What changed in this filing

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Item 1. Financial Statements

2024-04-25 compared with 2023-10-27 · 359 added, 438 removed, 267 unchanged (75% of the section changed)

2 unchanged sentences

NOTES TO THE FINANCIAL STATEMENTS

EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES

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

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

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

Company Excluding Ford Credit

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

Below are actions that have been initiated:

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

A sale of the Taubaté plant was completed in the second quarter of 2023

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

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

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

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

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

The following table summarizes the activities for the periods ended September 30, which are recorded in Other liabilities and deferred revenue (in millions):

Third Quarter First Nine Months

2022 2023 2022 2023

Beginning balance $ 691 $ 1,277 $ 950 $ 588

Changes in accruals (a) 329 148 445 1,067

Payments ( 188 ) ( 298 ) ( 539 ) ( 493 )

Foreign currency translation and other ( 21 ) ( 54 ) ( 45 ) ( 89 )

Ending balance $ 811 $ 1,073 $ 811 $ 1,073

(a) Excludes pension costs of $ 11 million and $ 58 million in the third quarter of 2022 and 2023, respectively, and $ 27 million and $ 117 million in the first nine months of 2022 and 2023, respectively.

We recorded $ 35 million and $ 101 million in the third quarter and first nine months of 2022, respectively, for accelerated depreciation, impairment of our India assets, and other non-cash items and recognized a $ 38 million pre-tax net gain on sale of assets during the first nine months of 2022.

We recorded $ 0 and $ 50 million in the third quarter and first nine months of 2023, respectively, for accelerated depreciation and other non-cash items.

In addition, we recognized a $ 4 million and $ 23 million pre-tax net gain on sale of assets in the third quarter and first nine months of 2023, respectively.

We recorded costs of $ 535 million and $ 1.2 billion in the first nine months of 2022 and 2023, respectively, related to the actions above.

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

In October 2023, we announced that 1,000 positions will be retained as part of a planned new technology center at our Saarlouis facility in Germany after 2025.

Accordingly, we will engage in discussions with our Social Partners related to the remaining affected positions at the Saarlouis Body and Assembly Plant.

Our plans for the site beyond the 1,000 positions are uncertain, and there are no existing employee benefit programs covering non-voluntary separations.

Therefore, potential future charges are not included in the estimate of total charges to be incurred in 2023 but could be significant once decisions are made.

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

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

EMPLOYEE SEPARATION ACTIONS AND EXIT AND DISPOSAL ACTIVITIES (Continued)

Accumulated foreign currency translation losses included in Accumulated other comprehensive income/(loss) at September 30, 2023 of $ 223 million are associated with Ford Credit’s investments in Brazil and Argentina that have ceased operations.

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

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

ACQUISITIONS AND DIVESTITURES

Company Excluding Ford Credit

Argo AI, LLC (“Argo AI”).

In the third quarter of 2022, Ford 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.

We determined that Argo AI no longer had value as a going concern, and as a result, we reassessed the carrying value of our investment as of September 30, 2022.

Our valuation assumed an orderly conclusion of operations at Argo AI, in which the cash required to satisfy the remaining obligations would consume all of Argo AI’s remaining capital.

In addition, we assessed whether Argo AI’s technology components have value in isolation, and we concluded that the cost to integrate into currently anticipated technology ecosystems would be prohibitive.

Accordingly, we recorded a $ 2.7 billion pre-tax impairment in the third quarter of 2022.

The non-cash charge was reported in Equity in net income/(loss) of affiliated companies .

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

At December 31, 2022, the carrying value of our equity method investment in Argo AI was $ 0 , and we had $ 65 million in Other liabilities and deferred revenue related to our funding commitment for our share of Argo AI’s expenses previously incurred.

Argo AI is in the process of winding down operations, and in the second quarter of 2023, we settled our expected funding commitment.

Sanand, India (“Sanand”) Plants.

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

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

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

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

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

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

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

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

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

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

ACQUISITIONS AND DIVESTITURES (Continued)

Ford Romania S.R.L.

(“Ford Romania”).

On July 1, 2022, we completed the sale of Ford Romania, our wholly-owned Romanian manufacturing subsidiary, to Ford Otosan, a joint venture in which Ford has a 41 % ownership share.

The transaction resulted in deconsolidation of our Ford Romania subsidiary in the third quarter of 2022.

The fair value of consideration received, consisting of cash and a note receivable, approximated the carrying value of Ford Romania at the time of sale.

The Ford Romania plant in Craiova, Romania continues to manufacture Ford-branded vehicles for Ford and Ford Otosan.

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

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

Skinny Labs Inc., dba Spin (“Spin”).

On April 1, 2022, we completed the sale of Spin, our wholly-owned micro-mobility provider, to TIER Mobility SE, a German-based micro-mobility provider, which resulted in the deconsolidation of our Spin subsidiary in the second quarter of 2022.

In exchange for our shares of Spin, we received preferred equity in TIER Mobility SE.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

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

Third Quarter First Nine Months

2022 2023 2022 2023

Foreign currency translation

Beginning balance $ ( 6,355 ) $ ( 5,649 ) $ ( 5,487 ) $ ( 6,416 )

Gains/(Losses) on foreign currency translation ( 996 ) ( 368 ) ( 2,063 ) 393

Tax/(Tax benefit) (a) 36 ( 1 ) 5 ( 11 )

Net gains/(losses) on foreign currency translation ( 1,032 ) ( 367 ) ( 2,068 ) 404

(Gains)/Losses reclassified from AOCI to net income (b) 80 ( 2 ) 248 ( 6 )

Other comprehensive income/(loss), net of tax (c) ( 952 ) ( 369 ) ( 1,820 ) 398

Ending balance $ ( 7,307 ) $ ( 6,018 ) $ ( 7,307 ) $ ( 6,018 )

Marketable securities

Beginning balance $ ( 355 ) $ ( 376 ) $ ( 19 ) $ ( 442 )

Gains/(Losses) on available for sale securities ( 199 ) 30 ( 647 ) 98

Tax/(Tax benefit) ( 47 ) 7 ( 153 ) 24

Net gains/(losses) on available for sale securities ( 152 ) 23 ( 494 ) 74

(Gains)/Losses reclassified from AOCI to net income 5 6 13 26

Tax/(Tax benefit) 1 1 3 6

Net (gains)/losses reclassified from AOCI to net income (b) 4 5 10 20

Other comprehensive income/(loss), net of tax ( 148 ) 28 ( 484 ) 94

Ending balance $ ( 503 ) $ ( 348 ) $ ( 503 ) $ ( 348 )

Derivative instruments

Beginning balance $ ( 143 ) $ ( 295 ) $ ( 193 ) $ 129

Gains/(Losses) on derivative instruments 445 430 475 ( 61 )

Tax/(Tax benefit) 105 111 112 ( 16 )

Net gains/(losses) on derivative instruments 340 319 363 ( 45 )

(Gains)/Losses reclassified from AOCI to net income 35 ( 3 ) 73 ( 69 )

Tax/(Tax benefit) 8 ( 9 ) 19 ( 15 )

Net (gains)/losses reclassified from AOCI to net income (d) 27 6 54 ( 54 )

Other comprehensive income/(loss), net of tax 367 325 417 ( 99 )

Ending balance $ 224 $ 30 $ 224 $ 30

Pension and other postretirement benefits

Beginning balance $ ( 2,620 ) $ ( 2,604 ) $ ( 2,640 ) $ ( 2,610 )

Amortization and recognition of prior service costs/(credits)

Tax/(Tax benefit) 1 2 4 5

Net prior service costs/(credits) reclassified from AOCI to net income

Translation impact on non-U.S.

