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 June 30 was as follows (in millions): Ford Blue Ford Model e Ford Pro Ford Credit Unallocated Amounts and Eliminations (a) Total First Half 2024 External revenues $ 48,424 $ 1,266 $ 35,007 $ 5,884 $ 4 $ 90,585 Intersegment revenues (b) 23,047 133 — — ( 23,180 ) — Total revenues $ 71,471 $ 1,399 $ 35,007 $ 5,884 $ ( 23,176 ) $ 90,585 Other segment items (c) 69,403 3,876 29,439 5,215 Segment EBIT/EBT $ 2,068 $ ( 2,477 ) $ 5,568 $ 669 $ 5,828 Reconciliation of Segment EBIT/EBT Unallocated amounts: Corporate Other ( 308 ) Interest on debt (excludes $ 3,745 of Ford Credit interest on debt) ( 548 ) Special items (g) ( 922 ) Income/(Loss) before income taxes $ 4,050 Other Segment Disclosures Depreciation and tooling amortization $ 1,479 $ 295 $ 716 $ 1,245 $ 60 $ 3,795 Investment-related interest income 77 1 24 267 408 777 Equity in net income/(loss) of affiliated companies 156 ( 39 ) 228 18 1 364 Cash outflow for capital spending (e) 2,100 1,948 17 43 86 4,194 First Half 2025 External revenues $ 46,781 $ 3,599 $ 33,978 $ 6,478 $ 7 $ 90,843 Intersegment revenues (b) 24,132 308 — — ( 24,440 ) — Total revenues $ 70,913 $ 3,907 $ 33,978 $ 6,478 $ ( 24,433 ) $ 90,843 Other segment items (c) 70,156 6,085 30,351 5,253 Segment EBIT/EBT $ 757 $ ( 2,178 ) $ 3,627 $ 1,225 $ 3,431 Reconciliation of Segment EBIT/EBT Unallocated amounts: Corporate Other ( 272 ) Interest on debt (excludes $ 3,549 of Ford Credit interest on debt) ( 585 ) Special items (f) ( 1,412 ) Income/(Loss) before income taxes $ 1,162 Other Segment Disclosures Depreciation and tooling amortization $ 1,493 $ 292 $ 697 $ 1,233 $ 32 $ 3,747 Investment-related interest income 98 2 30 182 407 719 Equity in net income/(loss) of affiliated companies 114 ( 37 ) 136 23 ( 392 ) ( 156 ) Cash outflow for capital spending (e) 2,050 1,713 23 62 58 3,906 __________ (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 Ford Credit primarily consists of interest expense and depreciation. (d) Primarily reflects restructuring actions in Europe (which triggered remeasurement of certain European pension plans) and updated assumptions for the duration of the Oakville Assembly Plant changeover, which is now shorter than originally planned. (e) Ford Blue recognized $ 248 million and $ 195 million of spending attributable to electric vehicles at shared manufacturing plants during the second quarter of 2024 and 2025, respectively, and $ 471 million and $ 358 million in the first half of 2024 and 2025, respectively. Total electric vehicle spending, including Ford Blue and Ford Model e, was $ 1,221 million and $ 1,147 million during the second quarter of 2024 and 2025, respectively, and $ 2,419 million and $ 2,071 million in the first half of 2024 and 2025, respectively. (f) Primarily reflects a field service action for fuel injectors, our share of equity method investment asset impairments and write downs and other expenses, and charges related to the cancellation of a previously planned all-electric three-row SUV program and resulting actions. (g) Primarily reflects restructuring actions in Europe, buyouts for hourly employees in North America, and the extended duration of the Oakville Assembly Plant changeover. 33 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 (both directly and indirectly), 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 second quarter of 2025, Ford’s net EBIT impact related to tariffs implemented or revised in 2025 was about $800 million, including the impact of preferential tariff treatment and import adjustment offset amounts. These offsets are subject to periodic approval by the U.S. Department of Commerce and may be revised based on ultimate production and import levels. Although there is uncertainty regarding the application, scope, duration, and timing for implementation of tariffs (including related offsets), 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 beyond. For additional information regarding the impact and potential impact of trade policy and tariffs on our business, see the Outlook section on page 55 of this 10-Q Report and Item 1A. Risk Factors in our 2024 Form 10-K Report as updated by Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the period ended March 31, 2025. 