FORD MOTOR COMPANY ANNUAL REPORT ON FORM 10-K

Navigating Turbulent Times: Ford’s Financial Performance in 2024

Ford Motor Company faced a challenging business environment in 2024, navigating a complex web of trade policies, supply chain disruptions, and volatile commodity prices. Despite these headwinds, the automaker managed to deliver solid financial results, demonstrating the resilience of its diversified operations.

Trade Policy Tensions One of the key factors impacting Ford was the shifting global trade landscape. Governments around the world implemented or intensified trade barriers, such as tariffs, which had a significant adverse effect on manufacturers based in other markets. The announcement of substantial new tariffs on imports to the United States from Canada, Mexico, and China in early 2025 posed a serious threat to Ford’s profitability if implemented and sustained for an extended period.

Supply Chain Challenges Ford continued to grapple with production constraints due to capacity and labor shortages, as the company adjusted to shifting market conditions and balanced its production mix. The increased tariffs, if implemented, could further disrupt the company’s supply chain, hampering its ability to meet customer demand.

Currency Volatility Global currency exchange rates remained highly volatile, driven by central bank policy shifts and geopolitical instability. This currency volatility had a direct impact on Ford’s financial flows and the pricing of vehicles exported to overseas markets.

Pricing Pressure Despite elevated vehicle pricing due to strong demand and supply shortages, Ford faced increasing pricing pressure as auto production recovered from the semiconductor shortage. Intense competition and excess industry capacity put downward pressure on inflation-adjusted prices, including increased marketing incentives.

Electric Vehicle Market Dynamics Ford’s electric vehicle (EV) strategy faced headwinds, as the company observed lower-than-anticipated industry-wide EV adoption rates and near-term pricing pressures. This led Ford to adjust its spending, production, and product launch plans to better align with the pace of EV adoption. The company also incurred expenses related to the cancellation of a previously announced all-electric three-row SUV program.

Commodity and Energy Prices Prices for commodities and energy remained volatile, with the net impact being higher material costs for Ford and its suppliers. To ensure the supply of critical raw materials, such as those used in batteries for electric vehicles, Ford entered into multi-year sourcing agreements.

Vehicle Profitability Ford’s financial results were heavily dependent on the profitability of the vehicles it sells, with larger vehicles generally commanding higher prices and being more profitable than smaller vehicles. Government regulations aimed at reducing emissions and increasing fuel efficiency could also impact vehicle margins.

Inflation and Interest Rates Lingering inflationary pressures, including higher energy prices, freight premiums, and other operating costs, continued to weigh on Ford’s business. Rising interest rates also had implications for the company’s cost of capital and Ford Credit’s ability to offer financing at competitive rates.

Revenue and Profit Trends Ford’s revenue in 2024 was $184,992 million, an increase of 5% from the previous year. This growth was driven by higher sales volumes, favorable pricing, and increased revenue from Ford Credit.

The company’s net income attributable to Ford Motor Company was $5,879 million in 2024, up from $4,347 million in 2023. This improvement was primarily due to lower special item charges and higher profits from the Ford Pro segment, partially offset by lower earnings from the Ford Blue and Ford Model e segments.

Ford’s Company adjusted EBIT, which excludes interest, taxes, and special items, was $10,208 million in 2024, a slight decrease from $10,416 million in 2023. The lower adjusted EBIT was mainly driven by weaker performance in the Ford Blue and Ford Model e segments, partially offset by stronger results in the Ford Pro segment and Ford Credit.

Segment Performance The Ford Blue segment, which includes the company’s traditional internal combustion engine vehicles, saw its EBIT decrease by $2,178 million to $5,284 million in 2024. This decline was primarily due to unfavorable exchange rates, adverse product mix, and higher costs, partially offset by improved pricing in South America.

The Ford Model e segment, responsible for the company’s electric vehicle initiatives, reported an EBIT loss of $5,076 million in 2024, a $375 million increase in losses compared to the previous year. This was mainly driven by lower net pricing due to industry-wide competitive pressures, partially offset by lower costs.

The Ford Pro segment, which focuses on commercial and fleet vehicles, delivered a strong performance, with EBIT increasing by $1,793 million to $9,015 million in 2024. This improvement was driven by higher sales volumes, favorable pricing, and cost efficiencies, partially offset by higher material and warranty costs.

Ford Credit, the company’s financing arm, reported EBIT of $1,654 million in 2024, up from $1,331 million in 2023. The increase was primarily due to higher financing margin and favorable volume and mix, partially offset by higher operating lease depreciation and retail credit losses.

Liquidity and Capital Resources At the end of 2024, Ford had total balance sheet cash, cash equivalents, marketable securities, and restricted cash of $38.6 billion, including Ford Credit. The company’s key liquidity metric, Company cash, stood at $28.5 billion, with total Company liquidity at $46.7 billion.

Ford’s material cash requirements include capital expenditures, raw material and component purchases, regulatory compliance costs, marketing incentives, debt repayments, pension contributions, and employee-related expenses. The company plans to utilize its liquidity and cash flows from operations to fund these requirements.

Ford’s Company debt, excluding Ford Credit, was $20.7 billion at the end of 2024, up from $19.9 billion a year earlier. The company manages its debt levels with a leverage framework that targets investment-grade credit ratings through a normal business cycle.

Ford Credit remained well-capitalized, with a strong balance sheet and diversified funding sources, including term unsecured debt, term asset-backed securities, and retail deposits. The financing arm’s net liquidity available for use was $25.2 billion at the end of 2024, down slightly from the previous year.

Outlook and Risks For 2025, Ford expects adjusted EBIT to be in the range of $7.0 billion to $8.5 billion and adjusted free cash flow to be between $3.5 billion and $4.5 billion. The company’s outlook assumes a U.S. industry sales range of 16.0 million to 16.5 million units and lower pricing across the industry as inventory levels normalize.

However, the company cautioned that the recently announced tariffs on imports to the United States from Canada, Mexico, and China could have a significant adverse effect on its earnings if implemented and sustained for an extended period.

Other key risks facing Ford include supply chain disruptions, cybersecurity threats, lower-than-expected electric vehicle demand, commodity price volatility, and potential economic downturns. The company’s ability to successfully execute its Ford+ plan, improve cost competitiveness, and navigate the industry’s transition to electrification will be critical to its long-term success.

Overall, Ford demonstrated resilience in 2024, navigating a complex and challenging business environment. The company’s diversified operations, focus on cost management, and strategic investments in electric vehicles position it to weather the current storms and capitalize on future opportunities in the automotive industry.