Other comprehensive income/(loss), net of tax 13 7 33 13

Ending balance $ ( 2,607 ) $ ( 2,597 ) $ ( 2,607 ) $ ( 2,597 )

Total AOCI ending balance at September 30 $ ( 10,193 ) $ ( 8,933 ) $ ( 10,193 ) $ ( 8,933 )

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

However, we have made elections to tax certain non-U.S.

operations simultaneously in U.S.

tax returns, and have recorded deferred taxes for temporary differences that will reverse, independent of repatriation plans, in U.S.

Taxes or tax benefits resulting from foreign currency translation of the temporary differences are recorded in Other comprehensive income/(loss), net of tax .

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

(c) Excludes a $ 3 million gain and a $ 1 million loss in the third quarter and first nine months of 2022, respectively, and a $ 2 million loss and $ 2 million gain in the third quarter and first nine months of 2023, respectively, related to noncontrolling interest.

(d) Reclassified to Cost of sales .

During the next twelve months, we expect to reclassify existing net gains on cash flow hedges of $ 97 million (see Note 15).

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

VARIABLE INTEREST ENTITIES

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

Our maximum exposure to any potential losses associated with these unconsolidated affiliates is limited to our equity investments, accounts receivable, loans, and guarantees and was $ 1.0 billion and $ 3.0 billion at December 31, 2022 and September 30, 2023, respectively.

Of these amounts, guarantees of $ 113 million at both December 31, 2022 and September 30, 2023 related to certain obligations of our VIEs also are included in Note 20.

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

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

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

As of September 30, 2023, Ford has contributed to BOSK $ 2.2 billion of its agreed capital contribution of up to $ 6.6 billion through 2026, subject to any adjustments agreed to by the parties.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

Commitments and contingencies primarily consist of guarantees and indemnifications, litigation and claims, and warranty and field service actions.

Guarantees and Indemnifications

Financial Guarantees.

Financial guarantees and indemnifications are recorded at fair value at their inception.

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

The maximum potential payments for financial guarantees were $ 518 million and $ 561 million at December 31, 2022 and September 30, 2023, respectively.

The carrying value of recorded liabilities related to financial guarantees was $ 31 million and $ 39 million at December 31, 2022 and September 30, 2023, respectively.

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

Expiration dates vary through 2037, and guarantees will terminate on payment and/or cancellation of the underlying obligation.

A payment by us would be triggered by failure of the joint venture or other third party to fulfill its obligation covered by the guarantee.

In some circumstances, we are entitled to recover from a third party amounts paid by us under the guarantee.

Non-Financial Guarantees.

Non-financial guarantees and indemnifications are recorded at fair value at their inception.

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

The maximum potential payments for non-financial guarantees were $ 273 million and $ 8 million at December 31, 2022 and September 30, 2023, respectively.

The carrying value of recorded liabilities related to non-financial guarantees was $ 0 at both December 31, 2022 and September 30, 2023.

Included in the $ 8 million of maximum potential payments at September 30, 2023 are guarantees for the resale value of vehicles sold in certain arrangements to daily rental companies.

The maximum potential payment of $ 2 million as of September 30, 2023 represents the total proceeds we guarantee the rental company will receive on resale.

Reflecting our present estimate of proceeds the rental companies will receive on resale from third parties, we do not expect we will have to pay under the guarantee.

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

These indemnifications might include and are not limited to claims relating to any of the following:

environmental, tax, and shareholder matters;

intellectual property rights;

power generation contracts;

governmental regulations and employment-related matters;

dealer, supplier, and other commercial contractual relationships;

and financial matters, such as securitizations.

Performance under these indemnities generally would be triggered by a breach of contract claim brought by a counterparty, including a joint venture or alliance partner, or a third-party claim.

While some of these indemnifications are limited in nature, many of them do not limit potential payment.

Therefore, we are unable to estimate a maximum amount of future payments that could result from claims made under these unlimited indemnities.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES (Continued)

Litigation and Claims

Various legal actions, proceedings, and claims (generally, “matters”) are pending or may be instituted or asserted against us.

These include, but are not limited to, matters arising out of alleged defects in our products;

product warranties;

governmental regulations relating to safety, emissions, and fuel economy or other matters;

government incentives;

tax matters, including trade and customs;

alleged illegal acts resulting in fines or penalties;

financial services;

employment-related matters;

dealer, supplier, and other contractual relationships;

intellectual property rights;

environmental matters;

shareholder or investor matters;

and financial reporting matters.

Certain of the pending legal actions are, or purport to be, class actions.

Some of the matters involve or may involve claims for compensatory, punitive, or antitrust or other treble damages in very large amounts, or demands for field service actions, environmental remediation programs, sanctions, loss of government incentives, assessments, or other relief, which, if granted, would require very large expenditures.

The extent of our financial exposure to these matters is difficult to estimate.

Many matters do not specify a dollar amount for damages, and many others specify only a jurisdictional minimum.

To the extent an amount is asserted, our historical experience suggests that in most instances the amount asserted is not a reliable indicator of the ultimate outcome.

We accrue for matters when losses are deemed probable and reasonably estimable.

In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood that we will prevail, and the severity of any potential loss.

We reevaluate and update our accruals as matters progress over time.

For the majority of matters, which generally arise out of alleged defects in our products, we establish an accrual based on our extensive historical experience with similar matters.

We do not believe there is a reasonably possible outcome materially in excess of our accrual for these matters.

For the remaining matters, where our historical experience with similar matters is of more limited value (i.e., “non-pattern matters”), we evaluate the matters primarily based on the individual facts and circumstances.

For non-pattern matters, we evaluate whether there is a reasonable possibility of a material loss in excess of any accrual that can be estimated.

Our estimate of reasonably possible loss in excess of our accruals for all material matters currently reflects indirect tax and customs matters, for which we estimate the aggregate risk to be a range of up to a bout $ 1.4 billion.

In addition, we have a reasonably possible risk of loss related to supplier claims for an EV program in Europe.

