Ford Motor Company

Company Overview

Business Model: Ford Motor Company, based in Dearborn, Michigan, is a global automotive company focused on growth and value creation through its Ford+ plan. It develops and delivers Ford trucks, sport utility vehicles, commercial vans and cars, and Lincoln luxury vehicles. The Company operates through three customer-centered business segments: Ford Blue (internal combustion engine and hybrid vehicles), Ford Model e (electric vehicles and digital technologies), and Ford Pro (commercial vehicles and services). Financial services are provided through Ford Motor Credit Company LLC.

Market Position: Ford Motor Company sold approximately 4,470,000 vehicles at wholesale worldwide in 2024. The Company maintains a significant global dealership network with 9,006 dealerships. In 2024, its U.S. market share was 12.6%, Canada 14.7%, and Australia 8.2%. However, it experienced market share declines in China (1.6%), the United Kingdom (9.6%), Germany (5.0%), Türkiye (8.8%), Italy (5.8%), and France (3.5%). The worldwide automotive industry is highly competitive with numerous producers and no single dominant player.

Recent Strategic Developments: Ford Motor Company is executing its Ford+ plan, which segments its business to focus on distinct customer needs across ICE/hybrid, EV, and commercial vehicle markets. Key initiatives include significant investments in electrification and software services, such as the F-150 Lightning and E-Transit. The Company is investing in EV battery production through its 50/50 joint venture, BlueOval SK, LLC, with capital contributions of $4.1 billion recognized through December 2024, out of an agreed maximum of $6.6 billion through 2026. It has also entered multi-year offtake agreements for battery raw materials. In 2024, Ford Motor Company cancelled an all-electric three-row SUV program, resulting in a $391 million write-down of product-specific assets and $809 million in other related expenses. Ford Next, which included expenses and investments for emerging business initiatives in 2024, will no longer be a reportable segment as of January 1, 2025.

Geographic Footprint: Ford Motor Company operates globally with over 375 operations facilities across 24 countries, including 41 manufacturing and assembly plants. Its primary markets for revenue generation in 2024 were the United States ($124.97 billion, 67.6% of total revenue), Canada ($13.41 billion, 7.2%), the United Kingdom ($9.94 billion, 5.4%), Mexico ($2.63 billion, 1.4%), and other markets ($34.04 billion, 18.4%). Ford Credit's largest international operations are in Europe, through FCE Bank plc in the United Kingdom and Ford Bank GmbH in Germany.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin (Adjusted EBIT Margin): 5.5% (2024) vs. 5.9% (2023)
• Net Margin: 3.2% (2024) vs. 2.5% (2023)

Investment in Growth:

• R&D Expenditure: $8.0 billion (4.3% of revenue) in 2024
• Capital Expenditures: $8.6 billion in 2024 (up $0.4 billion from $8.2 billion in 2023)
• Strategic Investments:
  • Capital contributions to BlueOval SK, LLC: $4.1 billion recognized through December 2024 (net of returns of capital), out of an agreed maximum of $6.6 billion through 2026.
  • Multi-year offtake agreements for battery raw materials: Estimated expenditures of ~$1.8 billion in purchase obligations and ~$4.9 billion in contingent purchase obligations through 2035.

Business Segment Analysis

Ford Blue

Financial Performance:

• Revenue: $101.94 billion (flat YoY)
• EBIT: $5.28 billion (down $2.18 billion YoY)
• Operating Margin: 5.2% (down 2.1 ppts YoY)
• Key Growth Drivers: Net Pricing ($732 million positive impact) was offset by negative impacts from Volume/Mix ($-1.13 billion), Cost ($-904 million), and Exchange ($-1.19 billion).

Product Portfolio:

• Primarily sells Ford and Lincoln internal combustion engine (ICE) and hybrid vehicles, service parts, accessories, and digital services for retail customers.
• Provides hardware engineering and manufacturing for Ford Model e and manufactures vehicles for Ford Pro and Ford Model e.

