FORD MOTOR CO 10-Q

Item 1. Financial Statements (Continued) FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS NOTE 19. SEGMENT INFORMATION (Continued) Key financial information for the periods ended or at March 31 was as follows (in millions): Ford Blue Ford Model e Ford Pro Ford Credit Unallocated Amounts and Eliminations (a) Total First Quarter 2024 External revenues $ 21,754 $ 116 $ 18,019 $ 2,887 $ 1 $ 42,777 Intersegment revenues (b) 11,741 21 — — ( 11,762 ) — Total revenues $ 33,495 $ 137 $ 18,019 $ 2,887 $ ( 11,761 ) $ 42,777 Other segment items (c) 32,594 1,464 15,013 2,561 Segment EBIT/EBT $ 901 $ ( 1,327 ) $ 3,006 $ 326 $ 2,906 Reconciliation of Segment EBIT/EBT Unallocated amounts: Corporate Other ( 143 ) Interest on debt (excludes $ 1,848 of Ford Credit interest on debt) ( 278 ) Special items (d) ( 873 ) Income/(Loss) before income taxes $ 1,612 Other Segment Disclosures Depreciation and tooling amortization $ 725 $ 143 $ 360 $ 622 $ 31 $ 1,881 Investment-related interest income 36 1 11 145 217 410 Equity in net income/(loss) of affiliated companies 61 ( 19 ) 117 8 — 167 Cash outflow for capital spending (e) 1,049 975 9 21 40 2,094 Total assets 61,416 15,032 3,659 148,896 45,338 274,341 First Quarter 2025 External revenues $ 20,997 $ 1,242 $ 15,181 $ 3,237 $ 2 $ 40,659 Intersegment revenues (b) 10,605 116 — — ( 10,721 ) — Total revenues $ 31,602 $ 1,358 $ 15,181 $ 3,237 $ ( 10,719 ) $ 40,659 Other segment items (c) 31,506 2,207 13,872 2,657 Segment EBIT/EBT $ 96 $ ( 849 ) $ 1,309 $ 580 $ 1,136 Reconciliation of Segment EBIT/EBT Unallocated amounts: Corporate Other ( 117 ) Interest on debt (excludes $ 1,790 of Ford Credit interest on debt) ( 288 ) Special items (f) ( 110 ) Income/(Loss) before income taxes $ 621 Other Segment Disclosures Depreciation and tooling amortization $ 729 $ 138 $ 348 $ 618 $ 15 $ 1,848 Investment-related interest income 48 1 15 91 196 351 Equity in net income/(loss) of affiliated companies 62 ( 20 ) 40 10 2 94 Cash outflow for capital spending (e) 987 761 7 28 35 1,818 Total assets 62,772 16,181 3,664 154,183 47,739 284,539 __________ (a) Unallocated amounts include Corporate Other (see above description of corporate expenses and corporate assets) and Special Items. Eliminations include intersegment transactions occurring in the ordinary course of business. (b) 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. (c) Other segment items for the Ford Blue, Ford Model e, and Ford Pro segments primarily consists of: material costs (including commodities and components and purchased vehicles from partners), manufacturing costs (including hourly and salaried wages and fringe, and plant overhead such as utilities and taxes), warranty coverages and field service action costs (including estimated costs to repair, replace, or adjust parts on a vehicle that are defective in factory supplied materials or workmanship), freight and duty costs (including related to the receiving and shipping of components and vehicles), vehicle and software engineering and connectivity costs (including wages and fringe for personnel, prototype materials, testing, and outside services), spending-related costs (including depreciation and amortization of manufacturing and engineering assets, asset retirements, and operating leases), advertising and sales promotions costs (including costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows), and administrative, IT, and selling costs (primarily including wages and fringe for salaried personnel and purchased services). Other segment items for the Ford Credit segment primarily consists of interest expense and depreciation. (d) Primarily reflects restructuring actions in Europe, the extended duration of the EV program changeover at the Oakville Assembly Plant, and buyouts for hourly employees in North America. (e) Ford Blue includes $ 223 million and $ 163 million of spending attributable to electric vehicles at shared manufacturing plants at March 31, 2024 and March 31, 2025, respectively. Total electric vehicle spending, including Ford Blue and Ford Model e, was $ 1,198 million and $ 924 million at March 31, 2024 and March 31, 2025, respectively. (f) Primarily reflects the cancellation of a previously planned all-electric three-row SUV program and continued ongoing restructuring actions in Europe. 31 ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. RECENT DEVELOPMENTS Trade Policy and Tariffs To the extent governments in various regions implement or intensify barriers to trade, such as erecting tariff or non-tariff barriers, implementing export controls, or manipulating their currency to provide advantages to domestic companies, there can be a significant negative impact on manufacturers based in other markets. Tariffs implemented to date in the United States and elsewhere have caused significant disruption, increased costs, and uncertainty in the automotive industry, including for Ford, other OEMs, suppliers, and dealers, as well as customers. Moreover, tariffs implemented in the United States and elsewhere in the future may exacerbate these impacts. Further, fragility in the supply chain exacerbated by tariffs and other industry concerns, such as China’s restriction on the export of rare earth minerals, increases the risk of production disruptions and may further increase costs. Tariffs have affected and will continue to affect all OEMs, to various degrees. In the first quarter of 2025, Ford’s costs related to tariffs implemented or increased in 2025 were about $200 million. Although there is uncertainty regarding the application, scope, and duration of tariffs, those that have been implemented and any additional tariffs or other measures that are implemented in the United States and retaliatory tariffs or other measures or restrictions that are implemented by other governments and the potential related market impacts, should they be sustained for an extended period of time, would have a significant adverse effect, including both operationally and financially, on the