.

Ford Credit’s funding plan is subject to risks and uncertainties, many of which are beyond its control, including disruption in the capital markets that could impact both unsecured debt and asset-backed securities issuance and the effects of regulatory changes on the financial markets.

Despite Ford Credit’s diverse sources of funding and liquidity, its ability to maintain liquidity may be affected by, among others, the following factors (not necessarily listed in order of importance or probability of occurrence):

• Prolonged disruption of the debt and securitization markets;

• Global capital market volatility;

• Global capital markets volatility;

• Credit ratings assigned to Ford and Ford Credit;

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Going forward, we expect to:

• Limit our pension contributions to offset ongoing service cost or meet regulatory requirements, if any;

• Limit our pension contributions to offset ongoing service cost, ensure our funded plans remain fully funded in aggregate, and meet regulatory requirements, if any;

• Minimize the volatility of the value of our pension assets relative to pension obligations and ensure assets are sufficient to pay plan benefits;

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Year-End Discount Rate (Weighted Average)

Plans 2.91 % 5.51 % 2.60 ppts

Plans 1.75 % 4.42 % 2.67 ppts

Plans 5.51 % 5.17 % (34) bps

Plans 4.42 % 3.98 % (44) bps

Actual Asset Returns

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Contributions for Funded Plans 0.6 0.6 —

Worldwide, our defined benefit pension plans were underfunded by $0.2 billion at December 31, 2022, an improvement of $0.1 billion from December 31, 2021, primarily reflecting the impact of higher discount rates mostly offset by negative asset performance.

Worldwide, our defined benefit pension plans were underfunded by $2.3 billion at December 31, 2023, a deterioration of $2.1 billion from December 31, 2022, primarily reflecting the impact of lower discount rates compared to year-end 2022 and pension benefit enhancements as part of the collective bargaining agreements in the United States and Canada, partially offset by asset gains in excess of our assumptions.

Of the $2.3 billion underfunded status at year-end 2023, our funded plans were $2.1 billion overfunded and our unfunded plans were $4.4 billion underfunded.

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defined benefit plans for senior management.

The fixed income mix was 79% in both our U.S.

plans and non-U.S.

The fixed income mix was 76% in our U.S.

plans and 78% in our non-U.S.

plans at year-end 2023.

In 2022, we contributed $567 million to our global funded pension plans, a decrease of $206 million compared with 2021.

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

In 2023, we contributed $592 million to our global funded pension plans, an increase of $25 million compared with 2022.

During 2024, we expect to contribute about $1 billion of cash to our global funded pension plans.

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

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Adjusted ROIC (Non-GAAP) (b) 9.8 % 11.2 % 13.9 %

(a) Calculated as the sum of net operating profit after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

(b) Calculated as the sum of adjusted net operating profit after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

(a) Calculated as the sum of net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

(b) Calculated as the sum of adjusted net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

Numbers may not sum due to rounding.

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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 September 30, 2022.

The following rating actions were taken by these NRSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023:

• On October 30, 2023, S&P upgraded the credit ratings for Ford and Ford Credit to BBB- from BB+ and revised the outlook to stable from positive.

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

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Unsecured Outlook / Trend Minimum Long-Term Investment Grade Rating

DBRS BB (high) BB (high) Positive BB (high) R-4 Positive BBB (low)

Fitch BB+ BB+ Positive BB+ B Positive BBB-

DBRS BBB (low) BBB (low) Stable BBB (low) R-2 (low) Stable BBB (low)

Fitch BBB- BBB- Stable BBB- F3 Stable BBB-

Moody’s N/A Ba1 Stable Ba1 NP Stable Baa3

S&P BB+ BB+ Positive BB+ B Positive BBB-

S&P BBB- BBB- Stable BBB- A-3 Stable BBB-

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

We provided 2024 Company guidance in our earnings release furnished on Form 8-K dated February 6, 2024.

The guidance is based on our expectations as of February 2, 2023.