Because the matter is preliminary, we cannot estimate the amount of the potential loss or predict the outcome and cannot provide reasonable assurance that it will not have a material adverse effect on us.

As noted, the litigation process is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance.

Our assessments are based on our knowledge and experience, but the ultimate outcome of any matter could require payment substantially in excess of the amount that we have accrued and/or disclosed.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES (Continued)

Warranty and Field Service Actions

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

We establish our estimate of base warranty obligations using a patterned estimation model, using historical information regarding the nature, frequency, and average cost of claims for each vehicle line by model year.

We establish our estimates of field service action obligations using a patterned estimation model, using historical information regarding the nature, frequency, severity, and average cost of claims for each model year.

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.

Warranty and field service action obligations are reported in Other liabilities and deferred revenue .

We reevaluate the adequacy of our accruals on a regular basis.

We recognize the benefit from a recovery of the costs associated with our warranty and field service actions when specifics of the recovery have been agreed with our supplier and the amount of recovery is virtually certain.

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

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

First Nine Months

Beginning balance $ 8,451 $ 9,193

Payments made during the period ( 3,063 ) ( 3,481 )

Changes in accrual related to warranties issued during the period 2,806 3,331

Changes in accrual related to pre-existing warranties 449 2,016

Foreign currency translation and other ( 241 ) ( 274 )

Ending balance $ 8,402 $ 10,785

Changes to our estimated costs are reported as changes in accrual related to pre-existing warranties in the table above.

Our estimate of reasonably possible costs in excess of our accruals for material field service actions and customer satisfaction actions is a range of up to about $ 1.5 billion in the aggregate.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

SEGMENT INFORMATION

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

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

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

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

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

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

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

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

Ford Blue Segment

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

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

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

Ford Blue also includes:

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

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

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

• All sales of vehicles manufactured and sold to other OEMs

Ford Model e Segment

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

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

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

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

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

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

SEGMENT INFORMATION (Continued)

Ford Pro Segment

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

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

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

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

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

Ford Pro operates in North America and Europe.

Ford Next Segment

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

Ford Credit Segment

The Ford Credit segment is comprised of the Ford Credit business on a consolidated basis, which is primarily vehicle-related financing and leasing activities.

Corporate Other

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.

Corporate Other assets include:

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

Interest on Debt

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

Special Items

Special Items are presented as a separate reconciling item.

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

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

We also report these special items separately to help investors track amounts related to these activities and to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results.

Financial Statements (Continued)

FORD MOTOR COMPANY AND SUBSIDIARIES

NOTES TO THE FINANCIAL STATEMENTS

SEGMENT INFORMATION (Continued)

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

33 unchanged sentences

SEGMENT INFORMATION (Continued)

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

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

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

1 unchanged sentence

on Debt Special Items Eliminations/Adjustments Total

Third Quarter 2022

First Quarter 2023

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

2 unchanged sentences

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

Equity in net income/(loss) of affiliated companies 80 ( 4 ) 109 ( 87 ) 8 — — ( 2,732 ) (c) — ( 2,626 )

Total assets 55,897 4,407 2,139 415 127,088 57,972 — — ( 999 ) (d) 246,919

Third Quarter 2023

External revenues $ 25,587 $ 1,758 $ 13,829 $ 1 $ 2,625 $ 1 $ — $ — $ — $ 43,801

Intersegment revenues (a) 8,925 241 — — — — — — ( 9,166 ) —

Total revenues $ 34,512 $ 1,999 $ 13,829 $ 1 $ 2,625 $ 1 $ — $ — $ ( 9,166 ) $ 43,801

Income/(loss) before income taxes $ 1,718 $ ( 1,329 ) $ 1,654 $ ( 17 ) $ 358 $ ( 186 ) $ ( 324 ) $ ( 487 ) (e) $ — $ 1,387

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

Total assets 60,282 10,966 3,137 235 142,615 53,097 — — ( 2,259 ) (d) 268,073

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

Other Interest

on Debt Special Items Eliminations/Adjustments Total

First Nine Months 2022

External revenues $ 68,468 $ 3,693 $ 35,033 $ 120 $ 6,724 $ 20 $ — $ — $ — $ 114,058

Intersegment revenues (a) 25,879 93 — — — — — — ( 25,972 ) —

Total revenues $ 94,347 $ 3,786 $ 35,033 $ 120 $ 6,724 $ 20 $ — $ — $ ( 25,972 ) $ 114,058

Income/(Loss) before income taxes $ 5,298 $ ( 1,502 ) $ 1,772 $ ( 707 ) $ 2,466 $ 524 $ ( 941 ) $ ( 11,092 ) (b) $ — $ ( 4,182 )

Equity in net income/(loss) of affiliated companies 212 ( 9 ) 278 ( 245 ) 18 1 — ( 2,856 ) (c) — ( 2,601 )

First Nine Months 2023

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

First Quarter 2024

External revenues $ 21,754 $ 115 $ 18,019 $ 1 $ 2,887 $ 1 $ — $ — $ — $ 42,777

1 unchanged sentence

Total revenues $ 33,495 $ 136 $ 18,019 $ 1 $ 2,887 $ 1 $ — $ — $ ( 11,762 ) $ 42,777

Income/(loss) before income taxes $ 6,649 $ ( 3,131 ) $ 5,411 $ ( 87 ) $ 1,051 $ ( 530 ) $ ( 936 ) $ ( 2,593 ) (e) $ — $ 5,834

Equity in net income/(loss) of affiliated companies 249 ( 15 ) 456 ( 23 ) 23 1 — ( 422 ) (f) — 269

Income/(loss) before income taxes $ 905 $ ( 1,320 ) $ 3,008 $ ( 9 ) $ 326 $ ( 147 ) $ ( 278 ) $ ( 873 ) (d) $ — $ 1,612

Equity in net income/(loss) of affiliated companies 62 ( 19 ) 117 ( 1 ) 8 — — — — 167

Total assets 61,372 14,996 3,659 177 148,901 48,613 — — ( 3,377 ) (c) 274,341

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

(b) Primarily reflects gains/(losses) on our Rivian investment and the impairment of our Argo AI equity method investment.

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

(e) Primarily reflects restructuring actions, mark-to-market adjustments for our global pension and OPEB plans, and an accrual for the Transit Connect customs matter.

(f) Primarily reflects our share of charges from an equity method investment resulting from Ford's ongoing restructuring actions in China.

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

(d) Primarily reflects restructuring actions in Europe, the extended duration of the EV program changeover at Oakville, and buyouts for hourly employees in North America.

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

RECENT DEVELOPMENTS

UAW and Unifor

On September 14, 2023, our collective bargaining agreement with the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) in the United States expired.