overall automotive industry, Ford, and our supply chain in 2025 and potentially beyond. For additional information regarding the impact and potential impact of trade policy and tariffs on our business, see the Outlook section on page 52 of this 10-Q Report and Item 1A. Risk Factors in our 2024 Form 10-K Report as updated by Item 1A. Risk Factors on page 65 of this 10-Q Report. Electric Vehicle Market Although we continue to invest in our electric vehicle strategy, we have observed lower-than-anticipated industrywide electric vehicle adoption rates and near-term pricing pressures, which has led us, and may in the future lead us, to adjust our investments, spending, production, and/or product or future technology launches to better match the pace of electric vehicle adoption. Further, significant unexpected changes in the EV demand environment have led, and may in the future lead, to incremental competitive pricing actions, and we may continue to incur expenses related to payments to our electric vehicle-related suppliers (battery, raw material, or otherwise), asset write-downs, or other matters. These market dynamics may continue to occur, which could have a substantial impact on our business, including our investments in supply and production capacity. In addition, policy change in the United States could reduce or eliminate supply- and demand-side incentives, resulting in slower adoption of EVs. Further, the pace of EV adoption and slower-than-anticipated development of the EV market may impact our strategy to comply with regulatory standards. If consumers do not purchase our EVs and other highly fuel-efficient vehicles in sufficient numbers, it may be difficult for Ford to meet applicable environmental standards and may force us to take various product-led actions (e.g., curtailing the production and sale of certain internal combustion vehicles) that could have substantial adverse effects on our sales volume and operations. In some cases, we plan to utilize credits purchased from third parties to demonstrate regulatory compliance. See Item 1A. Risk Factors in our 2024 Form 10-K Report for additional discussion of the risks related to lower-than-anticipated electric vehicle volumes and our planned transition to a greater mix of electric vehicles. 32 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) RESULTS OF OPERATIONS In the first quarter of 2025, the net income attributable to Ford Motor Company was $471 million, and Company adjusted EBIT was $1,019 million. Net income/(loss) includes certain items (“special items”) that are excluded from Company adjusted EBIT. These items are discussed in more detail in Note 19 of the Notes to the Financial Statements. We report special items separately to allow investors analyzing our results to identify certain infrequent significant items that they may wish to exclude when considering the trend of ongoing operating results. Our pre-tax and tax special items were as follows (in millions): First Quarter 2024 2025 Restructuring (by Geography) Europe $ (321) $ (32) North America Hourly Buyouts (260) — Subtotal Restructuring $ (581) $ (32) Other Items EV program cancellation $ — $ (64) Extended Oakville Assembly Plant Changeover (291) — Other 2 — Subtotal Other Items $ (289) $ (64) Pension and OPEB Gain/(Loss) Pension and OPEB remeasurement $ 11 $ 10 Pension settlements, curtailments, and separations costs (14) (24) Subtotal Pension and OPEB Gain/(Loss) $ (3) $ (14) Total EBIT Special Items $ (873) $ (110) Provision for/(Benefit from) tax special items (a) $ (220) $ (29) __________ (a) Includes related tax effect on special items and tax special items. We recorded $110 million of pre-tax special item charges in the first quarter of 2025, primarily reflecting expenses related to the cancellation of a previously planned all-electric three-row SUV program and continued ongoing restructuring actions in Europe. In Note 19 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources. 33 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) COMPANY KEY METRICS The table below shows our first quarter 2025 key metrics for the Company, compared to a year ago. First Quarter 2024 2025 H / (L) GAAP Financial Measures Cash Flows from Operating Activities ($B) $ 1.4 $ 3.7 $ 2.3 Revenue ($M) 42,777 40,659 (5) % Net Income/(Loss) ($M) 1,332 471 $ (861) Net Income/(Loss) Margin (%) 3.1 % 1.2 % (2.0) ppts EPS (Diluted) $ 0.33 $ 0.12 $ (0.21) Non-GAAP Financial Measures (a) Company Adj. Free Cash Flow ($B) $ (0.5) $ (1.5) $ (1.0) Company Adj. EBIT ($M) 2,763 1,019 (1,744) Company Adj. EBIT Margin (%) 6.5 % 2.5 % (4.0) ppts Adjusted EPS (Diluted) $ 0.49 $ 0.14 $ (0.35) Adjusted ROIC (Trailing Four Quarters) 12.7 % 10.9 % (1.8) ppts __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP. In the first quarter of 2025, our diluted earnings per share of Common and Class B Stock was $0.12, and our diluted adjusted earnings per share was $0.14. Net income/(loss) margin was 1.2% in the first quarter of 2025, down 2.0 percentage points from a year ago. Company adjusted EBIT margin was 2.5% in the first quarter of 2025, down 4.0 percentage points from a year ago. The table below shows the details of our first quarter 2025 net income/(loss) attributable to Ford and Company adjusted EBIT (in millions). First Quarter 2024 2025 H / (L) Ford Blue $ 901 $ 96 $ (805) Ford Model e (1,327) (849) 478 Ford Pro 3,006 1,309 (1,697) Ford Credit 326 580 254 Corporate Other (143) (117) 26 Company Adjusted EBIT (a) 2,763 1,019 (1,744) Interest on Debt (278) (288) (10) Special Items (873) (110) 763 Taxes / Noncontrolling Interests (280) (150) 130 Net Income/(Loss) $ 1,332 $ 471 $ (861) __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP. The year-over-year decrease of $861 million in net income and $1,744 million in Company adjusted EBIT in the first quarter of 2025 was driven by lower Ford Pro and Ford Blue EBIT, offset partially by a reduced Model e EBIT loss and higher Ford Credit EBT. The decrease in net income was also offset partially by lower special item charges, including lower year-over-year restructuring related charges and the non-recurrence of charges related to an extended EV program changeover at the Oakville Assembly Plant. 