The guidance is based on our expectations as of February 6, 2024, and assumes no material change to our current assumptions for inflation, logistics issues, production, or macroeconomic conditions.

Our actual results could differ materially from our guidance due to risks, uncertainties, and other factors, including those set forth in “Risk Factors” in Item 1A of Part I.

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Adjusted EBIT (a) $10 - $12 billion

Adjusted Free Cash Flow (a) About $6 billion

Adjusted Free Cash Flow (a) $6 - $7 billion

Capital spending $8 - $9.5 billion

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(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.

For full-year 2023, we expect adjusted EBIT of $9 billion to $11 billion, which assumes a seasonally adjusted annual rate (“SAAR”) of about 15 million in the United States and about 13 million in Europe.

We also expect adjusted free cash flow of about $6 billion, which assumes no distributions from Ford Credit.

Our outlook for 2023 assumes the headwinds and tailwinds below.

• An expected mild U.S.

recession and a moderate recession in Europe

• Higher incentives across the industry as supply and demand come back into balance

• Ford Credit EBT of about $1.3 billion, down about $1.4 billion, reflecting unfavorable lease residuals and credit losses and the non-recurrence of derivative gains

• Continuation of the strong dollar

• About $2 billion lower past service pension income

• Continued investments in growth, including in customer experience, connected services, and capital expenditures

• Improvement in the supply chain and industry volume

• Launch of our all-new Super Duty

• Lower cost of goods sold, including efficiencies in materials, commodities, logistics, and other parts of our industrial platform

Additionally, we will be negotiating a new contract with the UAW in the United States.

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

Cautionary Note on Forward-Looking Statements

Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

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

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

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

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

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

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

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

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

• Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, 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.

It is to be expected that there may be differences between projected and actual results.

Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise.

For additional discussion, see “Item 1A.

Risk Factors” above.

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

NON-GAAP FINANCIAL MEASURES THAT SUPPLEMENT GAAP MEASURES

We use both generally accepted accounting principles (“GAAP”) and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment business performance.

The non-GAAP measures listed below are intended to be considered by users as supplemental information to their equivalent GAAP measures, to aid investors in better understanding our financial results.

We believe that these non-GAAP measures provide useful perspective on underlying operating results and trends, and a means to compare our period-over-period results.

These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

These non-GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in items or events being adjusted.

• Company Adjusted EBIT (Most Comparable GAAP Measure:

Net Income/(Loss) Attributable to Ford) – Earnings before interest and taxes (EBIT) excludes interest on debt (excl.

Ford Credit Debt), taxes, and pre-tax special items.

This non-GAAP measure is useful to management and investors because it focuses on underlying operating results and trends, and improves comparability of our period-over-period results.

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

Our categories of pre-tax special items and the applicable significance guideline for each item (which may consist of a group of items related to a single event or action) are as follows:

Pre-Tax Special Item Significance Guideline

∘ Pension and OPEB remeasurement gains and losses ∘ No minimum

∘ 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

∘ 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;

generally $100 million or more for other items

When we provide guidance for adjusted EBIT, we do not provide guidance on a net income basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty, including gains and losses on pension and OPEB remeasurements and on investments in equity securities.

• Company Adjusted EBIT Margin (Most Comparable GAAP Measure:

Company Net Income/(Loss) Margin) – Company Adjusted EBIT margin is Company adjusted EBIT divided by Company revenue.

This non-GAAP measure is useful to management and investors because it allows users to evaluate our operating results aligned with industry reporting.

• Adjusted Earnings/(Loss) Per Share (Most Comparable GAAP Measure:

Earnings/(Loss) Per Share) – Measure of Company’s diluted net earnings/(loss) per share adjusted for impact of pre-tax special items (described above), tax special items, and restructuring impacts in noncontrolling interests.

The measure provides investors with useful information to evaluate performance of our business excluding items not indicative of earnings from ongoing operating activities.

When we provide guidance for adjusted earnings/(loss) per share, we do not provide guidance on an earnings/(loss) per share basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and OPEB remeasurement gains and losses.