Following the expiration of the agreement, negotiations with the UAW continued;

however, UAW strikes at our Michigan Assembly Plant (where we produce the Ranger and Bronco), Chicago Assembly Plant (where we produce the Explorer and Aviator), and Kentucky Truck Plant (where we produce the Super Duty, Expedition, and Navigator) led to the cessation of production at those facilities and impacted operations at additional Ford plants that support or rely on the production operations at the three strike locations.

In the third quarter of 2023, the UAW strike had an adjusted EBIT impact of about $100 million.

Although a tentative agreement has been reached with the UAW, it is still subject to union ratification.

As a result, the ultimate impact on our business, including our suppliers, remains uncertain and could have a substantial adverse effect on our financial results for full-year 2023.

Overall, we expect the unit impact from the strike for Ford as of October 26, 2023 to be around 80,000 units, which would reduce 2023 adjusted EBIT by about $1.3 billion.

Risk Factors in our 2022 Form 10-K Report and as updated by our subsequent filings with the SEC for additional discussion of the risks related to production disruptions.

In addition, based on the tentative agreement that has been reached with the UAW, we expect to have a significant increase in labor costs through the life of the contract.

On September 24, 2023, Unifor-represented employees in Canada ratified a new three-year collective bargaining agreement with Ford.

Electric Vehicle Market

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

As a result of the lower-than-anticipated adoption rates, we accrued about $0.2 billion of charges in the third quarter of 2023 and may continue to incur charges, which could be substantial, for payments to our electric vehicle-related suppliers (battery, raw material, and otherwise).

Typically, our supplier contracts are annual commitments;

however, in certain instances, we have entered into long-term offtake agreements and other purchase contracts to acquire materials necessary for the production of our electric vehicles.

In instances where a contract is unable to be restructured or an alternate purchaser is unable to be found, Ford, rather than our suppliers, bears the risks associated with lower-than-expected electric vehicle production volumes that reduce the need for those materials.

For additional information on our offtake agreements, see the Liquidity and Capital Resources section below.

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, we have incurred, and may continue to incur, expenses related to payments to our electric vehicle-related suppliers (battery, raw material, or otherwise), inventory adjustments, or other matters.

Further, significant unexpected changes in the EV demand environment have led, and may in the future lead, to incremental competitive pricing actions.

These market dynamics may continue to occur, which could have a substantial impact on our business.

As a result, in the first quarter of 2024, we recorded about $0.4 billion of expenses and about $0.3 billion of adjustments related to revenue recognized in prior periods.

In addition, slower-than-anticipated development of the electric vehicle market may impact our strategy to comply with regulatory standards, and, in some cases, we plan to utilize credits purchased from third parties to demonstrate regulatory compliance or we may need to modify our product offerings.

Risk Factors in our 2023 Form 10-K Report and as updated by our subsequent filings with the SEC for a discussion of the risks related to lower-than-anticipated electric vehicle volumes and our planned transition to a greater mix of electric vehicles.

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.

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

RESULTS OF OPERATIONS

In the third quarter of 2023, the net income attributable to Ford Motor Company was $1,199 million, and Company adjusted EBIT was $2,198 million.

In the first quarter of 2024, the net income attributable to Ford Motor Company was $1,332 million, and Company adjusted EBIT was $2,763 million.

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

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

Third Quarter First Nine Months

2022 2023 2022 2023

First Quarter

Restructuring (by Geography)

China $ (17) $ (126) $ (37) $ (881)

Europe $ (370) $ (321)

Ford Credit - Brazil — — (155) —

Other (a) (362) 33 (466) (114)

China (309) —

North America Hourly Buyouts — (260)

Subtotal Restructuring $ (667) $ (581)

Extended Oakville EV Program Changeover

Other (including gains/(losses) on investments) (86) 2

Subtotal Other Items $ (86) $ (289)

Pension and OPEB Gain/(Loss)

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Subtotal Pension and OPEB Gain/(Loss) $ (159) $ (3)

Gain/(loss) on Rivian investment

$ 646 $ — $ (7,250) $ (31)

AV strategy including Argo impairment (2,708) — (2,708) —

Transit Connect customs matter — (96) — (396)

Russia suspension of operations/asset write-off 2 — (130) —

Patent matters related to prior calendar years

Other (including gains/(losses) on investments) (149) (8) (141) (161)

Subtotal Other Items $ (2,209) $ (104) $ (10,350) $ (580)

Total EBIT Special Items $ (912) $ (873)

Provision for/(Benefit from) tax special items (b) $ (544) $ (87) $ (2,273) $ (408)

(a) Includes $180 million and $175 million in the third quarter of 2022 and $210 million and $250 million in the first nine months of 2022 of North America and India restructuring charges, respectively.

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

We recorded $487 million of pre-tax special item charges in the third quarter of 2023, driven primarily by pension and OPEB remeasurement, restructuring actions in China, and the Transit Connect customs matter.

Provision for/(Benefit from) tax special items (a) $ (144) $ (220)

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

We recorded $873 million of pre-tax special item charges in the first quarter of 2024, driven primarily by restructuring actions in Europe, the extended duration of the EV program changeover at Oakville, and buyouts for hourly employees in North America.

In Note 19 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments.

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COMPANY KEY METRICS

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

Third Quarter First Nine Months

2022 2023 H / (L) 2022 2023 H / (L)

The table below shows our first quarter 2024 key metrics for the Company, compared to a year ago.

First Quarter

2023 2024 H / (L)

GAAP Financial Measures

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Net Income/(Loss) ($M) 1,757 1,332 $ (425)

Net Income/(Loss) Margin (%) (2.1) % 2.7 % 4.8 ppts (2.9) % 3.7 % 6.6 ppts

Net Income/(Loss) Margin (%) 4.2 % 3.1 % (1.1) ppts

EPS (Diluted) $ 0.44 $ 0.33 $ (0.11)

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EBIT ($M) 3,379 2,763 (616)

EBIT Margin (%) 4.6 % 5.0 % 0.4 ppts 6.9 % 7.2 % 0.3 ppts

EBIT Margin (%) 8.1 % 6.5 % (1.7) ppts

Adjusted EPS (Diluted) $ 0.63 $ 0.49 $ (0.14)

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

In the third quarter of 2023, our diluted earnings per share of Common and Class B Stock was $0.30, and our diluted adjusted earnings per share was $0.39.

Net income/(loss) margin was 2.7% in the third quarter of 2023, up 4.8 percentage points from a year ago.

Company adjusted EBIT margin was 5.0% in the third quarter of 2023, up 0.4 percentage points from a year ago.

The year-over-year increase of $2.0 billion in net income in the third quarter of 2023 was primarily driven by the non-recurrence of an impairment on our Argo investment (included in special items in the third quarter of 2022) and higher adjusted EBIT, offset partially by the non-recurrence of a mark-to-market gain on our Rivian investment (also included in special items in the third quarter of 2022).

