Ford Motor Company
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ITEM 1. Business.
Ford Motor Company was incorporated in Delaware in 1919. We acquired the business of a Michigan company, also known as Ford Motor Company, which had been incorporated in 1903 to produce and sell automobiles designed and engineered by Henry Ford. We are a global company based in Dearborn, Michigan. With about 169,000 employees worldwide, the Company is committed to helping build a better world, where every person is free to move and pursue their dreams. The Company’s Ford+ plan for growth and value creation combines existing strengths, new capabilities, and always-on relationships with customers to enrich experiences for customers and deepen their loyalty. Ford develops and delivers innovative, must-have Ford trucks, sport utility vehicles, commercial vans and cars, and Lincoln luxury vehicles, along with connected services, including BlueCruise (ADAS) and security. The Company offers freedom of choice through three customer-centered business segments: Ford Blue, engineering iconic gas-powered and hybrid vehicles; Ford Model e, inventing breakthrough electric vehicles (“EVs”), including extended range electric vehicles (“EREVs”), along with embedded software that defines always-on digital experiences for all customers; and Ford Pro, helping commercial customers transform and expand their businesses with vehicles and services tailored to their needs. Additionally, the Company provides financial services through Ford Motor Credit Company LLC (“Ford Credit”).
In addition to the information about Ford and our subsidiaries contained in this Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K Report” or “Report”), extensive information about our Company can be found at https://corporate.ford.com, including information about our management team, brands, products, services, and corporate governance principles.
The corporate governance information on our website includes our Corporate Governance Principles, Code of Ethics for Senior Financial Personnel, Code of Ethics for the Board of Directors, Code of Corporate Conduct for all employees, and the Charters for each of the Committees of our Board of Directors. In addition, any amendments to our Code of Ethics or waivers granted to our directors and executive officers will be posted on our corporate website. All of these documents may be accessed by going to our corporate website, or may be obtained free of charge by writing to our Shareholder Relations Department, Ford Motor Company, One American Road, P.O. Box 1899, Dearborn, Michigan 48126-1899.
Our recent periodic reports filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available free of charge at https://shareholder.ford.com. This includes recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as any amendments to those reports, and our Section 16 filings. We post each of these documents on our website as soon as reasonably practicable after it is electronically filed with the SEC. Our reports filed with the SEC also may be found on the SEC’s website at www.sec.gov.
Our Integrated Sustainability and Financial Report, which details our performance and progress toward our sustainability and corporate responsibility goals, is available at https://sustainability.ford.com.
The foregoing information regarding our websites and their content is for convenience only and not deemed to be incorporated by reference into this Report nor filed with the SEC.
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Item 1. Business (Continued)
OVERVIEW
Below is a description of our reportable segments and other activities as of December 31, 2025.
FORD BLUE SEGMENT
Ford Blue primarily includes the sale of Ford and Lincoln internal combustion engine (“ICE”) and hybrid (excluding EREVs) vehicles, service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services. This segment focuses on developing Ford and Lincoln ICE and hybrid vehicles. Additionally, this segment provides hardware engineering and manufacturing capabilities to Ford Model e and manufactures vehicles on behalf of Ford Pro and, in certain cases, Ford Model e. Ford Blue also includes:
•All sales for markets not presently in scope for Ford Model e or Ford Pro (as further described below)
•In markets outside of the United States and Canada, sales to commercial, government, and rental customers of ICE and hybrid vehicles not considered core to Ford Pro
•Sales of EVs, including EREVs, by our unconsolidated affiliates in China
•All sales of vehicles manufactured and sold to other OEMs
FORD MODEL E SEGMENT
Ford Model e primarily includes the sale of our EVs (including EREVs), service parts, accessories, and digital services for retail customers, together with the associated costs of development, manufacture, and distribution of the vehicles, parts, accessories, and services. This segment focuses on developing EV and digital vehicle technologies, as well as software development. Additionally, Ford Model e provides software and connected vehicle technologies on behalf of the enterprise, and manufactures certain EVs, including for Ford Pro. Ford Model e operates in North America, Europe, and China. Ford Model e also includes EV and related sales not considered core to Ford Pro to commercial, government, and rental customers in Europe, China, and Mexico.