• Adjusted Effective Tax Rate (Most Comparable GAAP Measure:

Effective Tax Rate) – Measure of Company’s tax rate excluding pre-tax special items (described above) and tax special items.

The measure provides an ongoing effective rate which investors find useful for historical comparisons and for forecasting.

When we provide guidance for adjusted effective tax rate, we do not provide guidance on an effective tax rate basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and OPEB remeasurement gains and losses.

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

• Company Adjusted Free Cash Flow (Most Comparable GAAP Measure:

Net Cash Provided By/(Used In) Operating Activities) – Measure of Company’s operating cash flow excluding Ford Credit’s operating cash flows.

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.

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

When we provide guidance for Company adjusted free cash flow, we do not provide guidance for net cash provided by/(used in) operating activities because the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, including cash flows related to the Company's exposures to foreign currency exchange rates and certain commodity prices (separate from any related hedges), Ford Credit's operating cash flows, and cash flows related to special items, including separation payments, each of which individually or in the aggregate could have a significant impact to our net cash provided by/(used in) our operating activities.

• Adjusted ROIC – Calculated as the sum of adjusted net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters.

Adjusted Return on Invested Capital (“Adjusted ROIC”) provides management and investors with useful information to evaluate the Company’s after-cash tax operating return on its invested capital for the period presented.

Adjusted net operating profit/(loss) after cash tax measures operating results less special items, interest on debt (excl.

Ford Credit Debt), and certain pension/OPEB costs.

Average invested capital is the sum of average balance sheet equity, debt (excl.

Ford Credit Debt), and net pension/OPEB liability.

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

NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

The following tables show our Non-GAAP financial measure reconciliations.

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

2020 2021 2022

Net income/(loss) attributable to Ford (GAAP) $ (1,279) $ 17,937 $ (1,981)

Income/(Loss) attributable to noncontrolling interests 3 (27) (171)

Net income/(loss) $ (1,276) $ 17,910 $ (2,152)

(Provision for)/Benefit from income taxes (a) (160) 130 864

Income/(Loss) before income taxes $ (1,116) $ 17,780 $ (3,016)

Special items pre-tax (2,003) 9,583 (12,172)

Income/(Loss) before special items pre-tax $ 887 $ 8,197 $ 9,156

Interest on debt (1,649) (1,803) (1,259)

Adjusted EBIT (Non-GAAP) $ 2,536 $ 10,000 $ 10,415

Revenue ($B) $ 127.1 $ 136.3 $ 158.1

Net income/(loss) margin (%) (1.0) % 13.2 % (1.3) %

Adjusted EBIT margin (%) 2.0 % 7.3 % 6.6 %

(a) 2020 includes an expense to establish valuation allowances primarily against U.S.

2021 reflects a benefit from recognizing deferred tax assets and favorable changes in our valuation allowances offset by the tax consequences of unrealized gains on marketable securities;

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

Earnings/(Loss) per Share Reconciliation to Adjusted Earnings/(Loss) per Share

2020 2021 2022

Diluted After-Tax Results ($M)

Diluted after-tax results (GAAP) $ (1,279) $ 17,937 $ (1,981)

Impact of pre-tax and tax special items (2,724) 11,507 (9,599)

Adjusted net income/(loss) - Diluted (Non-GAAP) $ 1,445 $ 6,430 $ 7,618

Basic and Diluted Shares (M)

Basic shares (average shares outstanding) 3,973 3,991 4,014

Net dilutive options, unvested restricted stock units, unvested restricted stock shares, and convertible debt 29 43 42

Diluted shares 4,002 4,034 4,056

Earnings/(Loss) per share - diluted (GAAP) (a) $ (0.32) $ 4.45 $ (0.49)

Net impact of adjustments (0.68) 2.86 (2.37)

Adjusted earnings per share - diluted (Non-GAAP) $ 0.36 $ 1.59 $ 1.88

(a) In 2020 and 2022, there were 29 million and 42 million shares, respectively, excluded from the calculation of diluted earnings/(loss) per share, 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

