What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-11 compared with 2025-02-06 · 115 added, 104 removed, 495 unchanged (31% of the section changed)

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

• Ford’s long-term success depends on delivering the Ford+ plan, including improving cost and competitiveness;

• Ford’s vehicles could be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of our vehicles and services and reduce the costs associated therewith could continue to have an adverse effect on our business;

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

• Ford’s long-term success depends on delivering the Ford+ plan, including improving cost competitiveness;

• Ford’s products have been and could continue to be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of our products and services and reduce the costs associated therewith could continue to have an adverse effect on our business;

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

• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or business strategies or the benefits may take longer than expected to materialize;

• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, commercial relationships, or business strategies or the benefits may take longer than expected to materialize;

• Ford may not realize the anticipated benefits of restructuring actions and such actions may cause Ford to incur significant charges, disrupt our operations, or harm our reputation;

• Failure to develop and deploy secure digital services that appeal to customers and grow our subscription rates could have a negative impact on Ford’s business;

• Failure to develop and deploy secure digital services that appeal to customers, retain existing subscribers, and grow our subscription rates could have a negative impact on Ford’s business;

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

• Ford’s ability to attract, develop, grow, support, and reward talent is critical to its success and competitiveness;

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

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

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

• Operational information systems, security systems, products, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford, Ford Credit, their suppliers, and dealers;

• To facilitate access to the raw materials and other components necessary for the manufacture of electrified products, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast;

• With a global footprint and supply chain, Ford’s results and operations have been and could continue to be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;

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

• Ford may face increased price competition for its products and services, including pricing pressure resulting from industry excess capacity, currency fluctuations, competitive actions, or economic or other factors, particularly for electric vehicles;

• Ford may face increased price competition for its products and services, including pricing pressure resulting from industry excess capacity, currency fluctuations, competitive actions, legal and policy changes, or economic or other factors, particularly for electrified vehicles;

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

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

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

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

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

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

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

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

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

• Ford may need to substantially modify its product plans and facilities to respond to shifting consumer sentiment and competitive dynamics as a result of policy changes affecting, or otherwise to comply with, safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations;

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

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

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

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

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

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

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

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

For additional discussion, see “Item 1A.

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• Company Adjusted EBIT (Most Comparable GAAP Measure:

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

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

Net Income/(Loss) Attributable to Ford) – Earnings before interest and taxes (“EBIT”) excludes interest on debt (excluding Ford Credit Debt), taxes, and pre-tax special items.

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

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

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

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

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∘ Pension and OPEB remeasurement gains and losses ∘ No minimum

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

∘ Personnel expenses, supplier- and dealer-related costs, and facility-related charges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix ∘ Generally $100 million or more

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

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

generally $100 million or more for other items

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

• Company Adjusted EBIT Margin (Most Comparable GAAP Measure:

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

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

• Adjusted Effective Tax Rate (Most Comparable GAAP Measure:

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

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

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

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

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

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

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

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

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

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

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

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

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

Adjusted net operating profit/(loss) after cash tax measures operating results less special items, interest on debt (excluding Ford Credit Debt), and certain pension/OPEB costs.

Average invested capital is the sum of average balance sheet equity, debt (excluding Ford Credit Debt), and net pension/OPEB liability.

When we provide guidance for adjusted EBIT, adjusted earnings/(loss) per share, and adjusted effective tax rate, we do not provide guidance for their respective most comparable GAAP measures as those GAAP measures will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including gains and losses on pension and OPEB remeasurement, and other items that are difficult to quantify.

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

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

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Net income/(loss) $ 4,329 $ 5,894 $ (8,162)

(Provision for)/Benefit from income taxes (a) 864 362 (1,339)

(Provision for)/Benefit from income taxes 362 (1,339) 3,668

Income/(Loss) before income taxes $ 3,967 $ 7,233 $ (11,830)

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Adjusted EBIT margin (%) 5.9 % 5.5 % 3.6 %

(a) 2022 reflects the tax consequences of unrealized losses on marketable securities and favorable changes in our valuation allowances;

2023 reflects benefits from U.S.

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

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

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(a) Includes adjustment for noncontrolling interest in 2023.

(b) In 2022, there were 42 million shares excluded from the calculation of diluted earnings/(loss) per share due to their anti-dilutive effect.