The year-over-year increase of $395 million in Company adjusted EBIT was driven by higher Ford Pro and Ford Blue EBIT and a lower EBIT loss in Ford Next.

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

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

Third Quarter First Nine Months

2022 2023 H / (L) 2022 2023 H / (L)

In the first quarter of 2024, our diluted earnings per share of Common and Class B Stock was $0.33, and our diluted adjusted earnings per share was $0.49.

Net income/(loss) margin was 3.1% in the first quarter of 2024, down 1.1 percentage points from a year ago.

Company adjusted EBIT margin was 6.5% in the first quarter of 2024, down 1.7 percentage points from a year ago.

The table below shows our first quarter 2024 net income/(loss) attributable to Ford and Company adjusted EBIT by segment.

First Quarter

2023 2024 H / (L)

Ford Blue $ 2,623 $ 905 $ (1,718)

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

The year-over-year decrease of $425 million in net income and $616 million in Company adjusted EBIT in the first quarter of 2024 was driven by lower Ford Blue and Model e EBIT, offset partially by higher Ford Pro EBIT.

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

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

The tables below and on the following pages provide first quarter 2024 key metrics and the change in first quarter 2024 EBIT compared with first quarter 2023 by causal factor for each of our segments.

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

Ford Blue Segment

Third Quarter First Nine Months

Key Metrics 2022 2023 H / (L) 2022 2023 H / (L)

First Quarter

Key Metrics 2023 2024 H / (L)

Wholesale Units (000) (a) 706 626 (80)

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EBIT ($M) 2,623 905 (1,718)

EBIT Margin (%) 6.2 % 6.7 % 0.6 ppts 7.7 % 8.8 % 1.0 ppts

EBIT Margin (%) 10.4 % 4.2 % (6.3) ppts

(a) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 97,000 units in Q1 2023 and 101,000 units in Q1 2024).

Change in EBIT by Causal Factor (in millions)

Third Quarter 2022 EBIT

First Quarter 2023 EBIT

Volume / Mix (1,717)

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Exchange (158)

Third Quarter 2023 EBIT

In the third quarter of 2023, Ford Blue’s wholesales decreased 0.6% from a year ago.

Third quarter 2023 revenue increased 7%, driven by favorable mix and higher net pricing.

Ford Blue’s third quarter 2023 EBIT was $1.7 billion, an increase of $252 million from a year ago, with an EBIT margin of 6.7%.

The higher EBIT was driven by lower commodity costs and higher net pricing, offset partially by higher warranty costs (reflecting an increase for field service actions and inflationary cost pressures) and higher material costs for new products.

First Quarter 2024 EBIT

In the first quarter of 2024, Ford Blue’s wholesales decreased 11% from a year ago, driven primarily by lower F-150 volume due to the new model launch in the quarter and ceasing production of the Fiesta in Europe.

First quarter 2024 revenue decreased 13%, driven by lower wholesales and unfavorable mix, offset partially by higher currency-related pricing in South America.

Ford Blue’s first quarter 2024 EBIT was $905 million, a decrease of $1.7 billion from a year ago, with an EBIT margin of 4.2%.

The lower EBIT was driven by lower wholesales and unfavorable mix (primarily fewer F-150s due to the new model launch).

Higher costs reflected primarily material cost for new products and higher warranty costs, offset partially by lower structural costs.

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

Ford Model e Segment

Third Quarter First Nine Months

Key Metrics 2022 2023 H / (L) 2022 2023 H / (L)

First Quarter

Key Metrics 2023 2024 H / (L)

Wholesale Units (000) 12 10 (3)

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EBIT ($M) (722) (1,320) (598)

EBIT Margin (%) (43.7) % (75.6) % (31.9) ppts (40.7) % (72.8) % (32.1) ppts

EBIT Margin (%) (102.1) % (1,145.9) % (1,043.8) ppts

Change in EBIT by Causal Factor (in millions)

Third Quarter 2022 EBIT

First Quarter 2023 EBIT

Volume / Mix (12)

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Exchange (63)

Third Quarter 2023 EBIT

In the third quarter of 2023, Ford Model e’s wholesales increased 44% from a year ago, reflecting increased production capacity for Mustang Mach-E.

Third quarter 2023 revenue increased 26%, primarily driven by higher wholesales, offset partially by lower net pricing and unfavorable mix.

Ford Model e’s third quarter 2023 EBIT loss was $1.3 billion, a $717 million higher loss than a year ago, with an EBIT margin of negative 75.6%.

The lower EBIT was primarily driven by higher material costs (including about $160 million of volume related obligations for batteries and certain other commodities), lower net pricing, higher field service action warranty costs, and higher volume/capacity-related manufacturing costs, offset partially by lower commodity costs.

First Quarter 2024 EBIT

In the first quarter of 2024, Ford Model e’s wholesales decreased 20% from a year ago to 10,000 units.

First quarter 2024 revenue decreased 84%, primarily driven by the accrual impacts for units in dealer stock at December 31, 2023 (about $0.3 billion) as well as lower net pricing.

Ford Model e’s first quarter 2024 EBIT loss was $1.3 billion, a $598 million higher loss than a year ago.

The lower EBIT was primarily driven by lower net pricing and exchange.

Favorable cost performance included lower battery raw materials and engineering expense, offset partially by volume-related obligations of about $90 million for batteries and certain other commodities and higher manufacturing costs ahead of the upcoming Explorer EV launch in Europe.

Ford Pro Segment

Third Quarter First Nine Months

Key Metrics 2022 2023 H / (L) 2022 2023 H / (L)

First Quarter

Key Metrics 2023 2024 H / (L)

Wholesale Units (000) (a) 337 409 71

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EBIT ($M) 1,366 3,008 1,642

EBIT Margin (%) 3.4 % 12.0 % 8.6 ppts 5.1 % 12.7 % 7.6 ppts

EBIT Margin (%) 10.3 % 16.7 % 6.4 ppts

(a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 22,000 units in Q1 2023 and 18,000 units in Q1 2024).

Change in EBIT by Causal Factor (in millions)

Third Quarter 2022 EBIT

First Quarter 2023 EBIT

Volume / Mix 1,795

Net Pricing 680

Third Quarter 2023 EBIT

In the third quarter of 2023, Ford Pro’s wholesales decreased 2% from a year ago, driven by new product launch changeover and production-related supply constraints.

Third quarter 2023 revenue increased 16%, driven by higher net pricing, partially offset by lower volume.

Ford Pro’s third quarter 2023 EBIT was $1.7 billion, an increase of $1.3 billion from a year ago, with an EBIT margin of 12.0%.

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

Partial offsets included lower wholesales and higher costs, including warranty (reflecting inflationary cost increases on repairs and for field service actions), higher material costs for new products, as well as volume related obligations for batteries and certain other commodities (about $60 million).