Market Dynamics:

• Includes sales in markets not covered by Ford Model e or Ford Pro, sales of ICE and hybrid vehicles to commercial, government, and rental customers outside the U.S. and Canada, sales of EVs by unconsolidated affiliates in China, and sales to other OEMs.
• Wholesale Units: 2,862,000 (down 2% YoY).

Ford Model e

Financial Performance:

• Revenue: $3.85 billion (down 35% YoY)
• EBIT: $-5.08 billion (loss increased by $375 million YoY)
• Operating Margin: -131.8% (down 52.0 ppts YoY)
• Key Growth Drivers: Cost ($1.38 billion positive impact) was significantly outweighed by negative impacts from Net Pricing ($-1.58 billion), Volume/Mix ($-101 million), and Exchange ($-112 million).

Product Portfolio:

• Primarily sells electric vehicles (EVs), service parts, accessories, and digital services for retail customers.
• Develops EV and digital vehicle technologies and software.
• Provides software and connected vehicle technologies for the enterprise and manufactures certain EVs, including for Ford Pro.

Market Dynamics:

• Operates in North America, Europe, and China.
• Includes EV sales to commercial, government, and rental customers in Europe, China, and Mexico not considered core to Ford Pro.
• Wholesale Units: 105,000 (down 9% YoY).
• Faces increased price competition for electric vehicles due to industry excess capacity.

Ford Pro

Financial Performance:

• Revenue: $66.91 billion (up 15% YoY)
• EBIT: $9.02 billion (up $1.79 billion YoY)
• Operating Margin: 13.5% (up 1.0 ppts YoY)
• Key Growth Drivers: Positive impacts from Volume/Mix ($3.31 billion) and Net Pricing ($937 million) were partially offset by Cost ($-2.82 billion).

Product Portfolio:

• Primarily sells Ford and Lincoln vehicles, service parts, accessories, and services to commercial, government, and rental customers.
• Includes core Ford Pro vehicles like Super Duty and Transit vans in North America and Europe, and Ranger in Europe.
• Focuses on selling ICE, hybrid, and electric vehicles, and providing digital and physical services for fleet optimization, including telematics and EV charging.

Market Dynamics:

• Operates in North America and Europe.
• In the U.S. and Canada, it includes all vehicle sales to commercial, government, and rental customers.
• Wholesale Units: 1,503,000 (up 9% YoY).

Ford Next

Financial Performance:

• EBIT loss: $50 million (an $88 million improvement YoY).
• As of January 1, 2025, Ford Next is no longer a reportable segment.

Ford Credit

Financial Performance:

• EBT: $1.65 billion (up $323 million YoY)
• ROE: 9.1% (down 1.5 ppts YoY)
• Total Net Receivables: $143.6 billion (up $10.4 billion YoY)
• Loss-to-Receivables (U.S. retail financing): 50 bps (up 15 bps YoY)
• Auction Values (U.S. 36-month off-lease): $29,810 (down 4% YoY)
• EBT change drivers: Positive impacts from Financing Margin ($709 million) and Volume/Mix ($177 million) were partially offset by Lease Residual ($-376 million) and Credit Loss ($-138 million).

Product Portfolio:

• Provides vehicle-related financing and leasing products to and through dealers worldwide, primarily for Ford vehicles.
• Offers retail installment sale and finance lease contracts, operating lease contracts, and dealer financing programs (wholesale loans, working capital, facilities, real estate).

Market Dynamics:

• Majority of business is in the U.S. and Canada, with Europe being its largest international operation.
• Total recorded investment in finance receivables: $112.5 billion in 2024 (up from $102.96 billion in 2023).
• Consumer finance receivables: $83.22 billion in 2024 (up from $78.27 billion in 2023).
• Dealer financing receivables: $29.28 billion in 2024 (up from $24.68 billion in 2023).
• Allowance for credit losses decreased $18 million in 2024, reflecting an improved macroeconomic outlook, partially offset by increased consumer receivables.

Capital Allocation Strategy

Shareholder Returns:

• Shareholder distributions: $3.5 billion in 2024.
• Share Repurchases: Completed an anti-dilutive share repurchase program in Q4 2024, repurchasing 13,700,000 shares at an average price of $10.91 in November 2024. Total 36.43 million shares were purchased under the program.
• Dividend Payments: On February 5, 2025, declared a regular dividend of $0.15 per share and a supplemental dividend of $0.15 per share.