2020 2021 2022

Pre-Tax Results ($M)

Income/(Loss) before income taxes (GAAP) $ (1,116) $ 17,780 $ (3,016)

Impact of special items (2,003) 9,583 (12,172)

Adjusted earnings before taxes (Non-GAAP) $ 887 $ 8,197 $ 9,156

(Provision for)/Benefit from income taxes (GAAP) $ (160) $ 130 $ 864

Impact of special items (a) (721) 1,924 2,573

Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ 561 $ (1,794) $ (1,709)

Effective tax rate (GAAP) (14.3) % (0.7) % 28.6 %

Adjusted effective tax rate (Non-GAAP) (63.2) % 21.9 % 18.7 %

(a) 2020 includes an expense to establish valuation allowances primarily against U.S.

2021 reflects a benefit from recognizing deferred tax assets and favorable changes in our valuation allowances offset by the tax consequences of unrealized gains on marketable securities;

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

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

2020 2021 2022

Net cash provided by/(used in) operating activities (GAAP) $ 24,269 $ 15,787 $ 6,853

Items not included in Company Adjusted Free Cash Flows

Ford Credit operating cash flows (a) $ 21,592 $ 15,293 $ (5,416)

Funded pension contributions (570) (773) (567)

Global Redesign (including separations) (b) (503) (1,855) (835)

Ford Credit tax payments/(refunds) under tax sharing agreement (a) 477 15 147

Other, net (583) (421) (58)

Items included in Company Adjusted Free Cash Flows

Company excluding Ford Credit capital spending $ (5,702) $ (6,183) $ (6,511)

Ford Credit distributions (a) 3,290 7,500 2,100

Settlement of derivatives (171) (255) (90)

Company adjusted free cash flow (Non-GAAP) (a) $ 1,273 $ 4,590 $ 9,081

(a) 2020 amounts have been updated as a result of the adoption of ASU 2019-12, Simplifying the Accounting for Income Taxes .

(b) 2021 and 2022 Global Redesign excludes cash flows reported in investing activities.

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

2022 SUPPLEMENTAL INFORMATION

The tables below provide supplemental consolidating financial information and other financial information.

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

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

Selected Cash Flow Information.

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

For the Year Ended December 31, 2022

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

Net income/(loss) $ (4,361) $ 2,209 $ — $ (2,152)

Depreciation and tooling amortization 5,361 2,281 — 7,642

Other amortization 62 (1,211) — (1,149)

Held for sale impairment charges 32 — — 32

Brazil manufacturing exit non-cash charges (excluding accelerated depreciation of $17)

(82) — — (82)

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

Provision for/(Benefit from) credit and insurance losses 11 35 — 46

Pension and OPEB expense/(income) (378) — — (378)

Equity method investment dividends received in excess of (earnings)/losses and impairments 3,321 3 — 3,324

Foreign currency adjustments (273) 246 — (27)

Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments 7,440 78 — 7,518

Net (gain)/loss on changes in investments in affiliates 146 1 — 147

Stock compensation 325 11 — 336

Provision for deferred income taxes (2,234) 324 — (1,910)

Decrease/(Increase) in finance receivables (wholesale and other) — (10,560) — (10,560)

Decrease/(Increase) in intersegment receivables/payables 274 (274) — —

Decrease/(Increase) in accounts receivable and other assets (984) (199) — (1,183)

Decrease/(Increase) in inventory (2,576) — — (2,576)

Increase/(Decrease) in accounts payable and accrued and other liabilities

7,098 170 — 7,268

Other 788 (352) — 436

Interest supplements and residual value support to Ford Credit

(1,836) 1,836 — —

Net cash provided by/(used in) operating activities $ 12,269 $ (5,416) $ — $ 6,853

Cash flows from investing activities

Capital spending $ (6,808) $ (58) $ — $ (6,866)

Acquisitions of finance receivables and operating leases — (45,533) — (45,533)