FORD PRO SEGMENT
Ford Pro primarily includes the sale of Ford and Lincoln vehicles, service parts, accessories, and services for commercial, government, and rental customers. Included in this segment are sales of all core Ford Pro vehicles, such as Super Duty and the Transit range of vans in North America and Europe and all sales of Ranger in Europe. In the United States and Canada, Ford Pro also includes all vehicle sales to commercial, government, and rental customers. This segment focuses on selling ICE, hybrid, and electric vehicles, and providing digital and physical services to optimize and maintain fleets, including telematics and EV charging solutions. This segment reflects external sales of vehicles produced by Ford Blue and Ford Model e and the costs (including intersegment markup) associated with acquiring vehicles for sale and providing services. Ford Pro operates in North America and Europe.
General
Our vehicle brands are Ford and Lincoln. In 2025, we sold approximately 4,395,000 vehicles at wholesale throughout the world. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“Item 7”) for a discussion of our calculation of wholesale unit volumes.
Substantially all of our vehicles, parts, and accessories are sold through distributors and dealers (collectively, “dealerships”), the substantial majority of which are independently owned. At December 31, the approximate number of dealerships worldwide distributing our vehicle brands was as follows:
| Brand | 2024 | 2025 | ||||||||
| Ford | 8,212 | 7,479 | ||||||||
| Ford-Lincoln (combined) | 451 | 408 | ||||||||
| Lincoln | 343 | 339 | ||||||||
| Total | 9,006 | 8,226 | ||||||||
We do not depend on any single customer or a few customers to the extent that the loss of such customers would have a material adverse effect on our business.
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Item 1. Business (Continued)
In addition to the products we sell to our dealerships for retail sale, we also sell vehicles to our dealerships for sale to fleet customers, including commercial fleet customers, daily rental car companies, and governments. We also sell parts and accessories, primarily to our dealerships (which, in turn, sell these products to retail customers) and to authorized parts distributors (which, in turn, primarily sell these products to retailers). We also offer extended service contracts.
The worldwide automotive industry is affected significantly by general economic and political conditions over which we have little control. Vehicles are durable goods, and consumers and businesses have latitude in determining whether and when to replace an existing vehicle. The decision whether to purchase a vehicle may be affected significantly by slowing economic growth, geopolitical events, and other factors (including the cost of purchasing and operating cars, trucks, and utility vehicles, the availability and cost of financing, cost of fuel, and EV charging availability and cost). As a result, the number of cars, trucks, and utility vehicles sold may vary substantially from year to year. Further, the automotive industry is a highly competitive business that has a wide and growing variety of product and service offerings from a growing number of manufacturers.
Our wholesale unit volumes vary with the level of total industry demand and our share of that industry demand. Our wholesale unit volumes also are influenced by the level of dealer inventory, and our ability to maintain sufficient production levels to support desired dealer inventory in the event of supplier disruptions or other types of disruptions affecting our production. Our share is influenced by how our products are perceived by customers in comparison to those offered by other manufacturers based on many factors, including price, quality, styling, reliability, safety, fuel efficiency, functionality, sustainability, and reputation. Our share also is affected by the timing and frequency of new model introductions. Our ability to satisfy changing consumer and business preferences with respect to type or size of vehicle, as well as design and performance characteristics and the services our vehicles offer, affects our sales and earnings significantly.
As with other manufacturers, the profitability of our business is affected by many factors, including:
•Wholesale unit volumes
•Margin of profit on each vehicle sold - which, in turn, is affected by many factors, such as:
◦Market factors - volume and mix of vehicles and options sold, and net pricing (reflecting, among other factors, incentive programs)
◦Costs of components and raw materials necessary for production of vehicles
◦Costs for customer warranty claims and additional service actions
◦Costs for safety, emissions, and fuel economy technology and equipment
•A high proportion of relatively fixed structural costs, so that small changes in wholesale unit volumes can significantly affect overall profitability
Although supply disruptions have resulted in a higher level of new vehicle prices, our industry has historically had a very competitive pricing environment, driven in part by excess capacity. For the past several decades, manufacturers typically have offered price discounts and other marketing incentives to provide value for customers and maintain market share and production levels, and we saw some of these actions resume as industry production and inventories increased in recent quarters, especially with waning policy support for EVs leading to excess supply in that market segment. The decline in value of foreign currencies can also contribute significantly to competitive pressures in many of our markets.