34 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) The tables below and on the following pages provide first quarter 2025 key metrics and the change in first quarter 2025 EBIT compared with first quarter 2024 by causal factor for each of our Ford Blue, Ford Model e, and Ford Pro segments. For a description of these causal factors, see Definitions and Information Regarding Ford Blue, Ford Model e, Ford Pro Causal Factors. Ford Blue Segment First Quarter Key Metrics 2024 2025 H / (L) Wholesale Units (000) (a) 626 588 (38) Revenue ($M) $ 21,754 $ 20,997 $ (757) EBIT ($M) 901 96 (805) EBIT Margin (%) 4.1 % 0.5 % (3.7) ppts __________ (a) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 101,000 units in Q1 2024 and 91,000 units in Q1 2025). Change in EBIT by Causal Factor (in millions) First Quarter 2024 EBIT $ 901 Volume / Mix (622) Net Pricing 372 Cost (144) Exchange (286) Other (125) First Quarter 2025 EBIT $ 96 In the first quarter of 2025, Ford Blue’s wholesales decreased 6% from a year ago, primarily reflecting the end of production of the Edge in North America, lower production of the Bronco and Ranger due to planned plant down weeks, and a planned reduction in dealer stocks resulting in lower wholesales across multiple nameplates. Higher F-150 wholesales were a partial offset, as the first quarter of 2024 included lower wholesales due to the launch of a new model. First quarter 2025 revenue decreased 3%, driven primarily by lower wholesales and unfavorable exchange, offset partially by favorable mix and pricing. Ford Blue’s first quarter 2025 EBIT was $96 million, a decrease of $805 million from a year ago, with an EBIT margin of 0.5%. The lower EBIT primarily reflects lower volume driven by planned production downtime and dealer stock reductions, adverse exchange, and tariff-related costs (primarily on parts). Favorable net pricing was a partial offset. 35 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Model e Segment First Quarter Key Metrics 2024 2025 H / (L) Wholesale Units (000) 10 31 21 Revenue ($M) $ 116 $ 1,242 $ 1,126 EBIT ($M) (1,327) (849) 478 EBIT Margin (%) (1,139.7) % (68.4) % 1,071.4 ppts Change in EBIT by Causal Factor (in millions) First Quarter 2024 EBIT $ (1,327) Volume / Mix 67 Net Pricing 256 Cost 143 Exchange 16 Other (4) First Quarter 2025 EBIT $ (849) In the first quarter of 2025, Ford Model e’s wholesales increased significantly from a year ago, primarily due to the launch of EV products in Europe, including the Explorer, Capri, and Puma, and higher F-150 Lightning wholesales in North America. First quarter 2025 revenue increased to $1.2 billion, reflecting higher wholesales and favorable net pricing driven by the non-recurrence of EV price adjustments on units in dealer stock in the first quarter of 2024. Ford Model e’s first quarter 2025 EBIT loss was $849 million, a $478 million improvement from a year ago, with an EBIT margin of negative 68.4%. The improved EBIT was primarily driven by favorable net pricing and lower material costs. Ford Pro Segment First Quarter Key Metrics 2024 2025 H / (L) Wholesale Units (000) (a) 409 352 (57) Revenue ($M) $ 18,019 $ 15,181 $ (2,838) EBIT ($M) 3,006 1,309 (1,697) EBIT Margin (%) 16.7 % 8.6 % (8.1) ppts __________ (a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 18,000 units in Q1 2024 and 20,000 units in Q1 2025). Change in EBIT by Causal Factor (in millions) First Quarter 2024 EBIT $ 3,006 Volume / Mix (1,127) Net Pricing (278) Cost (105) Exchange (10) Other (177) First Quarter 2025 EBIT $ 1,309 In the first quarter of 2025, Ford Pro’s wholesales decreased 14% from a year ago, driven by planned downtime at the Kentucky Truck Plant for the Expedition and Navigator launch, which also impacted Super Duty production, planned downtime at the Kansas City Assembly Plant for facility improvements that impacted Transit production, as well as the end of production of the Edge in North America for fleet customers (including daily rental). First quarter 2025 revenue decreased 16%, reflecting lower wholesales and moderated pricing across fleets, including daily rental. Ford Pro’s first quarter 2025 EBIT was $1.3 billion, a decrease of $1.7 billion from a year ago, with an EBIT margin of 8.6%. The EBIT deterioration was driven by lower volume and mix, unfavorable fleet pricing (including daily rental), and tariff-related costs (primarily on parts). 36 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 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): ◦ Volume and Mix – primarily measures EBIT variance from changes in wholesale unit volumes (at prior-year average contribution margin per unit) driven by changes in industry volume, market share, and dealer stocks, as well as the EBIT variance resulting from changes in product mix, including mix among vehicle lines and mix of trim levels and options within a vehicle line ◦ Net Pricing – primarily measures EBIT variance driven by changes in wholesale unit prices to dealers and marketing incentive programs such as rebate programs, low-rate financing offers, special lease offers, and stock adjustments on dealer inventory • Cost: ◦ Contribution Costs – primarily measures EBIT variance driven by per-unit changes in cost categories that typically vary with volume, such as material costs (including commodity and component costs), warranty expense, and freight and duty costs ◦ Structural Costs – primarily measures EBIT variance driven by absolute change in cost categories that typically do not have a directly proportionate relationship to production volume. Structural costs include the following cost categories: ▪ Manufacturing, Including Volume-Related – consists primarily of costs for hourly and salaried manufacturing personnel, plant overhead (such as utilities and taxes), and new product launch