First Quarter 2024 EBIT

In the first quarter of 2024, Ford Pro’s wholesales increased 21% from a year ago, driven by a full quarter of the all new Super Duty truck, which launched in the first quarter of 2023, and higher sales of the Transit range of vans.

First quarter 2024 revenue increased 36%, driven by higher wholesales, favorable mix, and higher net pricing.

Ford Pro’s first quarter 2024 EBIT was $3.0 billion, an increase of $1.6 billion from a year ago, with an EBIT margin of 16.7%.

The improvement in EBIT was driven by higher volume, favorable mix, and higher net pricing.

Higher cost was a partial offset, including material costs (primarily new product-related and inflationary increases), higher growth-related structural costs (including engineering and manufacturing), and higher warranty costs.

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

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

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

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-period volume and mix and exchange:

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

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▪ Engineering and Connectivity – consists primarily of costs for vehicle and software engineering personnel, prototype materials, testing, and outside engineering and software services

▪ Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets and capital project expense, but also includes asset retirements and operating leases

▪ Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets, but also includes asset retirements and operating leases

▪ Advertising and Sales Promotions – includes costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows

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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 third quarter 2023 EBIT loss was $17 million, a $227 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)

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

Ford Next’s first quarter 2024 EBIT loss was $9 million, a $35 million improvement from a year ago.

Ford Credit Segment

Ford Credit files periodic reports with the SEC that contain additional information regarding Ford Credit.

The reports are available through Ford Credit’s website located at www.fordcredit.com/investor-center and can also be found on the SEC’s website located at www.sec.gov .

The reports are available through Ford Credit’s website located at www.ford.com/finance/investor-center and can also be found on the SEC’s website located at www.sec.gov .

The foregoing information regarding Ford Credit’s website and its content is for convenience only and not deemed to be incorporated by reference into this Report nor filed with the SEC.

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

The tables below provide first quarter 2024 key metrics and the change in first quarter 2024 EBT compared with first quarter 2023 by causal factor for the Ford Credit segment.

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

Third Quarter First Nine Months

Key Metrics 2022 2023 H / (L) 2022 2023 H / (L)

First Quarter

Key Metrics 2023 2024 H / (L)

Total Net Receivables ($B) $ 124 $ 136 $ 12

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EBT ($M) 303 326 $ 23

ROE (%) 15 % 8 % (7) ppts 21 % 8 % (13) ppts

ROE (%) 8 % 7 % (1) ppts

Other Balance Sheet Metrics

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Net Liquidity ($B) 26 27 1

Financial Statement Leverage

(to 1) 9.4 9.7 0.3

Financial Statement Leverage (to 1) 9.8 9.6 (0.2)

retail financing only.

36-month off-lease third quarter auction values at Q3 2023 mix and YTD amounts at 2023 YTD mix.

36-month off-lease first quarter auction values at Q1 2024 mix.

Change in EBT by Causal Factor (in millions)

Third Quarter 2022 EBT

First Quarter 2023 EBT

Volume / Mix 34

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Lease Residual (126)

Third Quarter 2023 EBT

Ford Credit’s total net receivables of $126 billion were 9% higher than a year ago, reflecting the impact of increased non-consumer and consumer financing, partially offset by a smaller lease portfolio.

loss-to-receivables (“LTR”) ratio remained at a low level in the third quarter of 2023, at 38 basis points, though higher than a year ago as losses continue to normalize from historic lows.

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

Ford Credit’s third quarter 2023 EBT of $358 million was $241 million lower than a year ago, explained primarily by lower lease residual performance, the non-recurrence of derivative market valuation adjustment gains (included in Other), lower financing margin due to higher borrowing costs, and higher credit losses.

First Quarter 2024 EBT

Ford Credit’s total net receivables of $136 billion were 10% higher than a year ago, reflecting the impact of increased consumer and non-consumer financing, offset partially by a smaller lease portfolio.

The first quarter 2024 U.S.

loss-to-receivables (“LTR”) ratio of 47 basis points increased from a year ago, but remained low by historical standards.

auction values in the first quarter of 2024 were lower compared to a year ago.

Ford Credit’s first quarter 2024 EBT of $326 million was $23 million higher than a year ago, explained primarily by higher financing margin and favorable volume and mix, offset partially by unfavorable lease residual performance.

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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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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• Securitizations (as shown in the Public Term Funding Plan table) – Public securitization transactions, Rule 144A offerings sponsored by Ford Credit, and widely distributed offerings by Ford Credit Canada

• Term Asset-Backed Securities (as shown in the Funding Structure table) – Obligations issued in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements

• Term Asset-Backed Securities (“ABS”) (as shown in the Funding Structure table) – Obligations issued in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements

• Total Net Receivables (as shown in the Key Metrics table) – Includes finance receivables (retail financing and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment.

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

In the third quarter of 2023, Corporate Other had a $186 million loss, compared with a $192 million profit a year ago.

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

In the first quarter of 2024, Corporate Other had a $147 million EBIT loss, unchanged from a year ago.

Interest on Debt

Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $324 million in the third quarter of 2023, $3 million higher than a year ago.

Our Provision for/(Benefit from) income taxes for the third quarter and first nine months of 2023 was a provision of $214 million and $982 million, respectively.

This resulted in effective tax rates of 15.4% and 16.8%, respectively.

Our third quarter and first nine months of 2023 adjusted effective tax rates, which exclude special items, were 16.1% and 16.5%, respectively.

Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $278 million in the first quarter of 2024, $30 million lower than a year ago.

Our Provision for/(Benefit from) income taxes for the first quarter of 2024 was a provision of $278 million, resulting in an effective tax rate of 17.2%.

Our first quarter 2024 adjusted effective tax rate, which excludes special items, was 20.0%.

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

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LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2023, total balance sheet cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $41.3 billion.

At March 31, 2024, total balance sheet cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $34.7 billion.

We consider our key balance sheet metrics to be:

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Company excluding Ford Credit

2022 September 30,

2023 March 31,

Balance Sheets ($B)

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Total Funded Status OPEB $ (4.7) $ (4.6)

(a) Balances at September 30, 2023 reflect net funded status at December 31, 2022, updated for service and interest cost;

(a) Balances at March 31, 2024 reflect net funded status at December 31, 2023, updated for service and interest cost;

expected return on assets;

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The discount rate and rate of expected return assumptions are unchanged from year-end 2023.

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

At September 30, 2023, we had Company cash of $29.1 billion and liquidity of $50.6 billion.

At September 30, 2023, about 87% of Company cash was held by consolidated entities domiciled in the United States.

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

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 March 31, 2024, we had Company cash of $25.1 billion and liquidity of $42.6 billion.

At March 31, 2024, about 86% of Company cash was held by consolidated entities domiciled in the United States.

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

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

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• 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.