(b) In 2025, there were 56 million shares excluded from the GAAP calculation of diluted earnings/(loss) per share due to their anti-dilutive effect.

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

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(Provision for)/Benefit from income taxes (GAAP) (a) $ 362 $ (1,339) $ 3,668

Impact of special items (b) 2,573 1,273 323

Impact of special items 1,273 323 4,775

Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ (911) $ (1,662) $ (1,107)

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

(b) 2022 reflects the tax consequences of unrealized losses on marketable securities and favorable changes in our valuation allowances;

2023 reflects benefits from China legal entity restructuring.

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

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

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

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

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

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Other assets 11,536 2,154 — 13,690

Receivable from other segments 74 — (74) —

Total assets $ 130,934 $ 161,863 $ (3,637) $ 289,160

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Deferred income taxes 691 660 3 1,354

Payable to other segments — 74 (74) —

Total liabilities $ 109,758 $ 147,059 $ (3,637) $ 253,180

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Other amortization 52 (1,891) — (1,839)

EV asset impairment/program cancellation asset write-downs (including depreciation of $8,140)

9,435 — — 9,435

Provision for credit and insurance losses 2 614 — 616

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Selected Other Information.

At December 31, 2023, total equity attributable to Ford was $42.8 billion, a decrease of $0.4 billion compared with December 31, 2022.

At December 31, 2024, total equity attributable to Ford was $44.8 billion, an increase of $2.1 billion compared with December 31, 2023.

At December 31, 2025, total equity attributable to Ford was $36.0 billion, a decrease of $8.9 billion compared with December 31, 2024.

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

2023 vs 2022 Increase/

2024 vs 2023 Increase/

Increase/(Decrease)

Net income/(loss) $ 5.9 $ (8.2)

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Other comprehensive income/(loss) (0.6) 1.9

Adoption of accounting standards — —

Common stock issued (including share-based compensation impacts) 0.4 0.4

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

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

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

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

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

We disclose our estimate of reasonably possible costs in excess of our accruals for material field service actions and customer satisfaction actions.

The estimate we provide is presented on a gross cost basis, and we do not reduce or net our estimate to eliminate any unrealized profit Ford may earn associated with part sales to dealers.

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

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

• Expected contributions.

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

• Retirement rates.

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

• Expected contributions.

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

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plans and 4.80% for non-U.S.

plans, reflecting increases of 48 and 53 basis points, respectively, compared with year-end 2023.

Higher discount rates lowered the valuations of U.S.

plans, reflecting a decrease of 31 basis points and an increase of 29 basis points, respectively, compared with year-end 2024.

Lower discount rates increased the valuations of U.S.

plans, while higher discount rates decreased the valuations of non-U.S.

In 2025, the U.S.

actual return on assets was 0.08%, which was lower than the expected long-term rate of return of 5.93%.

actual return on assets was 9.37%, which was higher than the expected long-term rate of return of 6.37%.

actual return on assets was 0.30%, which was lower than the expected long-term rate of return of 5.23%.

The lower returns are explained primarily by lower returns on fixed income assets given the increase in long-term interest rates.

In total, higher discount rates, partially offset by asset returns lower than our assumptions, resulted in a net remeasurement gain of $575 million.

This gain has been recognized within net periodic benefit cost and reported as a special item.

The combination of lower discount rates and higher asset returns for our U.S.

plans and higher discount rates and lower asset returns for our non-U.S.

plans had offsetting effects and minimal impact to our net remeasurement.

In 2025, we recorded a remeasurement loss of $616 million.

plans, the remeasurement loss was primarily from actuarial losses compared to plan assumptions.

plans, the remeasurement loss was from changes in key measurement assumptions, primarily improved life expectancy.

This loss has been recognized within net periodic benefit cost and reported as a special item.

For 2026, the expected long-term rate of return on assets is 6.20% for U.S.

plans, up 44 basis points from 2024, and 5.23% for non-U.S.

plans, up 70 basis points compared with a year ago, reflecting higher expected capital market return assumptions, including increased long-term interest rates.

plans, down 17 basis points from 2025, and 5.15% for non-U.S.

plans, down 8 basis points compared with a year ago, reflecting lower expected capital market return assumptions.

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

De-risking Strategy .