expense. These costs could be affected by volume for operating pattern actions such as overtime, line-speed, and shift schedules ▪ Engineering and Connectivity – consists primarily of costs for vehicle and software engineering personnel, prototype materials, testing, and outside engineering and software services ▪ Spending-Related – consists primarily of depreciation and amortization of our manufacturing and engineering assets, but also includes asset retirements and operating leases ▪ Advertising and Sales Promotions – includes costs for advertising, marketing programs, brand promotions, customer mailings and promotional events, and auto shows ▪ Administrative, Information Technology, and Selling – includes primarily costs for salaried personnel and purchased services related to our staff activities, information technology, and selling functions • Exchange – primarily measures EBIT variance driven by one or more of the following: (i) transactions denominated in currencies other than the functional currencies of the relevant entities, (ii) effects of converting functional currency income to U.S. dollars, (iii) effects of remeasuring monetary assets and liabilities of the relevant entities in currencies other than their functional currency, or (iv) results of our foreign currency hedging • Other – includes a variety of items, such as parts and services earnings, royalties, government incentives, compensation-related changes, and regulatory compliance expenses In addition, definitions and calculations used in this report include: • Wholesales and Revenue – wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that are sold to dealerships or others, units manufactured by Ford that are sold to other manufacturers, units distributed by Ford for other manufacturers, and local brand units produced by our China joint venture, Jiangling Motors Corporation, Ltd. (“JMC”), that are sold to dealerships or others. Vehicles sold to daily rental car companies that are subject to a guaranteed repurchase option (i.e., rental repurchase), as well as other sales of finished vehicles for which the recognition of revenue is deferred (e.g., consignments), also are included in wholesale unit volumes. Revenue from certain vehicles in wholesale unit volumes (specifically, Ford badged vehicles produced and distributed by our unconsolidated affiliates, as well as JMC brand vehicles) are not included in our revenue. Excludes transactions between Ford Blue, Ford Model e, and Ford Pro segments • Industry Volume and Market Share – based, in part, on estimated vehicle registrations; includes medium and heavy duty trucks • SAAR – seasonally adjusted annual rate 37 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 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.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 first quarter 2025 key metrics and the change in first quarter 2025 EBT compared with first quarter 2024 by causal factor for the Ford Credit segment. For a description of these causal factors, see Definitions and Information Regarding Ford Credit Causal Factors. First Quarter Key Metrics 2024 2025 H / (L) Total Net Receivables ($B) $ 135.5 $ 141.6 $ 6.1 Loss-to-Receivables (bps) (a) 47 63 16 Auction Values (b) $ 29,665 $ 30,635 3 % EBT ($M) 326 580 $ 254 ROE (%) 7.0 % 12.3 % 5.3 ppts Other Balance Sheet Metrics Debt ($B) $ 129.3 $ 134.3 $ 5.0 Net Liquidity ($B) 27.0 29.5 2.5 Financial Statement Leverage (to 1) 9.6 9.5 (0.1) __________ (a) U.S. retail financing only. (b) U.S. portfolio off-lease first quarter auction values at Q1 2025 mix. Change in EBT by Causal Factor (in millions) First Quarter 2024 EBT $ 326 Volume / Mix 55 Financing Margin 213 Credit Loss (56) Lease Residual (11) Exchange (10) Other 63 First Quarter 2025 EBT $ 580 Ford Credit’s total net receivables of $141.6 billion were 5% higher than a year ago, reflecting higher consumer financing, a larger operating lease portfolio, and higher non-consumer financing, offset partially by exchange. The first quarter 2025 U.S. loss-to-receivables (“LTR”) ratio of 63 basis points increased from a year ago, reflecting higher repossessions and increased loss severity. U.S. auction values increased 3% year over year, reflecting low industrywide used vehicle availability; tariffs and economic outlook create uncertainty for used vehicle pricing. Ford Credit’s first quarter 2025 EBT of $580 million was $254 million higher than a year ago, explained primarily by higher financing margin, favorable volume and mix, and a favorable derivative market valuation adjustment (included in Other), offset partially by higher credit losses. 38 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Definitions and Information Regarding Ford Credit Causal Factors In general, we measure year-over-year changes in Ford Credit’s EBT using the causal factors listed below: • Volume and Mix: ◦ Volume primarily measures changes in net financing margin driven by changes in average net receivables excluding the allowance for credit losses at prior period financing margin yield (defined below in financing margin) at prior period exchange rates. Volume changes are primarily driven by the volume of new and used vehicles sold and leased, the extent to which Ford Credit purchases retail financing and operating lease contracts, the extent to which Ford Credit provides wholesale financing, the sales price of the vehicles financed, the level of dealer inventories, Ford-sponsored special financing programs available exclusively through Ford Credit, and the availability of cost-effective funding ◦ Mix primarily measures changes in net financing margin driven by period-over-period changes in the composition of Ford Credit’s average net receivables excluding the allowance for credit losses by product within each region • Financing Margin: ◦ 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. Financing margin yield equals revenue, less interest expense and scheduled depreciation for the period, divided by average net receivables excluding the