Competitive Position. The worldwide automotive industry consists of many producers, with no single dominant producer. Certain manufacturers, however, account for the major percentage of total sales within particular countries, especially their countries of origin.
Seasonality. We manage our vehicle production schedule based on a number of factors, including retail sales (i.e., units sold by our dealerships to their customers at retail) and dealer stock levels (i.e., the number of units held in inventory by our dealerships for sale to their customers). Historically, we have experienced some seasonal fluctuation in the business, with production in many markets tending to be higher in the first half of the year to meet demand in the spring and summer (typically the strongest sales months of the year); however, that may not be the case in a particular year depending on the circumstances, e.g., if we have a higher number of vehicle launches (particularly for our higher volume vehicles) in the first half of the year, we would expect production in the second half of the year to be higher.
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Item 1. Business (Continued)
Raw Materials.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
RECENT DEVELOPMENTS
Trade Policy and Tariffs
As of March 31, 2026, we expect to receive about $2.8 billion related to tariff reimbursements from the federal government and suppliers and offsets to Company payment obligations to suppliers. Included in this amount is about $1.3 billion related to the International Emergency Economic Powers Act (“IEEPA”) and tariff rulings from the United States Supreme Court and the Court of International Trade in the first quarter of 2026.
Although we have started to receive reimbursements from the federal government (excluding those related to IEEPA), the timing for our receipt of these reimbursements is uncertain and is subject to changes in trade policy.
For additional information regarding the impact and potential impact of trade policy and tariffs on our business, see the Outlook section on page 53 of this 10-Q Report (including the EBIT impact) as well as Item 1A. Risk Factors and “Key Trends and Economic Factors Affecting Ford and the Automotive Industry” in Item 7 in our 2025 Form 10-K Report.
Production and Supply Chain
As previously disclosed, in September 2025 and November 2025, fires at a Novelis Inc. plant in New York disrupted operations at the facility. Novelis is a major aluminum supplier to Ford, and since the initial fire occurred, we have been working closely with Novelis to address the situation and exploring potential alternative sources of aluminum. We have also sought mitigating actions to minimize potential disruptions to our operations. We experienced lower production subsequent to the Novelis fires in September and November 2025, and although the ultimate impact on Ford depends on a number of factors, in the second half of 2026, we expect to partially recover the production lost to date.
For more information regarding the impact and potential impact of the Novelis fires on our business, see the Outlook section on page 53 of this 10-Q Report.
See Item 1A. Risk Factors in our 2025 Form 10-K Report for additional discussion of the risks related to disruptions to Ford’s and Ford’s suppliers’ production and operations.
Electric Vehicle Market
In December 2025, we announced our decision to rationalize our EV manufacturing capacity and product roadmap, including cancelling three previously planned EVs and ending production of the current generation F-150 Lightning EV. Related to the foregoing, in the first quarter of 2026, we recorded $103 million of charges to be paid in cash, primarily related to contractual commitments related to those programs. As previously disclosed, we may incur additional expenses and cash expenditures of up to about $4 billion (on a pre-tax basis) related to these actions and will recognize those charges in the quarter they are incurred as a special item.
In addition, in December 2025, Ford, SK On Co., Ltd., and SK Battery America, Inc., and BlueOval SK, LLC (“BOSK”) entered into a Joint Venture Disposition Agreement (“JVDA”), pursuant to which our membership interest in BOSK will be redeemed, and a Ford subsidiary will receive BOSK’s two Kentucky plants and related assets, and will assume the related liabilities. Upon closing of the transactions contemplated by the JVDA (expected in the second quarter of 2026), we now expect to recognize pre-tax special item charges of about $3.5 billion, which includes about $500 million of cash expenditures. For additional information about BOSK and the JVDA, see Note 16 of the Notes to the Financial Statements.
The regulatory and market dynamics we have observed in the EV market may continue to occur, which could have a substantial adverse impact on our results of operations and/or business, including our investments in supply, production capacity, and equity method investments.