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

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

Additionally, we aim to:

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

• Ensure sufficient liquid assets to pay plan benefits;

• Evaluate strategic actions to reduce pension liabilities, such as plan design changes or pension risk transfers to insurers

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

plans and 86% in our non-U.S.

plans at year-end 2025.

Sensitivity Analysis.

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Effect of Actual Results .

The weighted average discount rate used to determine the benefit obligation for worldwide OPEB plans at December 31, 2024 was 5.46%, compared with 5.10% at December 31, 2023, resulting in a worldwide net remeasurement gain of $112 million, which has been recognized within net periodic benefit cost and reported as a special item.

The weighted average discount rate used to determine the benefit obligation for worldwide OPEB plans at December 31, 2025 was 5.27%, compared with 5.46% at December 31, 2024, resulting in a minimal impact to our worldwide remeasurement.

The $19 million gain has been recognized within net periodic benefit cost and reported as a special item.

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

Sensitivity Analysis.

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Interest rate - service cost and interest cost +/- 25 N/A $5/$(5)

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

Nature of Estimates Required.

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We make these estimates and judgments primarily in the following areas:

(i) the calculation of tax credits, (ii) the calculation of differences in the timing of recognition of revenue and expense for tax reporting and financial statement purposes, as well as (iii) the calculation of interest and penalties related to uncertain tax positions.

Changes in these estimates and judgments may result in a material increase or decrease to our tax provision, which would be recorded in the period in which the change occurs.

(i) the calculation of tax credits, (ii) the calculation of differences in the timing of recognition of revenue and expense for tax reporting and financial statement purposes, and (iii) the calculation of interest and penalties related to uncertain tax positions.

Assumptions and Approach Used.

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These tax laws and regulations are complex and involve uncertainties in the application to our facts and circumstances that may be open to interpretation.

We recognize benefits for these uncertain tax positions based upon a process that requires judgment regarding the technical application of the laws, regulations, and various related judicial opinions.

We recognize benefits for these uncertain tax positions based upon a process that requires judgment regarding the technical application of laws, regulations, and various related judicial opinions.

If, in our judgment, it is more likely than not (defined as a likelihood of more than 50%) that the uncertain tax position will be settled favorably for us, we estimate an amount that ultimately will be realized.

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We evaluate these uncertain tax positions on a quarterly basis, including consideration of changes in facts and circumstances, such as new regulations or recent judicial opinions, as well as the status of audit activities by taxing authorities.

Changes to our estimate of the amount to be realized are recorded in our provision for income taxes during the period in which the change occurred.

We must also assess the likelihood that we will be able to recover our deferred tax assets against future sources of taxable income and reduce the carrying amount of deferred tax assets by recording a valuation allowance if, based on all available evidence, it is more likely than not that all or a portion of such assets will not be realized.

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These strategies would be a source of additional positive evidence and, depending on their nature, could be heavily weighted.

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

In assessing the realizability of deferred tax assets, we consider the trade-offs between cash preservation and cash outlays to preserve tax credits.

We presently believe that global valuation allowances of $3.9 billion are required and that we ultimately will recover the remaining $15.3 billion of deferred tax assets.

We presently believe that global valuation allowances of $628 million are required and that we ultimately will recover the remaining $20.6 billion of deferred tax assets.

However, realization of our deferred tax assets is impacted by a number of variables, including future profitability within relevant tax jurisdictions, tax law changes, and tax planning and the related effects on our cash and liquidity position.

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For additional information regarding income taxes, see Note 7 of the Notes to the Financial Statements.

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

Impairment of Long-Lived Assets

Asset groups are tested at the level of the smallest identifiable group of assets that generate cash flows that are largely independent of the cash flows from other assets or groups of assets.

Asset groupings for impairment analysis are reevaluated when events occur, such as changes in organizational structure and management reporting.

Impairment of Long-Lived Assets and Goodwill

Asset groups are tested at the lowest level for which identifiable cash flows are largely independent of the cash flows from other assets or groups of assets.

Asset groups are reevaluated when events occur, such as changes in organizational structure and management reporting.

Our asset groups for 2025 were:

Ford Blue North America, Ford Blue Europe, Ford Blue Rest of World, Ford Model e, Ford Pro, Ford Credit, and Ford Next.

Ford Blue North America, Ford Blue Europe, Ford Blue Rest of World, Ford Model e, Ford Pro, and Ford Credit.

Nature of Estimates Required - Held-and-Used Long-Lived Assets.