Subject to approval by our Board of Directors, shareholder distributions in the form of dividend payments and/or a share repurchase program (including share repurchases to offset the anti-dilutive effect of increased share-based compensation) may require the expenditure of a material amount of cash.

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.

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

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

Changes in Company Cash.

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

Operating items include:

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

Non-operating items include:

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

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

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

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

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

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

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

For example, we typically experience cash flow timing differences associated with inventories and payables due to our annual 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 March 31, 2024 was higher than at December 31, 2023, primarily reflecting new vehicle launches and units awaiting final quality review.

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 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.

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

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

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

As of March 31, 2024, our estimated expenditures for the maximum quantity that we are committed to purchase under these offtake agreements through 2035, subject to certain conditions, consist of approximately $3.9 billion of purchase obligations and approximately $6.9 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.

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 the second half of 2024.

Risk Factors in our 2023 Form 10-K Report and as updated by our subsequent filings with the SEC for a discussion of the risks related to our offtake agreements and other long-term purchase contracts.

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

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

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

We have no economic interest in a supplier’s decision to participate in the SCF program, and we do not provide any guarantees in connection with it.

As of March 31, 2024, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $213 million.

The amount settled through the SCF program during the first quarter of 2024 was $383 million.

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

First Quarter

Company Excluding Ford Credit

Company Adjusted EBIT excluding Ford Credit (a) $ 3.1 $ 2.4

Capital spending $ (1.8) $ (2.1)

Depreciation and tooling amortization 1.3 1.3

Net spending $ (0.5) $ (0.8)

Receivables $ 0.4 $ —

Inventory (2.0) (3.1)

Trade Payables 0.3 1.9

Changes in working capital $ (1.2) $ (1.2)

Ford Credit distributions $ — $ —

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

All other and timing differences (0.1) (0.2)

Company adjusted free cash flow (a) $ 0.7 $ (0.5)

Restructuring $ — $ (0.2)

Changes in debt (0.2) 0.2

Funded pension contributions (0.1) (0.5)

Shareholder distributions (3.2) (1.3)

All other (0.7) (1.4)

Change in cash $ (3.6) $ (3.8)

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

Numbers may not sum due to rounding.

Our first quarter 2024 Net cash provided by/(used in) operating activities was positive $1.4 billion, $1.4 billion lower than a year ago (see page 60 for additional information).

The decrease reflects higher inventory and lower net income, offset partially by higher accounts payable as reflected on our Consolidated Statement of Cash Flows.

Company adjusted free cash flow was negative $0.5 billion, $1.2 billion lower than a year ago.

The decrease was primarily driven by lower Company adjusted EBIT excluding Ford Credit and higher capital spending.

Capital spending was $2.1 billion in the first quarter of 2024, an increase of $0.3 billion from a year ago.

We now expect full year 2024 capital spending to be in the range of $8 billion to $9 billion.

First quarter 2024 working capital impact was $1.2 billion negative, driven by higher inventory, offset partially by higher trade payables, each compared to December 31, 2023.

All other and timing differences were negative $0.2 billion.

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).

In the first quarter of 2024, we contributed $550 million to our global funded pension plans.

We continue to expect to contribute about $1 billion to our global funded pension plans in 2024.

Shareholder distributions were $1.3 billion in the first quarter of 2024, all of which was attributable to our regular and supplemental dividend.

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

Available Credit Lines .

Total Company committed credit lines, excluding Ford Credit, at March 31, 2024 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 March 31, 2024, the utilized portion of the corporate credit facility was $18 million, representing amounts utilized for letters of credit.

In addition, $1.7 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates as of March 31, 2024.

Our corporate, supplemental, and 364-day revolving credit facilities were amended as of April 22, 2024 to extend the maturity dates of the commitments under each facility and increase the size of our 364-day revolving credit facility.

Following the corporate credit facility amendment, $25 million of commitments mature on April 26, 2026, $3.4 billion of commitments mature on April 22, 2027, $0.1 billion of commitments mature on April 26, 2028, and $10.0 billion of commitments mature on April 20, 2029.

Following the supplemental revolving credit facility amendment, $2.0 billion of commitments mature on April 22, 2027.

Following the 364-day revolving credit facility amendment, $2.5 billion of commitments mature on April 21, 2025.

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

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

The corporate credit facility contains a liquidity covenant that requires us to maintain a minimum of $4 billion in aggregate of domestic cash, cash equivalents, and loaned and marketable securities and/or availability under the corporate credit facility, supplemental revolving credit facility, and 364-day revolving credit facility.

If our senior, unsecured, long-term debt does not maintain at least two investment grade ratings from Fitch, Moody’s, and S&P, the guarantees of certain subsidiaries will be required.

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

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

As shown in Note 12 of the Notes to the Financial Statements, at March 31, 2024, Company debt excluding Ford Credit was $20.2 billion.

This balance is $0.2 billion higher than at December 31, 2023.

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

The leverage framework includes a ratio of total Company debt (excluding Ford Credit), underfunded pension liabilities, operating leases, and other adjustments, divided by Company adjusted EBIT (excluding Ford Credit EBT), and further adjusted to exclude depreciation and tooling amortization (excluding Ford Credit).

Ford Credit’s leverage is calculated as a separate business as described in the ”Liquidity and Capital Resources - Ford Credit Segment” section of Item 2.

Ford Credit is self-funding and its debt, which is used to fund its operations, is separate from our Company debt excluding Ford Credit.

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

Ford Credit Segment

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

Ford Credit ended the first quarter of 2024 with $27.0 billion of liquidity, up $1.3 billion from year-end.

Ford Credit continues to have robust access to capital markets, completing $13 billion of public term issuances through April 23, 2024.

Key elements of Ford Credit’s funding strategy include:

• Maintain strong liquidity and funding diversity

• Prudently access public markets

• Continue to leverage retail deposit funding in Europe

• Flexibility to increase ABS mix as needed;

preserving assets and committed capacity

• Target financial statement leverage of 9:1 to 10:1

• Maintain self-liquidating balance sheet

Ford Credit’s liquidity profile continues to be diverse, robust, and focused on maintaining liquidity levels that meet its business and funding requirements.

Ford Credit regularly stress tests its balance sheet and liquidity to ensure that it can continue to meet its financial obligations through economic cycles.

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

2023 December 31,

2023 March 31,

Funding Structure

Term unsecured debt $ 49.3 $ 54.1 $ 57.0

Term asset-backed securities 55.0 58.0 54.9

Retail Deposits / Ford Interest Advantage 15.3 17.2 17.4

Other 2.3 1.4 1.6

Equity 12.2 13.4 13.5

Adjustments for cash (10.3) (10.9) (8.9)

Total Net Receivables $ 123.8 $ 133.2 $ 135.5

Securitized Funding as Percent of Total Debt 46.0 % 44.9 % 42.5 %

Net receivables of $135.5 billion at March 31, 2024 were funded primarily with term unsecured debt and term asset-backed securities.