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. We previously announced the cancellation of an all-electric three-row SUV program. In addition to incurring expenses of $1.3 billion through the first quarter of 2025 for the cancellation of that program and for which we may continue to incur expenses, the impact of that cancellation has resulted in changes to future technology and product launches, for which we have incurred and may continue to incur additional expenses. In the second quarter of 2025, we recorded $308 million of expenses related to the program cancellation and resulting actions. We may incur additional expenses and cash expenditures of about $1.5 billion and will reflect those in the quarter they are incurred as a special item. 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 adverse impact on our business, including our investments in supply, production capacity, and equity method investments. In addition, policy changes in the United States are currently phasing out certain demand-side incentives to purchase EVs and may further reduce supply-side benefits to produce EVs, all of which may result in slower adoption of EVs or otherwise disrupt the market for 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. Although recent actions taken or expected to be taken in the United States and elsewhere may reduce the stringency of such 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 in certain markets 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. As previously reported, we have entered into agreements to purchase regulatory compliance credits for current and future model years in various regions, as, in some cases, we plan to utilize credits purchased from third parties to demonstrate regulatory 34 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) compliance. Our obligations under these agreements generally are dependent on the continued existence of an underlying regulatory compliance requirement in the applicable jurisdiction. Following federal legislative action taken in the United States in the second quarter of 2025 that eliminated certain state compliance programs, we exercised our contractual right to terminate some of the credit purchase transactions under those agreements. As a result of these terminations, in addition to the delivery of credits to us under our purchase agreements and accruals we recorded for credits we are obligated to receive, our future purchase obligations under our compliance credit purchase agreements as of June 30, 2025 totaled about $2.8 billion, down from about $4.2 billion at December 31, 2024. In addition, we have written off, and may in the future write off, compliance credit assets that we are no longer able to use as a result of legislative or regulatory changes. Write-offs to date for such credit assets have been immaterial. 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. 35 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) RESULTS OF OPERATIONS In the second quarter of 2025, the net loss attributable to Ford Motor Company was $36 million, and Company adjusted EBIT was $2,140 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 analyzing operating results. Our pre-tax and tax special items were as follows (in millions): Second Quarter First Half 2024 2025 2024 2025 Restructuring (by Geography) Europe $ (226) $ (18) $ (547) $ (50) North America Hourly Buyouts — — (260) — Subtotal Restructuring $ (226) $ (18) $ (807) $ (50) Other Items Fuel injector field service action $ — $ (571) $ — $ (571) EV program cancellation — (308) — (372) Ford share of equity method investment’s asset impairments — (201) — (201) Ford share of BlueOval SK’s asset write down / other — (193) — (193) Extended Oakville Assembly Plant Changeover 45 — (246) — Other 7 — 9 — Subtotal Other Items $ 52 $ (1,273) $ (237) $ (1,337) Pension and OPEB Gain/(Loss) Pension and OPEB remeasurement $ 172 $ — $ 183 $ 10 Pension settlements, curtailments, and separations costs (47) (11) (61) (35) Subtotal Pension and OPEB Gain/(Loss) $ 125 $ (11) $ 122 $ (25) Total EBIT Special Items $ (49) $ (1,302) $ (922) $ (1,412) Provision for/(Benefit from) tax special items (a) $ 30 $ 233 $ (190) $ 204 __________ (a) Includes related tax effect on special items and tax special items. We recorded $1,302 million of pre-tax special item charges in the second quarter of 2025, primarily reflecting a field service action for fuel injectors, expenses related to the cancellation of a previously planned all-electric three-row SUV program and resulting actions (for additional details, please see the discussion of the Electric Vehicle Market in the “Recent Developments” section on page 34), our share of asset impairments at an equity method investment, and our share of BOSK’s asset write downs and other expenses due to BOSK’s alternative capacity usage plans. We recorded a $233 million provision for tax special items in the second quarter of 2025, including a $471 million non-cash charge to deferred tax assets associated with resolving transfer price matters in certain non-U.S. operations. In Note 19 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources. 36 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) COMPANY KEY METRICS The table below shows our second quarter and first half 2025 key metrics for the Company, compared to a year ago. Second Quarter First Half 2024 2025 H / (L) 2024 2025 H / (L) GAAP Financial Measures Cash Flows from Operating Activities ($B) $ 5.5 $ 6.3 $ 0.8 $ 6.9 $ 10.0 $ 3.1 Revenue ($M) 47,808 50,184 5 % 90,585 90,843 — % Net Income/(Loss) ($M) 1,831 (36) $ (1,867) 3,163 435 $ (2,728) Net Income/(Loss) Margin (%) 3.8 % (0.1) % (3.9) ppts 3.5 % 0.5 % (3.0) ppts EPS (Diluted) $ 0.46 $ (0.01) $ (0.47) $ 0.79 $ 0.11 $ (0.68) Non-GAAP Financial Measures (a) Company Adj. Free Cash Flow ($B) $ 3.2 $ 2.8 $ (0.4) $ 2.8 $ 1.3 $ (1.4) Company Adj. EBIT ($M) 2,757 2,140 (617) 5,520 3,159 (2,361) Company Adj. EBIT Margin (%) 5.8 % 4.3 % (1.5) ppts 6.1 % 3.5 % (2.6) ppts Adjusted EPS (Diluted) $ 0.47 $ 0.37 $ (0.10) $ 0.97 $ 0.51 $ (0.46) Adjusted ROIC (Trailing Four Quarters) 11.1 % 10.1 % (1.0) ppts __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP. In the second quarter of 2025, our diluted earnings per share of Common and Class B Stock was a loss of $0.01, and our diluted adjusted earnings per share was $0.37. Net income/(loss) margin was negative 0.1% in the second quarter of 2025, down 3.9 percentage points from a year ago. Company adjusted EBIT margin was 4.3% in the second quarter of 2025, down 1.5 percentage points from a year ago. The table below shows the details of our second quarter and first half 2025 net income/(loss) attributable to Ford and Company adjusted EBIT (in millions). Second Quarter First Half 2024 2025 H / (L) 2024 2025 H / (L) Ford Blue $ 1,167 $ 661 $ (506) $ 2,068 $ 757 $ (1,311) Ford Model e (1,150) (1,329) (179) (2,477) (2,178) 299 Ford Pro 2,562 2,318 (244) 5,568 3,627 (1,941) Ford Credit 343 645 302 669 1,225 556 Corporate Other (165) (155) 10 (308) (272) 36 Company Adjusted EBIT (a) 2,757 2,140 (617) 5,520 3,159 (2,361) Interest on Debt (270) (297) (27) (548) (585) (37) Special Items (49) (1,302) (1,253) (922) (1,412) (490) Taxes / Noncontrolling Interests (607) (577) 30 (887) (727) 160 Net Income/(Loss) $ 1,831 $ (36) $ (1,867) $ 3,163 $ 435 $ (2,728) __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP. The year-over-year decrease of $1,867 million in net income and $617 million in Company adjusted EBIT in the second quarter of 2025 was driven by lower Ford Blue, Ford Pro, and Model e EBIT, offset partially by higher Ford Credit EBT. The decrease in net income was also driven by higher special item charges, as described on page 36. 