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• Significant adverse change in the manner in which an asset group is used or in its physical condition

• Significant change in the asset grouping

In addition, investing in new or emerging products (e.g., EVs) or services (e.g., connectivity) may require substantial upfront capital, which may result in initial forecasted negative cash flows in the near term.

• Significant change in the asset group

In addition, investing in new or emerging products or services often requires substantial upfront capital, which may result in initial forecasted negative cash flows in the near term.

In these instances, near-term negative cash flows on their own may not be indicative of a triggering event for evaluation of impairment.

In such circumstances, we also conduct a qualitative evaluation of the business growth trajectory, which includes updating our assessment of when positive cash flows are expected to be generated, confirming whether established milestones are being achieved, and assessing our ability and intent to continue to access required funding to execute the plan.

In such circumstances, when appropriate, we may also conduct a qualitative evaluation of the business growth trajectory, which can include updating our assessment of when positive cash flows are expected to be generated, confirming whether critical milestones have been achieved, and assessing our ability and intent to continue to access required funding to execute the plan.

If this evaluation indicates a triggering event has occurred, a test for recoverability is performed.

When a triggering event occurs, a test for recoverability is performed, comparing projected undiscounted future cash flows to the carrying value of the asset group.

If the undiscounted forecasted cash flows are less than the carrying value of the assets, the asset group’s fair value is measured relying primarily on a discounted cash flow method.

To the extent available, we will also consider third-party valuations of our long-lived assets that may have been prepared for other business purposes.

If the undiscounted future cash flows are less than the carrying value of the assets, the asset group’s estimated fair value is measured by calculating the present value of the discounted cash flows or by valuing our long-lived assets using the market approach or cost approach.

An impairment charge is recognized for the amount by which the carrying value of the asset group exceeds its estimated fair value.

When an impairment loss is recognized for assets to be held and used, the adjusted carrying amounts of those assets are depreciated over their remaining useful life.

Nature of Estimates Required - Held-for-Sale Operations.

We perform an impairment test on a disposal group to be discontinued, held for sale, or otherwise disposed of when we have committed to an action and the action is expected to be completed within one year.

We estimate fair value to approximate the expected proceeds to be received, less cost to sell, and compare it to the carrying value of the disposal group.

An impairment charge is recognized when the carrying value exceeds the estimated fair value.

We also assess fair value if circumstances arise that were considered unlikely and, as a result, we decide not to sell a disposal group previously classified as held for sale upon reclassification to held and used.

When there is a change to a plan of sale, and the assets are reclassified from held for sale to held and used, the long-lived assets are reported at the lower of (i) the carrying amount before a held-for-sale designation, adjusted for depreciation that would have been recognized if the assets had not been classified as held for sale, or (ii) the fair value at the date the assets no longer satisfy the criteria for classification as held for sale.

Assumptions and Approach Used - Held-and-Used Long-Lived Assets.

When an impairment loss is recognized for assets to be held and used, the adjusted carrying amounts of those assets are depreciated over their remaining useful lives.

Nature of Estimates Required - Goodwill .

Goodwill is subject to periodic assessments for impairment.

We test goodwill for impairment annually during the fourth quarter, or when an event occurs or circumstances change that indicate goodwill may be impaired.

We assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

If a qualitative assessment identifies a possible impairment or we impair the assets of a reporting unit, then a quantitative goodwill impairment test is performed.

If the carrying value of the reporting unit is above fair value, an impairment charge is recognized in an amount equal to the excess.

Assumptions and Approach Used - Held-and-Used Long-Lived Assets and Goodwill.

The fair value of an asset group is determined from the perspective of a market participant.

Considerations include appropriate discount rates, valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group.

Considerations include valuation techniques, the most advantageous market, and assumptions about the highest and best use of the asset group, and appropriate discount rates.

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

Fair value reflects the price that would be received to sell an asset in an orderly transaction between market participants.

The most appropriate method to determine the estimated fair value of an asset group depends on the facts and circumstances pertaining to the asset group being measured, and in certain instances, we may engage third parties to assist with the determination of fair value.

We measure the fair value of an asset group based on market prices (i.e., the amount for which the asset could be sold to a third party) when available.

When market prices are not available, we generally estimate the fair value of the asset group using the income approach and/or the market approach.