Further, 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 compliance. Our obligations under these agreements generally are dependent on the continued existence of an underlying regulatory compliance requirement in the applicable jurisdiction, and we have terminated or renegotiated some of these agreements in response to regulatory changes, as authorized by those agreements. As a result of these terminations, in addition to the delivery of credits to us under purchase agreements that
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
remain in place and accruals we recorded for credits we are obligated to receive, our future purchase obligations under our compliance credit purchase agreements as of March 31, 2026 totaled about $40 million, down from about $1.6 billion at December 31, 2025. 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 legal and policy changes. Write-offs to date for such credit assets have been immaterial.
For additional discussion of the impact of changes in the EV market to our business, and the risks related thereto, see the “Governmental Standards” discussion in “Item 1. Business” and “Item 1A. Risk Factors” in our 2025 Form 10-K Report.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
RESULTS OF OPERATIONS
In the first quarter of 2026, the net income attributable to Ford Motor Company was $2,548 million, and Company adjusted EBIT was $3,488 million.
Net income/(loss) includes certain items (“special items”) that are excluded from Company adjusted EBIT. These items are discussed in more detail under “Non-GAAP Financial Measures That Supplement GAAP Measures” on page 56 and in Note 18 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 ongoing operating results. Our pre-tax and tax special items were as follows (in millions):
| First Quarter | |||||||||||||||||||
| 2025 | 2026 | ||||||||||||||||||
| Restructuring (by Geography) | |||||||||||||||||||
| Europe | $ | (32) | $ | (351) | |||||||||||||||
| Subtotal Restructuring | $ | (32) | $ | (351) | |||||||||||||||
| Other Items | |||||||||||||||||||
| EV program cancellations announced in December 2025 | $ | — | $ | (103) | |||||||||||||||
| All-electric three-row SUV program cancellation and resulting actions | (64) | 53 | |||||||||||||||||
| Subtotal Other Items | $ | (64) | $ | (50) | |||||||||||||||
| Pension and OPEB Gain/(Loss) | |||||||||||||||||||
| Pension and OPEB remeasurement | $ | 10 | $ | 243 | |||||||||||||||
| Pension settlements, curtailments, and separations costs | (24) | (68) | |||||||||||||||||
| Subtotal Pension and OPEB Gain/(Loss) | $ | (14) | $ | 175 | |||||||||||||||
| Total EBIT Special Items | $ | (110) | $ | (226) | |||||||||||||||
| Provision for/(Benefit from) tax special items (a) | $ | (29) | $ | (76) | |||||||||||||||
__________
(a)Includes related tax effect on special items and tax special items.
We recorded $226 million of pre-tax special item charges in the first quarter of 2026, primarily reflecting ongoing restructuring actions in Europe and continued charges related to the EV program cancellations previously announced in December 2025, offset partially by the impact of pension and OPEB remeasurement.
In Note 18 of the Notes to the Financial Statements, special items are reflected as a separate reconciling item, as opposed to being allocated among our segments. This reflects the fact that management excludes these items from its review of operating segment results for purposes of measuring segment profitability and allocating resources.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
COMPANY KEY METRICS
The table below shows our first quarter 2026 key metrics for the Company, compared to a year ago.
| First Quarter | |||||||||||||||||||||||||||||
| 2025 | 2026 | H / (L) | |||||||||||||||||||||||||||
| GAAP Financial Measures | |||||||||||||||||||||||||||||
| Cash Flows from Operating Activities ($B) | $ | 3.7 | $ | 1.3 | $ | (2.4) | |||||||||||||||||||||||
| Revenue ($M) | 40,659 | 43,253 | 6 | % | |||||||||||||||||||||||||
| Net Income/(Loss) ($M) | 471 | 2,548 | $ | 2,077 | |||||||||||||||||||||||||
| Net Income/(Loss) Margin (%) | 1.2 | % | 5.9 | % | 4.7 ppts | ||||||||||||||||||||||||
| EPS (Diluted) | $ | 0.12 | $ | 0.63 | $ | 0.51 | |||||||||||||||||||||||
Non-GAAP Financial Measures (a) | |||||||||||||||||||||||||||||
| Company Adj. Free Cash Flow ($B) | $ | (1.5) | $ | (1.9) | $ | (0.4) | |||||||||||||||||||||||
| Company Adj. EBIT ($M) | 1,019 | 3,488 | 2,469 | ||||||||||||||||||||||||||
| Company Adj. EBIT Margin (%) | 2.5 | % | 8.1 | % | 5.6 ppts | ||||||||||||||||||||||||
| Adjusted EPS (Diluted) | $ | 0.14 | $ | 0.66 | $ | 0.52 | |||||||||||||||||||||||
| Adjusted ROIC (Trailing Four Quarters) | 10.9 | % | 12.6 | % | 1.8 ppts | ||||||||||||||||||||||||
__________
(a)See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.