Balance Sheet Position:

• Cash and Equivalents (excluding Ford Credit): $28.5 billion at December 31, 2024.
• Total Debt (excluding Ford Credit): $20.7 billion at December 31, 2024.
• Net Cash Position (excluding Ford Credit): $7.8 billion.
• Total Debt (Ford Credit): $137.9 billion at December 31, 2024.
• Net Liquidity (Ford Credit): $25.2 billion at December 31, 2024.
• Financial Statement Leverage (Ford Credit): 10.0:1 (up 0.3 YoY).
• Total Global Pension underfunded by $0.5 billion at December 31, 2024 (funded plans $3.4 billion overfunded, unfunded plans $3.9 billion underfunded).
• Total Funded Status OPEB underfunded by $4.4 billion at December 31, 2024.

Cash Flow Generation:

• Operating Cash Flow: $15.4 billion in 2024 (up $0.5 billion from 2023).
• Free Cash Flow (Company Adjusted): $6.7 billion in 2024 (down $0.1 billion from 2023).

Operational Excellence

Production & Service Model: Ford Motor Company and its consolidated entities utilize over 375 operations facilities globally across 24 countries, including 41 manufacturing and assembly plants. The Company's production historically tends to be higher in the first half of the year to meet demand in spring and summer.

Supply Chain Architecture: Key Suppliers & Partners:

• Manufacturing Joint Ventures:
  • AutoAlliance (Thailand) Co., Ltd. (50/50 Ford Motor Company-Mazda)
  • BlueOval SK, LLC (50/50 Ford Motor Company-SK On/SK Battery America) for EV battery plants in Tennessee and Kentucky.
  • Changan Ford Automobile Corporation, Ltd. (50/50 Ford Motor Company-Chongqing Changan Automobile Co., Ltd.) operating four assembly plants, an engine plant, and a transmission plant in China.
  • Ford Otomotiv Sanayi Anonim Sirketi (Ford Motor Company 41%, Koc Group 41%, public 18%) operating three plants, a parts distribution depot, R&D center in Türkiye, and a plant in Romania.
  • JMC (Ford Motor Company 32% shareholder) operating two assembly plants and one engine plant in Nanchang.
• Battery Raw Materials: Entered into multi-year offtake agreements for battery raw materials.

Facility Network:

• Manufacturing: 41 manufacturing and assembly plants globally.
• Research & Development: R&D centers in Türkiye (via Ford Otomotiv Sanayi Anonim Sirketi). Engineering, research, and development expenses were $8.0 billion in 2024.
• Distribution: Parts distribution depot in Türkiye (via Ford Otomotiv Sanayi Anonim Sirketi).

Operational Metrics:

• Wholesale Units (Total Company): 4,470,000 in 2024 (up from 4,413,000 in 2023).
• Depreciation and tooling amortization: $7.57 billion in 2024 (down from $7.69 billion in 2023).
• Maintenance and rearrangement expenses: $1.92 billion in 2024 (up from $1.91 billion in 2023).
• Inventories: $14.95 billion at December 31, 2024 (down from $15.65 billion in 2023).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Channel Partners: Primarily through independently owned dealerships (9,006 worldwide at December 31, 2024).
• Digital Platforms: Digital services are a component of the Ford Blue and Ford Model e segments.

Customer Portfolio: Enterprise Customers:

• Strategic Partnerships: Ford Pro focuses on commercial, government, and rental customers, offering vehicles and services for fleet optimization.

Geographic Revenue Distribution:

• United States: $124.97 billion (67.6% of total revenue) in 2024.
• Canada: $13.41 billion (7.2% of total revenue) in 2024.
• United Kingdom: $9.94 billion (5.4% of total revenue) in 2024.
• Mexico: $2.63 billion (1.4% of total revenue) in 2024.
• All Other: $34.04 billion (18.4% of total revenue) in 2024.
• Growth Markets: Australia showed market share growth from 7.2% in 2023 to 8.2% in 2024.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The worldwide automotive industry is highly competitive, characterized by numerous producers and no single dominant player. Ford Motor Company faces increased price competition, particularly in the electric vehicle segment, driven by industry excess capacity and other factors.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Not explicitly named in the provided text, but the filing states the industry is highly competitive with many producers.