allowance for credit losses for the same period ◦ Financing margin changes are driven by changes in revenue and interest expense. Changes in revenue are primarily driven by the level of market interest rates, cost assumptions in pricing, mix of business, and competitive environment. Changes in interest expense are primarily driven by the level of market interest rates, borrowing spreads, and asset-liability management • Credit Loss: ◦ Credit loss is the change in the provision for credit losses at prior period exchange rates. For analysis purposes, management splits the provision for credit losses into net charge-offs and the change in the allowance for credit losses ◦ Net charge-off changes are primarily driven by the number of repossessions, severity per repossession, and recoveries. Changes in the allowance for credit losses are primarily driven by changes in historical trends in credit losses and recoveries, changes in the composition and size of Ford Credit’s present portfolio, changes in trends in historical used vehicle values, and changes in forward looking macroeconomic conditions. For additional information, refer to the “Critical Accounting Estimates - Allowance for Credit Losses” section of Item 7 of Part II of our 2024 Form 10-K Report • Lease Residual: ◦ Lease residual measures changes to residual performance at prior period exchange rates. For analysis purposes, management splits residual performance primarily into residual gains and losses, and the change in accumulated supplemental depreciation ◦ Residual gain and loss changes are primarily driven by the number of vehicles returned to Ford Credit and sold, and the difference between the auction value and the depreciated value (which includes both base and accumulated supplemental depreciation) of the vehicles sold. Changes in accumulated supplemental depreciation are primarily driven by changes in Ford Credit’s estimate of the expected auction value at the end of the lease term and changes in Ford Credit’s estimate of the number of vehicles that will be returned to it and sold. Depreciation on vehicles subject to operating leases includes early termination losses on operating leases due to customer default events. For additional information, refer to the “Critical Accounting Estimates - Accumulated Depreciation on Vehicles Subject to Operating Leases” section of Item 7 of Part II of our 2024 Form 10-K Report • Exchange: ◦ Reflects changes in EBT driven by the effects of converting functional currency income to U.S. dollars • Other: ◦ Primarily includes operating expenses, other revenue, insurance expenses, and other income/(loss) at prior period exchange rates ◦ Changes in operating expenses are primarily driven by salaried personnel costs, facilities costs, and costs associated with the origination and servicing of customer contracts ◦ In general, other income/(loss) changes are primarily driven by changes in earnings related to market valuation adjustments to derivatives (primarily related to movements in interest rates) and other miscellaneous items 39 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 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, 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. Includes debt issued in securitizations and payable only out of collections on the underlying securitized assets and related enhancements. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions • Earnings Before Taxes (“EBT”) – Reflects Ford Credit’s income before income taxes • Loss-to-Receivables (“LTR”) Ratio – LTR ratio is calculated using net charge-offs divided by average finance receivables, excluding unearned interest supplements and the allowance for credit losses • Return on Equity (“ROE” ) (as shown in the Key Metrics table) – Reflects return on equity calculated by annualizing net income for the period and dividing by monthly average equity for the period • Securitization and Restricted Cash (as shown in the Liquidity table) – Securitization cash is held for the benefit of the securitization investors (for example, a reserve fund). Restricted cash primarily includes cash held to meet certain local governmental and regulatory reserve requirements and cash held under the terms of certain contractual agreements • 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 • 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. These receivables and operating leases are reported on Ford Credit’s balance sheets and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit’s other creditors 40 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 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, 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. In the first quarter of 2025, Corporate Other had a $117 million EBIT loss, compared to a $143 million EBIT loss a year ago. Interest on Debt Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $288 million in the first quarter of 2025, $10 million higher than a year ago. Taxes Our Provision for/(Benefit from) income taxes for the first quarter of 2025 was $148 million, resulting in an effective tax rate of 23.8%. Our first quarter 2025 adjusted effective tax rate, which excludes special items, was 24.2%. During the second quarter of 2025, we anticipate recognizing a non-cash charge to deferred tax assets of about $450 million associated with resolving transfer pricing matters in certain non-U.S. operations. We expect the charge to be treated as a tax special item. We regularly review our organizational structure and income tax elections for affiliates in non-U.S. and U.S. tax jurisdictions, which may result in changes in affiliates that are included in or excluded from our U.S. tax return. Any future changes to our structure, as well as any changes in income tax laws in the countries that we operate, could cause increases or decreases to our deferred tax balances and related valuation allowances. 