37 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) The tables below and on the following pages provide second quarter and first half 2025 key metrics and the change in second quarter 2025 EBIT compared with second quarter 2024 by causal factor for each of our Ford Blue, Ford Model e, and Ford Pro segments. For a description of these causal factors, see Definitions and Information Regarding Ford Blue, Ford Model e, Ford Pro Causal Factors. Ford Blue Segment Second Quarter First Half Key Metrics 2024 2025 H / (L) 2024 2025 H / (L) Wholesale Units (000) (a) 741 696 (45) 1,367 1,284 (84) Revenue ($M) $ 26,670 $ 25,784 $ (886) $ 48,424 $ 46,781 $ (1,643) EBIT ($M) 1,167 661 (506) 2,068 757 (1,311) EBIT Margin (%) 4.4 % 2.6 % (1.8) ppts 4.3 % 1.6 % (2.7) ppts __________ (a) Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 105,000 units in Q2 2024 and 97,000 units in Q2 2025). Change in EBIT by Causal Factor (in millions) Second Quarter 2024 EBIT $ 1,167 Volume / Mix (508) Net Pricing 174 Cost 307 Exchange (383) Other (96) Second Quarter 2025 EBIT $ 661 In the second quarter of 2025, Ford Blue’s wholesales decreased 6% from a year ago. The decrease primarily reflects lower F-150 wholesales due to the non-repeat of the stock build in 2024 following the launch of the new model. Second quarter 2025 revenue decreased 3%, driven primarily by lower wholesales and unfavorable exchange, offset partially by favorable mix and pricing. Ford Blue’s second quarter 2025 EBIT was $661 million, a decrease of $506 million from a year ago, with an EBIT margin of 2.6%. The lower EBIT primarily reflects lower volume and adverse exchange, offset partially by lower costs and favorable net pricing. The lower costs reflect ongoing cost reduction initiatives, including lower warranty costs, which more than offset increased tariff-related costs. 38 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Ford Model e Segment Second Quarter First Half Key Metrics 2024 2025 H / (L) 2024 2025 H / (L) Wholesale Units (000) 26 60 34 36 91 55 Revenue ($M) $ 1,150 $ 2,357 $ 1,207 $ 1,266 $ 3,599 $ 2,333 EBIT ($M) (1,150) (1,329) (179) (2,477) (2,178) 299 EBIT Margin (%) (99.9) % (56.4) % 43.6 ppts (195.5) % (60.5) % 135.0 ppts Change in EBIT by Causal Factor (in millions) Second Quarter 2024 EBIT $ (1,150) Volume / Mix (24) Net Pricing (52) Cost (113) Exchange 3 Other 7 Second Quarter 2025 EBIT $ (1,329) In the second 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, Puma, and Capri, and higher F-150 Lightning and Mustang Mach-E wholesales in North America. Second quarter 2025 revenue increased by $1,207 million, reflecting higher wholesales. Ford Model e’s second quarter 2025 EBIT loss was $1,329 million, a $179 million higher loss than a year ago, with an EBIT margin of negative 56.4%. The increased EBIT loss was primarily driven by tariff-related costs, volume-related manufacturing costs, and adverse net pricing. Ford Pro Segment Second Quarter First Half Key Metrics 2024 2025 H / (L) 2024 2025 H / (L) Wholesale Units (000) (a) 375 429 54 783 781 (2) Revenue ($M) $ 16,988 $ 18,797 $ 1,809 $ 35,007 $ 33,978 $ (1,029) EBIT ($M) 2,562 2,318 (244) 5,568 3,627 (1,941) EBIT Margin (%) 15.1 % 12.3 % (2.7) ppts 15.9 % 10.7 % (5.2) ppts __________ (a) Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 21,000 units in both Q2 2024 and Q2 2025). Change in EBIT by Causal Factor (in millions) Second Quarter 2024 EBIT $ 2,562 Volume / Mix 721 Net Pricing (491) Cost (489) Exchange 26 Other (11) Second Quarter 2025 EBIT $ 2,318 In the second quarter of 2025, Ford Pro’s wholesales increased 15% from a year ago, driven by higher daily rental volume and higher sales of the Transit family of vehicles, including the launch of the E-Transit Custom and E-Transit Courier in Europe. Second quarter 2025 revenue increased 11%, primarily reflecting higher wholesales, offset partially by moderated pricing across fleets (including daily rental). Ford Pro’s second quarter 2025 EBIT was $2,318 million, a decrease of $244 million from a year ago, with an EBIT margin of 12.3%. The lower EBIT was primarily driven by unfavorable fleet pricing (including daily rental), tariff-related costs, and volume-related manufacturing costs, offset partially by higher volume. 