In the first quarter of 2026, our diluted earnings per share of Common and Class B Stock was $0.63, and our diluted adjusted earnings per share was $0.66.
Net income/(loss) margin was 5.9% in the first quarter of 2026, up 4.7 percentage points from a year ago. Company adjusted EBIT margin was 8.1% in the first quarter of 2026, up 5.6 percentage points from a year ago.
The table below shows the details of our first quarter 2026 net income/(loss) attributable to Ford and Company adjusted EBIT (in millions).
| First Quarter | |||||||||||||||||||||||||||||
| 2025 | 2026 | H / (L) | |||||||||||||||||||||||||||
| Ford Blue | $ | 96 | $ | 1,942 | $ | 1,846 | |||||||||||||||||||||||
| Ford Model e | (849) | (777) | 72 | ||||||||||||||||||||||||||
| Ford Pro | 1,309 | 1,685 | 376 | ||||||||||||||||||||||||||
| Ford Credit | 580 | 783 | 203 | ||||||||||||||||||||||||||
| Corporate Other | (117) | (145) | (28) | ||||||||||||||||||||||||||
| Company Adjusted EBIT (a) | 1,019 | 3,488 | 2,469 | ||||||||||||||||||||||||||
| Interest on Debt | (288) | (350) | (62) | ||||||||||||||||||||||||||
| Special Items | (110) | (226) | (116) | ||||||||||||||||||||||||||
| Taxes / Noncontrolling Interests | (150) | (364) | (214) | ||||||||||||||||||||||||||
| Net Income/(Loss) | $ | 471 | $ | 2,548 | $ | 2,077 | |||||||||||||||||||||||
__________
(a)See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.
The year-over-year increase in both net income and Company adjusted EBIT was primarily driven by higher Ford Blue and Ford Pro EBIT and higher Ford Credit EBT, with higher taxes and special item charges a partial offset to net income.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
The tables below and on the following pages provide first quarter 2026 key metrics and the change in first quarter 2026 EBIT compared with first quarter 2025 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, and Ford Pro Causal Factors.
Ford Blue Segment
| First Quarter | |||||||||||||||||||||||||||||
| Key Metrics | 2025 | 2026 | H / (L) | ||||||||||||||||||||||||||
| Wholesale Units (000) (a) | 588 | 584 | (4) | ||||||||||||||||||||||||||
| Revenue ($M) | $ | 20,997 | $ | 23,858 | $ | 2,861 | |||||||||||||||||||||||
| EBIT ($M) | 96 | 1,942 | 1,846 | ||||||||||||||||||||||||||
| EBIT Margin (%) | 0.5 | % | 8.1 | % | 7.7 | ppts | |||||||||||||||||||||||
__________
(a)Includes Ford and Lincoln brand and JMC brand vehicles produced and sold in China by our unconsolidated affiliates (about 91,000 units in Q1 2025 and 78,000 units in Q1 2026).
| Change in EBIT by Causal Factor (in millions) | ||||||
First Quarter 2025 EBIT | $ | 96 | ||||
| Volume / Mix | 908 | |||||
| Net Pricing | 347 | |||||
| Cost | 46 | |||||
| Exchange | (4) | |||||
| Other | 549 | |||||
First Quarter 2026 EBIT | $ | 1,942 | ||||
In the first quarter of 2026, Ford Blue’s wholesales were about flat compared to a year ago. The end of production of the Escape in North America and Focus in Europe were largely offset by higher utility wholesales, including Explorer, Bronco, and Expedition. First quarter 2026 revenue increased 14%, primarily driven by favorable mix, exchange, and net pricing.