Collections of finance receivables and operating leases — 46,276 — 46,276

Proceeds from sale of business 449 — — 449

Purchases of marketable securities and other investments (13,880) (3,578) — (17,458)

Sales and maturities of marketable securities and other investments 14,956 4,161 — 19,117

Settlements of derivatives (90) 184 — 94

Capital contributions to equity method investments (733) (5) — (738)

Other 310 2 — 312

Investing activity (to)/from other segments 2,130 (30) (2,100) —

Net cash provided by/(used in) investing activities $ (3,666) $ 1,419 $ (2,100) $ (4,347)

Cash flows from financing activities

Cash payments for dividends and dividend equivalents $ (2,009) $ — $ — $ (2,009)

Purchases of common stock (484) — — (484)

Net changes in short-term debt 85 5,375 — 5,460

Proceeds from issuance of long-term debt 3,295 42,175 — 45,470

Payments on long-term debt (3,897) (41,758) — (45,655)

Other (192) (79) — (271)

Financing activity to/(from) other segments — (2,100) 2,100 —

Net cash provided by/(used in) financing activities $ (3,202) $ 3,613 $ 2,100 $ 2,511

Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (227) $ (187) $ — $ (414)

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

Selected Income Statement Information.

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

For the Year Ended December 31, 2022

Company excluding Ford Credit Ford Credit Consolidated

Revenues $ 149,079 $ 8,978 $ 158,057

Total costs and expenses (a) 145,295 6,486 151,781

Operating income/(loss) 3,784 2,492 6,276

Interest expense on Company debt excluding Ford Credit 1,259 — 1,259

Other income/(loss), net (5,288) 138 (5,150)

Equity in net income/(loss) of affiliated companies (2,910) 27 (2,883)

Income/(Loss) before income taxes (5,673) 2,657 (3,016)

Provision for/(Benefit from) income taxes (1,312) 448 (864)

Net income/(loss) (4,361) 2,209 (2,152)

Income/(loss) attributable to noncontrolling interests (171) — (171)

Net income/(loss) attributable to Ford Motor Company $ (4,190) $ 2,209 $ (1,981)

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

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

Selected Balance Sheet Information.

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

December 31, 2022

Assets Company excluding

Ford Credit Ford Credit Eliminations Consolidated

Cash and cash equivalents $ 14,741 $ 10,393 $ — $ 25,134

Marketable securities 17,443 1,493 — 18,936

Ford Credit finance receivables, net — 38,720 — 38,720

Trade and other receivables, net 4,575 11,154 — 15,729

Inventories 14,080 — — 14,080

Assets held for sale 97 — — 97

Other assets 2,527 1,253 — 3,780

Receivable from other segments 49 1,462 (1,511) —

Total current assets 53,512 64,475 (1,511) 116,476

Ford Credit finance receivables, net — 49,903 — 49,903

Net investment in operating leases 951 21,821 — 22,772

Net property 37,032 233 — 37,265

Equity in net assets of affiliated companies 2,678 120 — 2,798

Deferred income taxes 15,394 158 — 15,552

Other assets 9,890 1,228 — 11,118

Receivable from other segments — 16 (16) —

Total assets $ 119,457 $ 137,954 $ (1,527) $ 255,884

Payables $ 24,507 $ 1,098 $ — $ 25,605

Other liabilities and deferred revenue 18,611 2,486 — 21,097

Company excluding Ford Credit debt payable within one year 730 — — 730

Ford Credit debt payable within one year — 49,434 — 49,434

Payable to other segments 1,511 — (1,511) —

Total current liabilities 45,359 53,018 (1,511) 96,866

Other liabilities and deferred revenue 22,964 2,533 — 25,497

Company excluding Ford Credit long-term debt 19,200 — — 19,200

Ford Credit long-term debt — 69,605 — 69,605

Deferred income taxes 628 921 — 1,549

Payable to other segments 16 — (16) —

Total liabilities $ 88,167 $ 126,077 $ (1,527) $ 212,717

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

Selected Other Information.

At December 31, 2021, total equity attributable to Ford was $48.5 billion, an increase of $17.8 billion compared with December 31, 2020.