39 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 (including tariff) 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 40 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 second quarter and first half 2025 key metrics and the change in second quarter 2025 EBT compared with second 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. Second Quarter First Half Key Metrics 2024 2025 H / (L) 2024 2025 H / (L) Total Net Receivables ($B) $ 137.7 $ 143.7 $ 6.0 Loss-to-Receivables (bps) (a) 41 48 7 44 56 12 Auction Values (b) $ 31,045 $ 32,410 4 % $ 30,305 $ 31,485 4 % EBT ($M) 343 645 $ 302 669 1,225 $ 556 ROE (%) 7.6 % 14.9 % 7.3 ppts 7.3 % 13.6 % 6.3 ppts Other Balance Sheet Metrics Debt ($B) $ 130.5 $ 137.4 $ 6.9 Net Liquidity ($B) 28.3 27.0 (1.3) Financial Statement Leverage (to 1) 9.6 9.4 (0.2) __________ (a) U.S. retail financing only. (b) U.S. portfolio off-lease second quarter auction values at Q2 2025 mix and YTD amounts at YTD 2025 mix. Change in EBT by Causal Factor (in millions) Second Quarter 2024 EBT $ 343 Volume / Mix 21 Financing Margin 197 Credit Loss (19) Lease Residual 23 Exchange (2) Other 82 Second Quarter 2025 EBT $ 645 Ford Credit’s total net receivables of $143.7 billion were 4% higher than a year ago, explained primarily by a larger operating lease portfolio, higher consumer financing, and exchange. The second quarter 2025 U.S. loss-to-receivables (“LTR”) ratio of 48 basis points increased from a year ago, reflecting higher repossessions and increased loss severity. U.S. auction values increased 4% year over year, reflecting industrywide low used vehicle supply and high demand. Ford Credit’s second quarter 2025 EBT of $645 million was $302 million higher than a year ago, explained primarily by higher financing margin and receivables and a favorable derivative market valuation adjustment (included in Other), partially offset by an accrual related to an industrywide review of historical U.K. discretionary dealer commissions (also included in Other). 41 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 42 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 43 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 second quarter of 2025, Corporate Other had a $155 million EBIT loss, compared to a $165 million EBIT loss a year ago. Interest on Debt Interest on Debt, which consists of interest expense on Company debt excluding Ford Credit, was $297 million in the second quarter of 2025, $27 million higher than a year ago. Taxes Our Provision for/(Benefit from) income taxes for the second quarter and first half of 2025 was $570 million and $718 million, respectively, resulting in effective tax rates of 105.4% and 61.8%, respectively. During the second quarter of 2025, we recognized a non-cash charge to deferred tax assets of $ 471 million associated with resolving transfer pricing matters in certain non-U.S. operations. Our second quarter and first half 2025 adjusted effective tax rates, which exclude special items, were 18.3% and 20.0%, respectively. On July 4, 2025, P.L. 119-21 (otherwise known as the “One Big Beautiful Bill Act”) was signed into law. We are analyzing the provisions within the act; however, we do not expect a material impact on our 2025 consolidated financial statements. During the third quarter of 2025, we expect to recognize a non-cash charge to deferred tax assets of about $400 million to recognize the impact of tax legislation enacted in Germany on July 18, 2025. 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. For example, in the near-term, we anticipate releasing valuation allowances in certain jurisdictions where restructuring actions have improved business operations. 44 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) LIQUIDITY AND CAPITAL RESOURCES At June 30, 2025, total cash, cash equivalents, marketable securities, and restricted cash, including Ford Credit and entities held for sale, was $37.7 billion. We consider our key balance sheet metrics to be: (i) Company cash, which includes cash equivalents, marketable securities, and restricted cash (including cash held for sale), excluding Ford Credit’s cash, cash equivalents, marketable securities, and restricted cash; and (ii) Company liquidity, which includes Company cash, less restricted cash, and total available committed credit lines, excluding Ford Credit’s total available committed