Ford Blue’s first quarter 2026 EBIT was $1,942 million, an increase of $1,846 million from a year ago, with an EBIT margin of 8.1%. The higher EBIT primarily reflects favorable market factors, higher parts and accessories profit, and lower regulatory compliance expenses. Costs were about flat year over year with the one-time IEEPA tariff benefit of about $700 million recognized in the first quarter of 2026 being offset by higher sourcing costs, including tariffs, associated with the disruption in aluminum supply and higher commodity prices.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Ford Model e Segment
| First Quarter | |||||||||||||||||||||||||||||
| Key Metrics | 2025 | 2026 | H / (L) | ||||||||||||||||||||||||||
| Wholesale Units (000) | 31 | 34 | 3 | ||||||||||||||||||||||||||
| Revenue ($M) | $ | 1,242 | $ | 1,232 | $ | (10) | |||||||||||||||||||||||
| EBIT ($M) | (849) | (777) | 72 | ||||||||||||||||||||||||||
| EBIT Margin (%) | (68.4) | % | (63.1) | % | 5.3 | ppts | |||||||||||||||||||||||
| Change in EBIT by Causal Factor (in millions) | ||||||
First Quarter 2025 EBIT | $ | (849) | ||||
| Volume / Mix | 34 | |||||
| Net Pricing | (2) | |||||
| Cost | 32 | |||||
| Exchange | (10) | |||||
| Other | 18 | |||||
First Quarter 2026 EBIT | $ | (777) | ||||
In the first quarter of 2026, Ford Model e’s wholesales increased 10% from a year ago, primarily reflecting a full quarter of production of the Puma Gen-E and higher Explorer and Capri wholesales in Europe, offset partially by the discontinuation of the F-150 Lightning in North America. First quarter 2026 revenue was flat compared to a year ago.
Ford Model e’s first quarter 2026 EBIT loss was $777 million, a $72 million improvement from a year ago, with an EBIT margin of negative 63.1%. The improved EBIT was driven by about $200 million of lower losses on Gen-1 products (including lower warranty costs and higher volume), offset partially by higher investment in future Gen-2 products.
Ford Pro Segment
| First Quarter | |||||||||||||||||||||||||||||
| Key Metrics | 2025 | 2026 | H / (L) | ||||||||||||||||||||||||||
| Wholesale Units (000) (a) | 352 | 316 | (36) | ||||||||||||||||||||||||||
| Revenue ($M) | $ | 15,181 | $ | 14,723 | $ | (458) | |||||||||||||||||||||||
| EBIT ($M) | 1,309 | 1,685 | 376 | ||||||||||||||||||||||||||
| EBIT Margin (%) | 8.6 | % | 11.4 | % | 2.8 | ppts | |||||||||||||||||||||||
__________
(a)Includes Ford brand vehicles produced and sold by our unconsolidated affiliate Ford Otosan in Türkiye (about 20,000 units in Q1 2025 and 17,000 units in Q1 2026).
| Change in EBIT by Causal Factor (in millions) | ||||||
First Quarter 2025 EBIT | $ | 1,309 | ||||
| Volume / Mix | (451) | |||||
| Net Pricing | (23) | |||||
| Cost | 532 | |||||
| Exchange | 76 | |||||
| Other | 242 | |||||
First Quarter 2026 EBIT | $ | 1,685 | ||||
In the first quarter of 2026, Ford Pro’s wholesales decreased 10% from a year ago, driven by lower Super Duty wholesales as a result of the aluminum supply disruption and the end of production of the Escape in North America for fleet customers (including daily rentals), offset partially by the non-recurrence of 2025 planned downtime at the Kentucky Truck and Kansas City Assembly plants. First quarter 2026 revenue decreased 3%, reflecting lower wholesales, offset partially by favorable exchange and mix.
Ford Pro’s first quarter 2026 EBIT was $1,685 million, an increase of $376 million from a year ago, with an EBIT margin of 11.4%. The improved EBIT was primarily driven by lower cost, higher parts and accessories profit, favorable exchange, and lower regulatory compliance expenses, offset partially by unfavorable market factors. The lower costs reflect the one-time IEEPA tariff benefit of about $500 million recognized in the first quarter of 2026 and lower warranty and material costs, offset partially by higher commodity prices.