41 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) LIQUIDITY AND CAPITAL RESOURCES At March 31, 2025, total balance sheet cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $35.4 billion. We consider our key balance sheet metrics to be: (i) Company cash, which includes cash equivalents, marketable securities, and restricted cash (including cash held for sale), excluding Ford Credit’s cash, cash equivalents, marketable securities, and restricted cash; and (ii) Company liquidity, which includes Company cash, less restricted cash, and total available committed credit lines, excluding Ford Credit’s total available committed credit lines. Company excluding Ford Credit December 31, 2024 March 31, 2025 Balance Sheets ($B) Company Cash $ 28.5 $ 27.1 Liquidity 46.7 45.3 Debt (excluding finance leases) (19.9) (20.1) Cash Net of Debt (excluding finance leases) 8.7 7.0 Pension Funded Status ($B) (a) Funded Plans $ 3.4 $ 3.6 Unfunded Plans (3.9) (3.8) Total Global Pension $ (0.5) $ (0.2) Total Funded Status OPEB $ (4.4) $ (4.4) __________ (a) Balances at March 31, 2025 reflect net funded status at December 31, 2024, updated for: service and interest cost; expected return on assets; curtailments, settlements, and associated interim remeasurement (where applicable); separation expense; actual benefit payments; and cash contributions. The discount rate and rate of expected return assumptions are unchanged from year-end 2024. Liquidity . 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, 2025, we had Company cash of $27.1 billion and liquidity of $45.3 billion. At March 31, 2025, about 84% 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: (i) future cash flow expectations, such as for investments in future opportunities, capital investments, debt maturities, pension contributions, or restructuring requirements, (ii) short-term timing differences, and (iii) changes in the global economic or operating environment. Our Company cash investments primarily include U.S. Department of Treasury obligations, federal agency securities, bank time deposits with investment-grade institutions, investment-grade corporate securities, investment-grade commercial paper, and debt obligations of a select group of non-U.S. governments, non-U.S. governmental agencies, and supranational institutions. The average maturity of these investments is approximately one year and adjusted based on market conditions and liquidity needs. We monitor our Company cash levels and average maturity on a daily basis. 42 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Material Cash Requirements. Our material cash requirements include: • Capital expenditures (for additional information, see the “Changes in Company Cash” section below) and other payments for engineering, software, product development, and implementation of our plans for electric vehicles • Purchase of raw materials and components to support the manufacturing and sale of vehicles (including electric vehicles), parts, and accessories (for additional information, see the Aggregate Contractual Obligations table and the accompanying description of our “Purchase obligations” in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 of our 2024 Form 10-K Report) • Purchase of regulatory compliance credits • Marketing incentive payments to dealers • Payments for warranty and field service actions (for additional information, see Note 18 of the Notes to the Financial Statements herein) • Debt repayments including finance lease payments (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 18 of the Notes the Financial Statements in our 2024 Form 10-K Report) • Discretionary and mandatory payments to our global pension plans (for additional information, see the “Liquidity and Capital Resources - Total Company” section in Item 7 of our 2024 Form 10-K Report, the “Changes in Company Cash” section below, and Note 11 of the Notes to the Financial Statements herein) • Employee wages, benefits, and incentives • Operating lease payments (for additional information, see the Aggregate Contractual Obligations table in the “Liquidity and Capital Resources - Company Excluding Ford Credit” section in Item 7 and Note 17 of the Notes to the Financial Statements in our 2024 Form 10-K Report) • Cash effects related to the restructuring of our business • Strategic acquisitions and investments to grow our business, including electrification Subject to approval by our Board of Directors, shareholder distributions in the form of dividend payments and/or a share repurchase program (including share repurchases to offset the anti-dilutive effect of increased 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. 43 Item 2. 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 and finance lease payments; finance lease payments; 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, 2025 was higher than at December 31, 2024, reflecting higher in-transit and in-plant inventory. In response to, or in anticipation of, supplier disruptions, we may stockpile certain components or raw materials to help prevent disruption in our production of vehicles. 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 (“BOSK”) over a five-year period ending in 2026. As of March 31, 2025, we have recognized contributions (net of returns of capital) to BOSK of $2.4 billion (for additional information, see Note 17 of the Notes to the Financial Statements herein). 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 mechanisms included in the offtake agreements are 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 or otherwise compensate the supplier in an amount determined by the contract. As of March 31, 2025, 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 $2.3 billion of purchase obligations and approximately $4.3 billion of contingent purchase obligations based on our present forecast; however, our forecast could fluctuate from period to period based on market prices, which may 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 the event that we do not expect to consume all of the materials we are obligated to purchase pursuant to the terms of these agreements, we may sell the excess materials back to the supplier or another party. The resale price may or may not be the same as the original purchase price, depending on then-current market conditions and negotiated terms. As a result, we have recorded, and may in the future record, accruals related to either the resale when the purchase price mechanism under our agreements is higher than the expected resale price of the excess materials or when we are required to otherwise compensate the supplier. Accruals recorded to date for such items have been immaterial. 