Emerging Competitive Threats: New entrants and disruptive technologies, particularly in the EV market, contribute to increased price competition.

Competitive Response Strategy: Ford Motor Company's Ford+ plan segments its business into Ford Blue, Ford Model e, and Ford Pro to focus on distinct customer needs and market dynamics, aiming for growth and value creation through vehicles, brands, software, and services. This includes significant investments in electrification and software.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Geopolitical Developments: Exposure to U.S.-China relations, the Ukraine conflict, Red Sea tensions, and protectionist trade policies (e.g., new U.S. tariffs on Canada/Mexico/China imports announced February 1, 2025).
• Technology Disruption: Market acceptance of new products and services, especially electric vehicles, and the risk of price competition due to industry excess capacity.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Dependence on suppliers and potential defects leading to recalls/warranty costs.
• Geographic Concentration: Production disruptions from labor issues, public health crises, disasters, or financial distress.
• Capacity Constraints: Production limitations and the need for expansion plans.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Cyclicality of the automotive industry and sensitivity to economic conditions.
• Foreign Exchange: Currency fluctuations impacting financial results.
• Credit & Liquidity: Access to debt and securitization markets affected by credit ratings. Ford Credit faces risks of higher-than-expected credit losses, lower residual values, and higher return volumes for leased vehicles.
• Government Incentives: Reduction, termination, or clawback of government incentives (e.g., IRA tax credits).
• Pension/OPEB: Plan experience could be worse than assumed.

Regulatory & Compliance Risks:

• Industry Regulation: Compliance with evolving safety, emissions (e.g., California ZEV requirements, EU Euro 7, China Stage VI/VII), fuel economy (e.g., U.S. CAFE), and autonomous driving regulations. Increased scrutiny of automaker emission compliance.
• Export Controls: Trade restrictions and compliance requirements.
• Data Privacy: Stringent privacy, data use, data protection, and AI laws.
• Legal Proceedings: Material litigation and governmental investigations (e.g., NHTSA consent order for rearview camera recall, $165 million civil penalty).
• Ford Credit Specific: Subject to credit and consumer protection regulations (e.g., CFPB).

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Exposure to volatile markets.
• Trade Relations: Impact of trade tensions and policy changes.
• Sanctions & Export Controls: Compliance requirements and business limitations.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Electrification: Significant investments in electric vehicles and battery technology, including the F-150 Lightning and E-Transit. Total electric vehicle spending was $4.69 billion in 2024.
• Software & Digital Services: Development of digital vehicle technologies and software for the enterprise.
• Advanced Driver-Assistance Systems: Shifted capital from L4 autonomous technology (Argo AI dissolution) to advanced L2/L3 systems.

Intellectual Property Portfolio:

• Patent Strategy: Owns or holds licenses to numerous patents, trade secrets, copyrights, and trademarks globally.

Technology Partnerships:

• Strategic Alliances:
  • BlueOval SK, LLC: 50/50 joint venture with SK On/SK Battery America for EV battery production.
  • Ionity Holding GmbH & Co. KG: 15% ownership for EV charging infrastructure.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The executive team includes long-tenured leaders like William Clay Ford, Jr. and James D. Farley, Jr., alongside recent appointments to key roles such as COO, Chief EV, Digital, and Design Officer, and segment presidents, indicating a mix of experience and strategic realignment.

Board Composition: The Board of Directors delegates primary oversight of cybersecurity and IT risks to the Audit Committee.