credit lines. Company excluding Ford Credit December 31, 2024 June 30, 2025 Balance Sheets ($B) Company Cash $ 28.5 $ 28.4 Liquidity 46.7 46.6 Debt (excluding finance leases) (19.9) (19.5) Cash Net of Debt (excluding finance leases) 8.7 8.9 Pension Funded Status ($B) (a) Funded Plans $ 3.4 $ 4.0 Unfunded Plans (3.9) (3.9) Total Global Pension $ (0.5) $ 0.1 Total Funded Status OPEB $ (4.4) $ (4.4) __________ (a) Balances at June 30, 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 June 30, 2025, we had Company cash of $28.4 billion and liquidity of $46.6 billion. At June 30, 2025, about 82% 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. 45 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. 46 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 June 30, 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 June 30, 2025, we have recognized contributions (net of returns of capital) to BOSK of $2.6 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 June 30, 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 $1.7 billion of purchase obligations and approximately $4.8 billion of contingent purchase obligations based on our present forecast; however, our forecast could fluctuate from period to period based on market prices, which 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. 47 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 June 30, 2025, the outstanding amount of Ford receivables that suppliers elected to sell to the SCF financial institutions was $164 million. The amount settled through the SCF program during the first half of 2025 was $605 million. Changes in Company cash excluding Ford Credit are summarized below (in billions): Second Quarter First Half 2024 2025 2024 2025 Company Excluding Ford Credit Company Adjusted EBIT excluding Ford Credit (a) $ 2.4 $ 1.5 $ 4.9 $ 1.9 Capital spending $ (2.1) $ (2.1) $ (4.2) $ (3.8) Depreciation and tooling amortization 1.3 1.3 2.5 2.5 Net spending $ (0.8) $ (0.8) $ (1.6) $ (1.3) Receivables $ (0.2) $ (1.7) $ (0.2) $ (2.2) Inventory 1.3 1.2 (1.8) (1.4) Trade Payables (1.2) 0.8 0.8 3.4 Changes in working capital $ — $ 0.3 $ (1.2) $ (0.3) Ford Credit distributions $ 0.2 $ 0.5 $ 0.2 $ 0.7 Interest on debt and cash taxes (0.5) (0.4) (1.2) (0.9) All other and timing differences 2.0 1.8 1.8 1.2 Company adjusted free cash flow (a) $ 3.2 $ 2.8 $ 2.8 $ 1.3 Restructuring $ (0.3) $ 0.2 $ (0.5) $ 0.1 Changes in debt excluding finance lease payments 0.2 (0.7) 0.4 (0.7) Finance lease payments — — (0.1) (0.1) Funded pension contributions (0.1) (0.3) (0.6) (0.5) Shareholder distributions (0.8) (0.6) (2.2) (1.8) All other (0.7) (0.1) (2.1) 1.4 Change in cash $ 1.5 $ 1.3 $ (2.2) $ (0.1) __________ (a) See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP. Note: Numbers may not sum due to rounding. Our second quarter 2025 Net cash provided by/(used in) operating activities was $6.3 billion, $0.8 billion higher than a year ago (see page 61 for additional information). The increase primarily reflects higher Ford Credit operating cash flows and working capital changes, offset partially by lower net income. Company adjusted free cash flow was $2.8 billion, $0.4 billion lower than a year ago, primarily driven by lower Company adjusted EBIT excluding Ford Credit and all other and timing differences, offset partially by higher Ford Credit distributions and working capital changes. Capital spending was $2.1 billion in the second quarter of 2025, the same as a year ago. We now expect full year 2025 capital spending to be about $9 billion. 