At December 31, 2022, total equity attributable to Ford was $43.2 billion, a decrease of $5.3 billion compared with December 31, 2021.

The detail for the changes is shown below (in billions):

2021 vs 2020 Increase/

(Decrease) 2022 vs 2021 Increase/

Net income/(loss) $ 17.9 $ (2.0)

Shareholder distributions (0.4) (2.5)

Other comprehensive income/(loss) — (1.0)

Adoption of accounting standards — —

Common stock issued (including share-based compensation impacts) 0.3 0.2

Total $ 17.8 $ (5.3)

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

CRITICAL ACCOUNTING ESTIMATES

We consider an accounting estimate to be critical if:

(1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors.

In addition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above.

Changes in estimates used in these and other items could have a material impact on our financial statements.

Warranties and Field Service Actions

Nature of Estimates Required.

We provide base warranties on the products we sell for specific periods of time and/or mileage, which vary depending upon the type of product and the geographic location of its sale.

Separately, we also periodically perform field service actions related to safety recalls, emission recalls, and other product campaigns.

Pursuant to these warranties and field service actions, we will repair, replace, or adjust parts on a vehicle that are defective in factory-supplied materials or workmanship.

We accrue the estimated cost of both base warranty coverages and field service actions at the time of sale.

In addition, from time to time, we issue extended warranties at our expense, the estimated cost of which is accrued at the time of issuance.

Assumptions and Approach Used.

We establish our estimate of base warranty obligations using a patterned estimation model.

We use historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year.

We reevaluate our estimate of base warranty obligations on a regular basis.

Experience has shown that initial data for any given model year may be volatile;

therefore, our process relies on long-term historical averages until sufficient data are available.

With actual experience, we use the data to update the historical averages.

We then compare the resulting accruals with present spending rates to assess whether the balances are adequate to meet expected future obligations.

Based on this data, we update our estimates as necessary.

Field service actions may occur in periods beyond the base warranty coverage period.

We establish our estimates of field service action obligations using a patterned estimation model.

We use historical information regarding the nature, frequency, severity, and average cost of claims for each model year.

We assess our obligation for field service actions on a regular basis using actual claims experience and update our estimates as necessary.

Due to the uncertainty and potential volatility of the factors used in establishing our estimates, changes in our assumptions could materially affect our financial condition and results of operations.

See Note 25 of the Notes to the Financial Statements for information regarding warranty and field service action costs.

Pensions and Other Postretirement Employee Benefits

Nature of Estimates Required.

The estimation of our defined benefit pension and OPEB plan obligations and expenses requires that we make use of estimates of the present value of the projected future payments to all participants, taking into consideration the likelihood of potential future events, such as demographic experience and health care cost increases.

Plan obligations and expenses are based on existing retirement plan provisions.

No assumption is made regarding any potential future changes to benefit provisions beyond those to which we are presently committed (e.g., in existing labor contracts).

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

Assumptions and Approach Used.

The assumptions used in developing the required estimates include the following key factors:

• Discount rates.

Our discount rate assumptions are based primarily on the results of cash flow matching analyses, which match the future cash outflows for each major plan to a yield curve based on high-quality bonds specific to the country of the plan.

Benefit payments are discounted at the rates on the curve to determine the year-end obligations.

• Expected long-term rate of return on plan assets.

Our expected long-term rate of return considers inputs from a range of advisors for capital market returns, inflation, bond yields, and other variables, adjusted for specific aspects of our investment strategy by plan.

Historical returns also are considered when appropriate.

The assumption is based on consideration of all inputs, with a focus on long-term trends to avoid short-term market influences.

• Salary growth.

Our salary growth assumption reflects our actual experience, long-term outlook, and assumed inflation.

Our inflation assumption is based on an evaluation of external market indicators, including real gross domestic product growth and central bank inflation targets.

• Expected contributions.

Our expected amount and timing of contributions are based on an assessment of minimum requirements, cash availability, and other considerations (e.g., funded status, avoidance of regulatory premiums and levies, and tax efficiency).