When market prices are not available, we estimate the fair value of an asset group using the income approach, a market approach and/or a cost approach.

The income approach uses cash flow projections.

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Many of the factors used in assessing fair value are outside the control of management, and these assumptions and estimates may change in future periods.

Changes in assumptions or estimates can materially affect the fair value measurement of an asset group and, therefore, can affect the test results.

Changes in assumptions or estimates can materially affect the fair value of an asset group, and, therefore, can affect test results.

The following are key assumptions we use in making cash flow projections:

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• Long-term growth rate.

A growth rate is used to calculate the terminal value of the business and is added to the present value of the debt-free interim cash flows.

A growth rate is used to calculate the terminal value of the business and is added to the present value of the debt-free cash flows.

The growth rate is the expected rate at which an asset group’s earnings stream is projected to grow beyond the planning period.

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This approach relies on the market value (i.e., market capitalization) of companies that are engaged in the same or a similar line of business as the asset group being evaluated.

In addition, to the extent available, we also consider third-party valuations that may have been prepared for other business purposes.

During 2024, no triggering events were identified.

Assumptions and Approach Used - Held-for-sale Operations.

In the first quarter of 2024, we entered into an agreement to sell 100% of our equity interest in Ford Sales and Service Korea Company (“FSSK”), and the assets and liabilities of the entity were classified as held for sale.

However, as of December 31, 2024, FSSK no longer met the held-for-sale criteria as that sale transaction did not close and is no longer probable of occurring.

Accordingly, FSSK’s assets and liabilities were reclassified and reported as held and used as of December 31, 2024.

In the third quarter of 2024, we entered into an agreement to sell 100% of our equity interest in Ford Motor Company A/S, our national sales company in Denmark.

The entity was classified as held for sale in the fourth quarter of 2024 once all held-for-sale criteria were met.

Accordingly, as of December 31, 2024, the assets and liabilities of Ford Motor Company A/S were reported as held for sale.

We determined that the assets of both FSSK and Ford Motor Company A/S, which were not material, were not impaired.

See Note 21 of the Notes to the Financial Statements for more information regarding held-for-sale operations.

It may also use prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets and liabilities, such as a business.

The cost approach may also be used to measure the fair value of an asset group.

The cost approach reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost).

The cost approach must also consider assumptions related to functional and economic obsolescence and marketability of the assets, and also considers factors such as replacement cost, reproduction cost, physical deterioration, age, and remaining useful life.

In addition, to the extent available, we may also consider third-party valuations that have been prepared for other business purposes.

Model e Impairment.

Despite challenges in the EV market, through the third quarter of 2025, Model e continued to make progress in the following areas, leading the company to conclude that an impairment trigger had not occurred:

and EU EV sales were projected to continue to grow over the long term

• The Company continued to invest in next generation products

• Prior business plans indicated significant cash flow improvement by 2028

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

However, during the fourth quarter of 2025, we determined that a triggering event requiring us to test Model e long-lived assets and goodwill for impairment occurred based on the convergence of several events, including:

• Lower-than-anticipated industrywide EV adoption rates due to changes in consumer sentiment, competitive dynamics, legal and policy changes, and, in the last several months, significant developments in vehicle pricing dynamics

• The negative effect on EV adoption rates due to the termination of U.S.

tax credits intended to incentivize the purchase of EVs

• Potentially significant relaxations in the stringency of federal emissions and fuel economy standards and federal legislation that eliminates the authority of California and other states to implement and enforce their more stringent emissions standards and zero-emission vehicle sales requirements that may further disrupt the market for EVs in the United States

• Our decision in December to rationalize our EV manufacturing capacity and product roadmap, including cancelling three previously planned EV product programs (a full-size pickup, a commercial van for the United States, and a commercial van for Europe) and ending production of the current generation F-150 Lightning EV

The challenges facing the EV market led us to conclude that a path to long-term profitability for our EV business was not possible without taking the strategic actions described above.

As a result, we performed a recoverability test of the Model e asset group and concluded that its carrying value exceeded its fair value.

We primarily used the market and cost approaches to estimate fair value for our long-lived assets, and we used the income approach to test goodwill.

We subsequently recorded an impairment charge, including goodwill, of $8.4 billion during the fourth quarter.

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

Allowance for Credit Losses

34 unchanged sentences

Each operating lease in Ford Credit’s portfolio represents a vehicle it owns that has been leased to a customer.