Human Capital Strategy

Workforce Composition:

• Total Employees (including Ford Credit): 171,000 at December 31, 2024 (down from 177,000 in 2023).
• Geographic Distribution: U.S. employees: 87,000 (flat YoY); Rest of World employees: 78,000 (down from 84,000 in 2023).
• Skill Mix: Approximately 56,500 hourly employees in the U.S. were represented by the UAW at December 31, 2024.
• Workforce Diversity (as of Dec 31, 2024): 28.0% of salaried employees worldwide are women; 25.7% of total salaried and hourly employees in U.S. are women; 36.5% of total salaried and hourly employees in U.S. are underrepresented racial and ethnic groups.

Talent Management: Diversity & Development:

• Diversity Metrics: Specific representation data provided above.
• Culture & Engagement: Zero employee fatality incidents globally in 2024.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: The corporate credit facility includes sustainability-linked targets for global manufacturing facility greenhouse gas emissions and carbon-free electricity consumption. Ford Motor Company outperformed all three metrics prior to 2024.
• Renewable Energy: The corporate credit facility includes sustainability-linked targets for carbon-free electricity consumption.

Supply Chain Sustainability:

• Supplier Engagement: The EU Battery Regulation (effective August 2024) requires carbon footprint calculation for EV batteries, with maximum carbon footprint thresholds expected by 2028, impacting Ford Motor Company's supply chain.
• Responsible Sourcing: The EU Carbon Border Adjustment Mechanism (CBAM) adopted in 2023, subjects imported materials (iron, steel, aluminum) to a carbon levy from 2026, with a similar CBAM expected in the United Kingdom in 2027.

Social Impact Initiatives:

• Product Impact: Brazil's MOVER Program (2024) aims to reduce carbon emissions, sets stricter fuel economy targets from 2027, and mandates recyclability and GHG emission reporting.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Historically, production tends to be higher in the first half of the year to meet demand in spring and summer.
• Economic Sensitivity: The 2025 outlook assumes U.S. industry sales of 16.0 million to 16.5 million units, indicating sensitivity to overall market demand.
• Industry Cycles: The automotive industry is generally cyclical.

Planning & Forecasting: The 2025 outlook assumes lower industry pricing and normalized inventory, suggesting active planning and forecasting in response to market conditions.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Safety & Quality: National Highway Traffic Safety Administration Consent Order (November 13, 2024) includes a $165 million civil penalty ($65 million cash, $55 million abeyance, $45 million investment) related to a rearview camera recall.
• Emissions & Fuel Economy: Compliance with evolving safety, emissions (e.g., California ZEV requirements, EU Euro 7, China Stage VI/VII), and fuel economy (e.g., U.S. CAFE) regulations. Increased scrutiny of automaker emission compliance.
• International Compliance: EU Battery Regulation (effective August 2024) and EU Carbon Border Adjustment Mechanism (CBAM) adopted 2023, subjecting imported materials to carbon levy from 2026. Brazil's MOVER Program (2024) sets stricter fuel economy targets and mandates recyclability and GHG emission reporting.

Trade & Export Controls:

• Export Restrictions: Geopolitical developments, trade relations, sanctions, and export controls pose risks.
• Sanctions Compliance: Compliance requirements and business limitations.

Legal Proceedings:

• Material Litigation: New Jersey Department of Environmental Protection filed a complaint (June 16, 2022) seeking natural resource damages for the Ringwood Mines/Landfill Site.
• Regulatory Investigations: European Commission and U.K. Competition and Markets Authority conducted inspections (March 15, 2022) concerning possible collusion related to end-of-life cars and vans.
• Settlement Exposures: Aggregate reasonably possible loss in excess of accruals for non-pattern litigation matters is up to about $0.4 billion, primarily for indirect tax and regulatory matters. Estimated reasonably possible costs in excess of accruals for material field service actions and customer satisfaction actions are up to about $1.8 billion.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 18.5% in 2024.
• Adjusted Effective Tax Rate: 18.3% in 2024.
• Geographic Tax Planning: Net operating loss carryforwards for tax purposes of $23.7 billion at December 31, 2024 ($6.1 billion with no expiration date). Tax credits available of $8.0 billion (majority with 12+ year carryforward).
• Tax Reform Impact: Brazilian tax matters include outstanding tax assessments against Ford Motor Company Brasil Ltda. for state and federal tax incentives, potentially requiring collateral in excess of $1 billion.