• Retirement rates.

Retirement rates are developed to reflect actual and projected plan experience.

• Mortality rates.

Mortality rates are developed to reflect actual and projected plan experience.

• Health care cost trends .

Our health care cost trend assumptions are developed based on historical cost data, the near-term outlook, and an assessment of likely long-term trends.

Assumptions are set at each year-end and are generally not changed during the year unless there is a major plan event, such as a curtailment or settlement that would trigger a plan remeasurement.

See Note 17 of the Notes to the Financial Statements for more information regarding pension and OPEB costs and assumptions.

Pension Plans

Effect of Actual Results .

The year-end 2022 weighted average discount rate was 5.51% for U.S.

plans and 4.42% for non-U.S.

plans, reflecting increases of 260 and 267 basis points, respectively, compared with year-end 2021.

In 2022, the U.S.

actual return on assets was negative 21.20%, which was lower than the expected long-term rate of return of 5.75%.

actual return on assets was negative 25.40%, which was lower than the expected long-term rate of return of 3.29%.

The lower returns are explained by losses on fixed income and growth assets, both of which were consistent with broader market performance.

In total, higher rates and pension asset losses, in addition to demographic and other updates, resulted in a net remeasurement loss of $1.3 billion, which has been recognized within net periodic benefit cost and reported as a special item.

For 2023, the expected long-term rate of return on assets is 6.25% for U.S.

plans, up 50 basis points from 2022, and 4.13% for non-U.S.

plans, up 84 basis points compared with a year ago, reflecting higher nominal risk-free rates and a higher consensus on capital market return expectations from advisors.

De-risking Strategy .

We employ a broad de-risking strategy for our global funded plans that increases the matching characteristics of our assets relative to our obligation as funded status improves.

Changes in interest rates, which directly influence changes in discount rates, in addition to other factors have a significant impact on the value of our pension obligation and fixed income asset portfolio.

Our de-risking strategy has increased the allocation to fixed income investments and reduced our funded status sensitivity to changes in interest rates.

Changes in interest rates should result in offsetting effects in the value of our pension obligation and the value of the fixed income asset portfolio.

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

Sensitivity Analysis.

The December 31, 2022 pension funded status and 2023 expense are affected by year-end 2022 assumptions.

Sensitivities to these assumptions may be asymmetric and are specific to the time periods noted.

The effects of changes in the factors that generally have the largest impact on year-end funded status and pension expense are discussed below.

Discount rates and interest rates have the largest impact on our obligations and fixed income assets.

The table below estimates the effect on our funded status of an increase/decrease in discount rates and interest rates (in millions):

Point Change Increase/(Decrease) in

December 31, 2022 Funded Status

Plans Non-U.S.

Discount rate - obligation +/- 100 bps $2,700/$(3,200) $2,500/$(3,100)

Interest rate - fixed income assets +/- 100 (2,600)/3,100 (1,700)/2,000

Net impact on funded status $100/$(100) $800/$(1,100)

The fixed income asset sensitivity shown excludes other fixed income return components (e.g., changes in credit spreads, bond coupon and active management excess returns), and growth asset returns.

Other factors that affect net funded status (e.g., contributions) are not reflected.

Interest rates and the expected long-term rate of return on assets have the largest effect on pension expense.

These assumptions are generally set at each year-end for expense recorded throughout the following year.

The table below estimates the effect on pension expense of a higher/lower assumption for these factors (in millions):

Point Change Increase/(Decrease) in

2023 Pension Expense

Plans Non-U.S.

Interest rate - service cost and interest cost +/- 25 bps $25/$(25) $10/$(10)

Expected long-term rate of return on assets +/- 25 (80)/80 (50)/50

The effect of changing multiple factors simultaneously cannot be calculated by combining the individual sensitivities.

The sensitivity of pension expense to a change in discount rate assumptions may not be linear.

What changed 10-K

Item 5. Market for Registrant’s Common Equity