44 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) As market conditions dictate, we have entered, and may in the future enter, into additional offtake agreements with raw material suppliers or renegotiate existing agreements. In addition, as mentioned above, we may seek to resell excess materials. See Item 1A. Risk Factors in our 2024 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. 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, 2025, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $176 million. The amount settled through the SCF program during the first quarter of 2025 was $301 million. Changes in Company cash excluding Ford Credit are summarized below (in billions): First Quarter 2024 2025 Company Excluding Ford Credit Company Adjusted EBIT excluding Ford Credit (a) $ 2.4 $ 0.4 Capital spending $ (2.1) $ (1.8) Depreciation and tooling amortization 1.3 1.2 Net spending $ (0.8) $ (0.6) Receivables $ — $ (0.5) Inventory (3.1) (2.6) Trade Payables 1.9 2.5 Changes in working capital $ (1.2) $ (0.6) Ford Credit distributions $ — $ 0.2 Interest on debt and cash taxes (0.7) (0.4) All other and timing differences (0.2) (0.6) Company adjusted free cash flow (a) $ (0.5) $ (1.5) Restructuring $ (0.2) $ (0.1) Changes in debt excluding finance lease payments 0.2 0.1 Finance lease payments — — Funded pension contributions (0.5) (0.2) Shareholder distributions (1.3) (1.2) All other (1.4) 1.5 Change in cash $ (3.8) $ (1.4) __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP. Note: Numbers may not sum due to rounding. Our first quarter 2025 Net cash provided by/(used in) operating activities was positive $3.7 billion, $2.3 billion higher than a year ago (see page 58 for additional information). The increase reflects higher Ford Credit operating cash flows and working capital changes, offset partially by lower net income. Company adjusted free cash flow was negative $1.5 billion, $1.0 billion lower than a year ago, primarily driven by lower Company adjusted EBIT excluding Ford Credit, offset partially by working capital changes, lower cash taxes and capital spending, and higher Ford Credit distributions. Capital spending was $1.8 billion in the first quarter of 2025, a decrease of $0.3 billion from a year ago. 45 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) First quarter 2025 working capital impact was negative $0.6 billion, driven by higher inventory and receivables, offset partially by higher trade payables, each compared to December 31, 2024. All other and timing differences were negative $0.6 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). Cash outflows related to our warranty accruals are expected to occur over several years. In the first quarter of 2025, we contributed $234 million to our global funded pension plans. We continue to expect to contribute about $800 million to our global funded pension plans in 2025. Shareholder distributions were $1.2 billion in the first quarter of 2025, all of which was attributable to our regular and supplemental dividends. Available Credit Lines . Total Company committed credit lines, excluding Ford Credit, at March 31, 2025 were $20.1 billion, consisting of $13.5 billion of our corporate credit facility, $2.0 billion of our supplemental revolving credit facility, $2.5 billion of our 364-day revolving credit facility, and $2.1 billion of local credit facilities. At March 31, 2025, $1.8 billion of committed Company credit lines, excluding Ford Credit, was utilized under local credit facilities for our affiliates, and the full amount under each of our corporate, supplemental, and 364-day credit facilities was available. Our corporate, supplemental, and 364-day revolving credit facilities were amended as of April 17, 2025 to extend the maturity dates of the commitments under each facility. Following the corporate credit facility amendment, $3.4 billion of commitments mature on April 17, 2028 and $10.1 billion of commitments mature on April 17, 2030. Following the supplemental revolving credit facility amendment, $2.0 billion of commitments mature on April 17, 2028. Following the 364-day revolving credit facility amendment, $2.5 billion of commitments mature on April 16, 2026. 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. Debt. As shown in Note 12 of the Notes to the Financial Statements, at March 31, 2025, Company debt excluding Ford Credit was $20.9 billion (including $0.8 billion of finance leases). This balance is $0.3 billion higher than at December 31, 2024. Leverage. 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. 46 Item 2. 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 2025 with $29.5 billion of liquidity, up $4.3 billion from year-end. Ford Credit completed $11 billion of public term issuances through May 2, 2025. Key elements of Ford Credit’s funding strategy include: • Maintain strong liquidity and funding diversity • Prudently access public markets • Continue to leverage retail deposits in Europe • Flexibility to increase asset-backed securities 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): March 31, 2024 December 31, 2024 March 31, 2025 Funding Structure Term unsecured debt $ 57.0 $ 59.2 $ 63.2 Term asset-backed securities 54.9 60.4 52.8 Retail Deposits / Ford Interest Advantage 17.4 18.3 18.3 Other 1.6 1.2 0.7 Equity 13.5 13.8 14.1 Cash (8.9) (9.3) (7.5) Total Net Receivables $ 135.5 $ 143.6 $ 141.6 Securitized Funding as Percent of Total Debt 42.5 % 43.8 % 39.3 % Net receivables of $141.6 billion at March 31, 2025 were funded primarily with term unsecured debt and term asset-backed securities. Securitized funding as a percent of total debt was 39.3% as of March 31, 2025, down from 43.8% at December 31, 2024. Public Term Funding Plan. The following table shows Ford Credit’s issuances for full year 2023 and 2024, planned issuances for full year 2025, and its global public term funding issuances through May 2, 2025, excluding short-term funding programs (in billions): 2023 Actual 2024 Actual 2025 Forecast Through May 2 Unsecured $ 14 $ 17 $ 9 - 12 $ 6 Securitizations (a) 14 16 12 - 15 5 Total public $ 28 $ 33 $ 21 - 27 $ 11 __________ (a) See Definitions and Information Regarding Ford Credit Causal Factors section. For 2025, Ford Credit now projects full year public term funding in the range of $21 billion to $27 billion. 