48 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Second quarter 2025 working capital impact was $0.3 billion, driven by lower inventory and higher payables, offset by higher receivables, each compared to March 31, 2025. All other and timing differences were $1.8 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 second quarter of 2025, we contributed $281 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 $0.6 billion in the second quarter of 2025, all of which was attributable to our regular dividend. Available Credit Lines . Total Company committed credit lines, excluding Ford Credit, at June 30, 2025 were $19.3 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 $1.3 billion of local credit facilities. At June 30, 2025, $1.0 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. Lenders under our corporate credit facility have $3.4 billion of commitments maturing on April 17, 2028 and $10.1 billion of commitments maturing on April 17, 2030. Lenders under our supplemental revolving credit facility have $2.0 billion of commitments maturing on April 17, 2028. Lenders under our 364-day revolving credit facility have $2.5 billion of commitments maturing 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. On July 28, 2025, we closed on a $3 billion delayed draw term loan facility, further strengthening our liquidity and providing additional financial flexibility. The commitments under the delayed draw term loan facility are available through July 28, 2026. Any unused commitments shall automatically terminate after July 28, 2026, and any loans drawn under the facility will mature on December 31, 2028. The terms and conditions of the delayed draw term loan facility are consistent with our corporate, supplemental, and 364-day revolving facilities; however, the delayed draw term loan facility does not include any sustainability-linked targets. As of July 30, 2025, all $3 billion was available for use. On July 23, 2025, Ford Motor Company Limited, our operating subsidiary in the United Kingdom (“Ford of Britain”), entered into a £1 billion term loan credit facility with a syndicate of banks to support Ford of Britain’s general export activities. Accordingly, U.K. Export Finance (“UKEF”) provided an £800 million guarantee of the credit facility under its Export Development Guarantee scheme, which supports high value commercial lending to U.K. exporters. We have also guaranteed Ford of Britain’s obligations under the credit facility to the lenders. On July 28, 2025, Ford of Britain drew the full £1 billion available under the facility. This seven-year, partially amortizing loan matures on July 23, 2032. Debt. As shown in Note 12 of the Notes to the Financial Statements, at June 30, 2025, Company debt excluding Ford Credit was $20.3 billion (including $0.9 billion of finance leases). This balance is $0.3 billion lower than at December 31, 2024. 49 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) 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 separately 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. Ford Credit Segment Ford Credit remains well capitalized with a strong balance sheet and funding diversified across platforms and markets. Ford Credit ended the second quarter of 2025 with $27 billion of liquidity, up $1.8 billion from year-end. Ford Credit completed $15 billion of public term issuances through July 29, 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): June 30, 2024 December 31, 2024 June 30, 2025 Funding Structure Term unsecured debt $ 59.2 $ 59.2 $ 63.1 Term asset-backed securities 53.9 60.4 55.7 Retail Deposits / Ford Interest Advantage 17.4 18.3 18.6 Other 1.1 1.2 0.3 Equity 13.6 13.8 14.5 Cash (7.5) (9.3) (8.5) Total Net Receivables $ 137.7 $ 143.6 $ 143.7 Securitized Funding as Percent of Total Debt 41.3 % 43.8 % 40.5 % Net receivables of $143.7 billion at June 30, 2025 were funded primarily with term unsecured debt and term asset-backed securities. Securitized funding as a percent of total debt was 40.5% as of June 30, 2025. 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 July 29, 2025, excluding short-term funding programs (in billions): 2023 Actual 2024 Actual 2025 Forecast Through July 29 Unsecured $ 14 $ 17 $ 9 - 12 $ 7 Securitizations (a) 14 16 13 - 15 8 Total public $ 28 $ 33 $ 22 - 27 $ 15 __________ (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 $22 billion to $27 billion. 