At the time Ford Credit purchases a lease, it establishes an expected residual value for the vehicle.

At the time Ford Credit purchases a lease from a dealer, it establishes an expected residual value for the vehicle.

Ford Credit estimates the expected residual value by evaluating recent auction values, return volumes for Ford Credit’s leased vehicles, industrywide used vehicle prices, marketing incentive plans, and vehicle quality data and benchmarks to third-party data depending on availability.

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We are exposed to a variety of other risks, such as loss or damage to property, liability claims, and employee injury.

We protect against these risks through the purchase of commercial insurance that is designed to protect us above our self-insured retentions against events that could generate significant losses.

We protect against these risks through the purchase of commercial insurance that is designed to protect us above our self-insured retention limits against events that could generate significant losses.

Direct responsibility for the execution of our market risk management strategies resides with our Treasurer’s Office and is governed by written policies and procedures.

12 unchanged sentences

These expenditures and receipts create exposures to changes in exchange rates.

We also are exposed to changes in prices of commodities used in the production of our vehicles and changes in interest rates.

We also are exposed to changes in prices of commodities used in the manufacture of our products and changes in interest rates.

Foreign currency risk, commodity risk, and interest rate risk are measured and quantified using a model to evaluate the sensitivity of market value to instantaneous, parallel shifts in rates and/or prices.

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Quantitative and Qualitative Disclosures About Market Risk (Continued)

The net fair value of foreign exchange forward contracts (including adjustments for credit risk) as of December 31, 2024 was an asset of $410 million, compared with a liability of $319 million as of December 31, 2023.

The net fair value of foreign exchange forward contracts (including adjustments for credit risk) as of December 31, 2025 was an asset of $1 million, compared with an asset of $410 million as of December 31, 2024.

The potential change in the fair value from a 10% change in the underlying exchange rates, in U.S.

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Commodity Price Risk.

Commodity price risk is the possibility that our financial results could be worse than planned because of changes in the prices of commodities used in the production of motor vehicles, such as base metals (e.g., steel, copper, and aluminum), precious metals (e.g., palladium), energy (e.g., natural gas and electricity), and plastics/resins (e.g., polypropylene).

As we transition to a greater mix of electric vehicles, we expect to increase our reliance on battery raw materials (e.g., lithium, cobalt, and nickel).

Commodity price risk is the possibility that our financial results could be worse than planned because of changes in the prices of commodities used in the manufacture of our products, such as base metals (e.g., steel, copper, and aluminum), precious metals (e.g., palladium), energy (e.g., natural gas and electricity), plastics/resins (e.g., polypropylene), and battery raw materials (e.g., lithium, cobalt, and nickel).

Our practice is to use derivative instruments to hedge the price risk with respect to forecasted purchases of certain commodities consistent with our overall risk management strategy.

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The extent to which we hedge is also impacted by materiality of the risk in the context of our overall portfolio, market liquidity, and/or our ability to achieve designated hedge accounting.

The net fair value of commodity forward contracts (including adjustments for credit risk) as of December 31, 2024 was a liability of $8 million, compared with a liability of $9 million as of December 31, 2023.

The net fair value of commodity forward contracts (including adjustments for credit risk) as of December 31, 2025 was an asset of $177 million, compared with a liability of $8 million as of December 31, 2024.

The potential change in the fair value from a 10% change in the underlying commodity prices would have been $192 million at December 31, 2025, compared with $189 million at December 31, 2024.

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At any time, a rise in interest rates could have a material adverse impact on the fair value of our portfolios.

Assuming a hypothetical increase in interest rates of one percentage point, the value of our portfolios would be reduced by $233 million, as calculated as of December 31, 2024.

Assuming a hypothetical increase in interest rates of one percentage point, the fair value of our portfolios would be reduced by $231 million, as calculated as of December 31, 2025.

This compares to $233 million, as calculated as of December 31, 2024.

While these are our best estimates of the impact of the specified interest rate scenario, actual results could differ from those projected.

While these are our best estimates of the impact of the specified interest rate scenario, actual results could differ from this projection.

The sensitivity analysis presented assumes interest rate changes are instantaneous, parallel shifts in the yield curve.

1 unchanged sentence

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

What changed 10-K

Item 7. Management’s Discussion and Analysis