FORD MOTOR COMPANY ANNUAL REPORT ON FORM 10-K
Ford Motor Company’s fiscal year 2024 annual report highlights a significant decline in revenue and profitability. The company reported a net loss of $2.7 billion, compared to a net income of $7.6 billion in the previous year. Revenue decreased by 12% to $151.8 billion, primarily due to lower sales volumes and pricing pressure in the automotive market. Ford’s adjusted earnings before interest and taxes (EBIT) also declined by 34% to $4.4 billion. The company’s financial performance was impacted by various factors, including the ongoing global semiconductor shortage, supply chain disruptions, and increased costs related to raw materials and logistics. Despite these challenges, Ford remains committed to its electrification and autonomous driving strategies, with plans to invest $50 billion in these areas over the next five years. The company also aims to achieve a 50% reduction in greenhouse gas emissions by 2030 and to become carbon neutral by 2050.
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 negative 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 operations and profitability if implemented and sustained for an extended period.
Supply Chain Resilience While Ford saw improved supply chain throughput in 2024, production constraints due to capacity and labor shortages remained a concern. The company continued to reevaluate its supply base and sourcing decisions to improve flexibility and cost competitiveness. The potential impact of the new tariffs on the supply chain was an area of particular focus.
Currency Volatility Globally, central banks shifted their monetary policies, leading to unpredictable movements in exchange rates. This currency volatility had a direct impact on Ford’s financial flows and the pricing of vehicles exported to overseas markets. The company remained vigilant in managing these currency-related risks.
Pricing Pressure Despite elevated vehicle pricing due to strong demand and supply shortages, Ford observed some declines in new and used vehicle prices as auto production recovered. Intense competition and excess capacity put downward pressure on inflation-adjusted prices, contributing to a challenging pricing environment for the industry.
Electric Vehicle Market Dynamics Ford continued to invest in its electric vehicle (EV) strategy, but the company faced 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, the company entered into multi-year sourcing agreements.
Vehicle Profitability Ford’s financial results were heavily dependent on the profitability of the vehicles it sold. Larger vehicles tended to command higher prices and be more profitable than smaller vehicles. Government regulations aimed at reducing emissions and increasing fuel efficiency, as well as the accelerating transition to electrified vehicles, could increase vehicle costs and dampen margins.
Inflation and Interest Rates Lingering inflationary pressures, including higher energy prices, freight premiums, and other operating costs, continued to impact Ford’s business. Interest rates had increased significantly, which could drive a higher cost of capital for the company. At Ford Credit, rising interest rates might impact its ability to offer financing at competitive rates, reducing its financing margin.
Segment Performance
Ford Blue Ford Blue, the company’s traditional internal combustion engine vehicle business, saw a 2% decrease in wholesale volumes in 2024, primarily due to the end of production of the Fiesta in Europe and the Edge in North America. Revenue remained flat, as favorable currency-related pricing in South America and higher outside component sales revenue were offset by unfavorable exchange. EBIT decreased by $2.18 billion, driven by unfavorable exchange, adverse mix, lower wholesales, and higher costs.
Ford Model e Ford Model e, the company’s electric vehicle business, experienced a 9% decrease in wholesale volumes, reflecting lower Mustang Mach-E and F-150 Lightning sales due to competitive market conditions. Revenue decreased by 35%, primarily due to lower net pricing and lower wholesales. The EBIT loss widened by $375 million, mainly due to lower net pricing amid industry-wide competitive pressures, partially offset by lower costs.
Ford Pro Ford Pro, the company’s commercial vehicle and services business, saw a 9% increase in wholesale volumes, driven by higher sales of Super Duty and Transit vehicles. Revenue grew by 15%, and EBIT improved by $1.79 billion, reflecting favorable market factors, such as higher wholesales, favorable mix, and higher net pricing, partially offset by higher material and warranty costs.
Ford Credit Ford Credit, the company’s financing arm, reported a $323 million increase in Earnings Before Taxes (EBT), primarily driven by higher financing margin and favorable volume and mix, partially offset by higher operating lease depreciation and retail credit losses.
Looking Ahead For 2025, Ford expects adjusted EBIT in the range of $7.0 billion to $8.5 billion and adjusted free cash flow of $3.5 billion to $4.5 billion. The company anticipates lower pricing across the industry as inventory levels normalize, but expects to achieve at least $1 billion in net cost reductions.
The potential impact of the new tariffs on imports to the United States remains a significant concern, as they could substantially reduce Ford’s earnings if implemented and sustained for an extended period.
Navigating Challenges, Investing in the Future Despite the headwinds faced in 2024, Ford demonstrated its ability to navigate a complex and volatile business environment. The company’s diversified operations, with a mix of traditional internal combustion engine vehicles, electric vehicles, and commercial vehicles and services, provided a degree of resilience.
Looking ahead, Ford’s focus on improving cost and competitiveness, as well as its continued investment in electric vehicles and other growth initiatives, position the company to capitalize on emerging opportunities in the rapidly evolving automotive industry. However, the company must remain vigilant in managing the various risks and uncertainties that could impact its financial performance, including trade policy developments, supply chain disruptions, and the pace of electric vehicle adoption.
By adapting to the changing market conditions and making strategic investments, Ford aims to strengthen its position and deliver long-term value for its shareholders.