50 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): June 30, 2024 December 31, 2024 June 30, 2025 Liquidity Sources (a) Cash $ 7.5 $ 9.3 $ 8.5 Committed asset-backed facilities 42.5 42.9 42.8 Other unsecured credit facilities 2.2 1.7 1.7 Total liquidity sources $ 52.2 $ 53.9 $ 53.0 Utilization of Liquidity (a) Securitization and restricted cash $ (2.8) $ (3.1) $ (2.9) Committed asset-backed facilities (21.1) (25.6) (22.9) Other unsecured credit facilities (0.2) (0.5) (0.3) Total utilization of liquidity $ (24.1) $ (29.2) $ (26.1) Available liquidity $ 28.1 $ 24.7 $ 26.9 Other adjustments 0.2 0.5 0.1 Net liquidity available for use $ 28.3 $ 25.2 $ 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 June 30, 2025, Ford Credit’s net liquidity available for use was $27.0 billion, $1.8 billion higher than year-end 2024, reflecting strong access to public funding markets in the first half of the year. At June 30, 2025, Ford Credit’s liquidity sources, including cash, committed asset-backed facilities, and committed unsecured credit facilities, totaled $53.0 billion, down $0.9 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. 51 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): June 30, 2024 December 31, 2024 June 30, 2025 Leverage Calculation Debt $ 130.5 $ 137.9 $ 137.4 Equity (a) 13.6 13.8 14.5 Financial statement leverage (to 1) 9.6 10.0 9.4 __________ (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 June 30, 2025, Ford Credit’s financial statement leverage was 9.4:1. 52 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) Total Company Pension Plans - Funded Balances. As of June 30, 2025, our total Company pension overfunded status reported on our consolidated balance sheets was $143 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 June 30, 2024 June 30, 2025 Adjusted Net Operating Profit/(Loss) After Cash Tax Net income/(loss) attributable to Ford $ 3.8 $ 3.2 Add: Noncontrolling interest — — Less: Income tax 0.2 (1.2) Add: Cash tax (1.2) (0.7) Less: Interest on debt (1.2) (1.2) Less: Total pension/OPEB income/(cost) (2.6) (0.1) Add: Pension/OPEB service costs (0.6) (0.5) Net operating profit/(loss) after cash tax $ 5.7 $ 4.4 Less: Special items (excl. pension/OPEB) pre-tax (2.0) (2.7) Adjusted net operating profit/(loss) after cash tax $ 7.7 $ 7.1 Invested Capital Equity $ 43.6 $ 45.1 Debt (excl. Ford Credit) 20.4 20.3 Net pension and OPEB liability 6.0 4.3 Invested capital (end of period) $ 70.0 $ 69.7 Average invested capital $ 69.1 $ 70.2 ROIC (a) 8.2 % 6.3 % Adjusted ROIC (Non-GAAP) (b) 11.1 % 10.1 % __________ (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. 53 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. There have been no rating actions taken by these NSROs since the filing of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. 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- 54 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued) OUTLOOK We provided 2025 Company guidance in our earnings release furnished on Form 8-K dated July 30, 2025. The guidance is based on our expectations and best estimates as of July 30, 2025, and assumes no material change to our current assumptions for inflation, logistics issues, production, or macroeconomic conditions. Moreover, our guidance has not factored in any new policy changes by the administration in the United States, including future or revised tariffs, that have not been announced or tariffs or other policy changes that may be announced by other governments after the date hereof. 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 2024 Form 10-K Report and as updated by our subsequent filings with the SEC. 2025 Guidance Total Company Adjusted EBIT (a) $6.5 - $7.5 billion Adjusted Free Cash Flow (a) $3.5 - $4.5 billion Capital spending About $9.0 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 2025, we expect adjusted EBIT of $6.5 billion to $7.5 billion and adjusted free cash flow of $3.5 billion to $4.5 billion. Our outlook for 2025 assumes: • U.S. industry sales of 16.0 million to 16.5 million units • Full year industry pricing about flat • Net cost improvement target of $1.0 billion, excluding the impact of tariffs • Net tariff headwind of about $2.0 billion Our assumption for the net tariff headwind reflects approximately $3.0 billion of gross adverse adjusted EBIT impact, offset partially by $1.0 billion of recovery actions (primarily market factors). 55