Securitized funding as a percent of total debt was 42.5% as of March 31, 2024.

Public Term Funding Plan.

The following table shows Ford Credit’s issuances for full year 2022 and 2023, planned issuances for full year 2024, and its global public term funding issuances through April 23, 2024, excluding short-term funding programs (in billions):

Forecast Through

Unsecured $ 6 $ 14 $ 14-17 $ 8

Securitizations (a) 10 14 13-16 5

Total public $ 16 $ 28 $ 27-33 $ 13

(a) See Definitions and Information Regarding Ford Credit Causal Factors section.

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

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

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

2023 December 31,

2023 March 31,

Liquidity Sources (a)

Cash $ 10.3 $ 10.9 $ 8.9

Committed asset-backed facilities 40.5 42.9 42.6

Other unsecured credit facilities 2.5 2.4 2.3

Total liquidity sources $ 53.3 $ 56.2 $ 53.8

Utilization of Liquidity (a)

Securitization and restricted cash $ (3.0) $ (2.8) $ (3.4)

Committed asset-backed facilities (24.0) (27.5) (23.3)

Other unsecured credit facilities (0.4) (0.4) (0.4)

Total utilization of liquidity $ (27.4) $ (30.7) $ (27.1)

Available Liquidity $ 25.9 $ 25.5 $ 26.7

Other adjustments 0.2 0.2 0.3

Net liquidity available for use $ 26.1 $ 25.7 $ 27.0

(a) See Definitions and Information Regarding Ford Credit Causal Factors section.

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 March 31, 2024, Ford Credit’s net liquidity available for use was $27.0 billion, $1.3 billion higher than year-end 2023, reflecting strong access to public funding markets.

At March 31, 2024, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and unsecured credit facilities, totaled $53.8 billion, down $2.4 billion from year-end 2023.

Material Cash Requirements.

Ford Credit’s material cash requirements include:

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

and (2) debt repayments (for additional information on debt, see the “Aggregate Contractual Obligations” table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 19 of the Notes to the Financial Statements in our 2023 Form 10-K Report).

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

Moreover, Ford Credit 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.

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

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 issuance and the effects of regulatory changes on the financial markets.

Refer to the “Liquidity - Ford Credit Segment - Funding and Liquidity Risks” section of Item 7 of Part II of our 2023 Form 10-K Report for more information.

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

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

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

2023 December 31,

2023 March 31,

Leverage Calculation

Debt $ 119.6 $ 129.3 $ 129.3

Equity (a) 12.2 13.4 13.5

Financial statement leverage (to 1) 9.8 9.7 9.6

(a) Total shareholder’s interest reported on Ford Credit’s balance sheets.

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

At March 31, 2024, Ford Credit’s financial statement leverage was 9.6:1.

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

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

Total Company

Pension Plans - Funded Balances.

As of March 31, 2024, our total Company pension underfunded status reported on our consolidated balance sheets was $1.7 billion and reflects the net funded status at December 31, 2023, updated for:

service and interest cost;

expected return on assets;

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

separation expense;

actual benefit payments;

and cash contributions.

For plans without interim remeasurement, the discount rate and rate of expected return assumptions are unchanged from year-end 2023.

Return on Invested Capital (“ROIC”).

We analyze total Company performance using an adjusted ROIC financial metric based on an after-tax, rolling four-quarter average.

The following table contains the calculation of our ROIC for the periods shown (in billions):

Four Quarters Ending

2023 March 31,

Adjusted Net Operating Profit/(Loss) After Cash Tax

Net income/(loss) attributable to Ford $ 2.9 $ 3.9

Noncontrolling interest (0.3) 0.1

Income tax (0.4) 0.6

Cash tax (0.9) (1.2)

Interest on debt (1.3) (1.3)

Total pension/OPEB income/(cost) (0.1) (2.9)

Pension/OPEB service costs (0.9) (0.6)

Net operating profit/(loss) after cash tax $ 2.6 $ 5.8

Special items (excl.

pension/OPEB) pre-tax (6.6) (2.9)

Adjusted net operating profit/(loss) after cash tax $ 9.2 $ 8.7

Invested Capital

Equity $ 42.2 $ 42.9

Ford Credit) 19.7 20.2

Net pension and OPEB liability 4.6 6.3

Invested capital (end of period) $ 66.5 $ 69.3

Average invested capital $ 68.2 $ 68.4

ROIC (a) 3.8 % 8.5 %

Adjusted ROIC (Non-GAAP) (b) 13.5 % 12.7 %

(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.

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

CREDIT RATINGS

Our short-term and long-term debt is rated by four credit rating agencies designated as nationally recognized statistical rating organizations (“NRSROs”) by the U.S.

Securities and Exchange Commission:

DBRS, Fitch, Moody’s, and S&P.

In several markets, locally recognized rating agencies also rate us.

A credit rating reflects an assessment by the rating agency of the credit risk associated with a corporate entity or particular securities issued by that entity.

Rating agencies’ ratings of us are based on information provided by us and other sources.

Credit ratings are not recommendations to buy, sell, or hold securities and are subject to revision or withdrawal at any time by the assigning rating agency.

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 2023 Form 10-K Report.

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

NRSRO RATINGS

Ford Ford Credit NRSROs

Issuer Rating Long-Term Senior Unsecured Outlook / Trend Long-Term Senior Unsecured Short-Term

Unsecured Outlook / Trend Minimum Long-Term Investment Grade Rating

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 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 April 24, 2024.

The guidance is based on our expectations as of April 24, 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 our 2023 Form 10-K Report and as updated by our subsequent filings with the SEC.

2024 Guidance

Total Company

Adjusted EBIT (a) $10 - $12 billion

Adjusted Free Cash Flow (a) $6.5 - $7.5 billion

Capital spending $8 - $9 billion

EBT About $1.5 billion

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

For full-year 2024, we expect adjusted EBIT of $10 billion to $12 billion and adjusted free cash flow of $6.5 billion to $7.5 billion.

On a segment basis, we expect:

• Ford Pro EBIT of $8 billion to $9 billion driven by continued growth and favorable mix, offset partially by moderated pricing

• Ford Blue EBIT of $7 billion to $7.5 billion, reflecting a balanced market equation and cost efficiencies offsetting higher labor and product costs

• Ford Model e EBIT loss of $5 billion to $5.5 billion, driven by continued pricing pressure and investments in new vehicles

• Ford Credit EBT of about $1.5 billion

Our outlook for 2024 assumes:

• Flat to modest U.S.

industry growth at 16 million to 16.5 million

• Full year of all-new Super Duty, which drives positive pricing and mix in Ford Pro

• Lower industry pricing

• $2 billion of cost reductions in material, freight, and manufacturing

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

What changed 10-Q

Item 1. Financial Statements