47 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Liquidity. The following table shows Ford Credit’s liquidity sources and utilization (in billions): March 31, 2024 December 31, 2024 March 31, 2025 Liquidity Sources (a) Cash $ 8.9 $ 9.3 $ 7.5 Committed asset-backed facilities 42.6 42.9 43.0 Other unsecured credit facilities 2.3 1.7 1.7 Total liquidity sources $ 53.8 $ 53.9 $ 52.2 Utilization of Liquidity (a) Securitization and restricted cash $ (3.4) $ (3.1) $ (3.0) Committed asset-backed facilities (23.3) (25.6) (19.3) Other unsecured credit facilities (0.4) (0.5) (0.6) Total utilization of liquidity $ (27.1) $ (29.2) $ (22.9) Available liquidity $ 26.7 $ 24.7 $ 29.3 Other adjustments 0.3 0.5 0.2 Net liquidity available for use $ 27.0 $ 25.2 $ 29.5 __________ (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, 2025, Ford Credit’s net liquidity available for use was $29.5 billion, $4.3 billion higher than year-end 2024, reflecting strong public market execution in the first quarter. At March 31, 2025, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and committed unsecured credit facilities, totaled $52.2 billion, down $1.7 billion from year-end 2024, primarily explained by lower cash. 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 18 of the Notes to the Financial Statements in our 2024 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 and Capital Resources - Ford Credit Segment - Funding and Liquidity Risks” section of Item 7 of Part II of our 2024 Form 10-K Report for more information. 48 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Leverage. 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): March 31, 2024 December 31, 2024 March 31, 2025 Leverage Calculation Debt $ 129.3 $ 137.9 $ 134.3 Equity (a) 13.5 13.8 14.1 Financial statement leverage (to 1) 9.6 10.0 9.5 __________ (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, 2025, Ford Credit’s financial statement leverage was 9.5:1. Ford Credit targets financial statement leverage in the range of 9:1 to 10:1. 49 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Total Company Pension Plans - Funded Balances. As of March 31, 2025, our total Company pension underfunded status reported on our consolidated balance sheets was $219 million and reflects the net funded status at December 31, 2024, 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 2024. 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 March 31, 2024 March 31, 2025 Adjusted Net Operating Profit/(Loss) After Cash Tax Net income/(loss) attributable to Ford $ 3.9 $ 5.0 Add: Noncontrolling interest 0.1 — Less: Income tax 0.6 (1.2) Add: Cash tax (1.2) (0.9) Less: Interest on debt (1.3) (1.1) Less: Total pension/OPEB income/(cost) (2.9) (0.1) Add: Pension/OPEB service costs (0.6) (0.5) Net operating profit/(loss) after cash tax $ 5.8 $ 6.1 Less: Special items (excl. pension/OPEB) pre-tax (2.9) (1.6) Adjusted net operating profit/(loss) after cash tax $ 8.7 $ 7.6 Invested Capital Equity $ 42.9 $ 44.7 Debt (excl. Ford Credit) 20.2 20.9 Net pension and OPEB liability 6.3 4.6 Invested capital (end of period) $ 69.3 $ 70.2 Average invested capital $ 68.4 $ 70.1 ROIC (a) 8.5 % 8.6 % Adjusted ROIC (Non-GAAP) (b) 12.7 % 10.9 % __________ (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. Note: Numbers may not sum due to rounding. 50 Item 2. 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. The following rating actions were taken by these NRSROs since the filing of our 2024 Form 10-K Report: • On February 6, 2025, S&P affirmed the credit ratings for Ford and Ford Credit at BBB- and revised the outlook to negative from stable. The following table summarizes certain of the credit ratings and outlook presently assigned by these four NRSROs: NRSRO RATINGS Ford Ford Credit NRSROs Issuer Default / Corporate / 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- Negative BBB- A-3 Negative BBB- 51 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) OUTLOOK Based on our current understanding and our expectation as of May 5, 2025 of how certain details and changes will be resolved related to tariffs, and subject to the uncertainties described in the succeeding paragraph, which could have a significant financial impact, we estimate a gross adverse adjusted EBIT impact of about $2.5 billion and a net adverse adjusted EBIT impact (reflecting expected offsetting actions) of about $1.5 billion for full-year 2025. Given material near-term risks, especially the potential for industrywide supply chain disruption impacting production, the potential for future or increased tariffs in the United States, changes in the implementation of tariffs including tariff offsets, retaliatory tariffs and other restrictions by other governments and the potential related market impacts, and policy uncertainties associated with tax and emissions policy, we are suspending our full-year 2025 adjusted EBIT and adjusted free cash flow guidance. In addition, we are suspending our guidance for Ford Blue, Ford Model e, and Ford Pro full-year 2025 segment EBIT and Ford Credit full-year 2025 EBT. We are also suspending our guidance for full-year 2025 capital spending. 52