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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
38
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Ford Credit Segment
Ford Credit files periodic reports with the SEC that contain additional information regarding Ford Credit. The reports are available through Ford Credit’s website located at www.ford.com/finance/investor-center and can also be found on the SEC’s website located at www.sec.gov. The foregoing information regarding Ford Credit’s website and its content is for convenience only and not deemed to be incorporated by reference into this Report nor filed with the SEC.
The tables below provide first quarter 2026 key metrics and the change in first quarter 2026 EBT compared with first quarter 2025 by causal factor for the Ford Credit segment. For a description of these causal factors, see Definitions and Information Regarding Ford Credit Causal Factors.
| First Quarter | |||||||||||||||||||||||||||||
| Key Metrics | 2025 | 2026 | H / (L) | ||||||||||||||||||||||||||
| Total Net Receivables ($B) | $ | 141.6 | $ | 144.1 | $ | 2.5 | |||||||||||||||||||||||
| Loss-to-Receivables (bps) (a) | 63 | 72 | 9 | ||||||||||||||||||||||||||
| Auction Values (b) | $ | 31,390 | $ | 31,655 | 1 | % | |||||||||||||||||||||||
| EBT ($M) | 580 | 783 | $ | 203 | |||||||||||||||||||||||||
| ROE (%) | 12.3 | % | 18.2 | % | 5.9 ppts | ||||||||||||||||||||||||
| Other Balance Sheet Metrics | |||||||||||||||||||||||||||||
| Debt ($B) | $ | 134.3 | $ | 137.5 | $ | 3.2 | |||||||||||||||||||||||
| Net Liquidity ($B) | 29.5 | 29.8 | 0.3 | ||||||||||||||||||||||||||
| Financial Statement Leverage (to 1) | 9.5 | 9.5 | — | ||||||||||||||||||||||||||
__________
(a)U.S. retail financing only.
(b)U.S. portfolio off-lease first quarter auction values at Q1 2026 mix.
| Change in EBT by Causal Factor (in millions) | ||||||
First Quarter 2025 EBT | $ | 580 | ||||
| Volume / Mix | 15 | |||||
| Financing Margin | 88 | |||||
| Credit Loss | (24) | |||||
| Lease Residual | 16 | |||||
| Exchange | 20 | |||||
| Other | 88 | |||||
First Quarter 2026 EBT | $ | 783 | ||||
Ford Credit’s total net receivables of $144.1 billion were 2% higher than a year ago, explained primarily by a larger operating lease portfolio and exchange, offset partially by lower non-consumer financing. The first quarter 2026 U.S. loss-to-receivables ratio of 72 basis points increased from a year ago, primarily reflecting higher repossessions. U.S. auction values increased 1% year over year, reflecting strong customer demand.
Ford Credit’s first quarter 2026 EBT of $783 million was $203 million higher than a year ago, explained primarily by higher financing margin, favorable derivative market valuation adjustments (included in Other), and exchange, offset partially by higher credit losses.
39
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 2025 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 2025 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
40
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
Next expected filings
- ~2026-07-31 10-Q expected by 2026-08-12 (in 46 days)
- ~2026-10-24 10-Q expected by 2026-11-05 (in 131 days)
- ~2027-02-10 10-K expected by 2027-03-02 (in 240 days)
- ~2027-04-30 10-Q expected by 2027-05-12 (in 319 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-21 8-K Material Agreement Entered; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2026-04-30 10-Q Quarterly Report
- 2026-04-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-15 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-15 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-04-02 8-K Other Events; Financial Statements and Exhibits
- 2026-03-13 8-K Other Events
- 2026-02-11 10-K Annual Report
- 2026-02-10 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-06 8-K Other Events; Financial Statements and Exhibits
- 2025-12-12 8-K Officer/Director Change; Bylaws/Articles Amended; Financial Statements and Exhibits
- 2025-10-24 10-Q Quarterly Report
- 2025-10-23 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-01 8-K Other Events; Financial Statements and Exhibits
- 2025-07-31 10-Q Quarterly Report