FORD MOTOR CO (F)

ITEM 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

RECENT DEVELOPMENTS

Trade Policy and Tariffs

As of June 30, 2026, we expect to receive about $3 billion related to tariff reimbursements from the federal government and suppliers and as offsets to Company payment obligations to suppliers. As previously disclosed, 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 IEEPA), the timing for our receipt of these reimbursements is uncertain and is subject to changes in trade policy. Despite this uncertainty, we currently expect to receive about $500 million of reimbursements related to IEEPA in the second half of 2026.

For additional information regarding the impact and potential impact of trade policy and tariffs on our business, see 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 have temporarily sourced an alternative supply 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 55 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 second quarter of 2026, we recorded $481 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 related to these actions, which we now expect to be up to $2 billion (on a pre-tax basis). We will recognize those charges in the quarter they are incurred as a special item.

Also as previously disclosed, in May 2026, Ford, SK On Co., Ltd., and SK Battery America, Inc., and BlueOval SK, LLC (“BOSK”) closed on the transactions contemplated by the Joint Venture Disposition Agreement (“JVDA”) the parties entered into in December 2025. In conjunction with the closing, our membership interest in BOSK was redeemed, we acquired from BOSK all of BOSK’s interests in two battery plants located in Kentucky, and we entered into a Loan Arrangement and Reimbursement Agreement with U.S. Department of Energy (the “Ford DOE Loan Agreement”), pursuant to which we assumed from BOSK all of its obligations under its U.S. Department of Energy loan related to the single Kentucky plant for which advances were made.

Upon closing of the transactions, we recognized pre-tax special item charges of $3.6 billion, which includes about $500 million of cash expenditures. For additional information about BOSK, the JVDA, and the Ford DOE Loan Agreement, see Notes 12 and 16 of the Notes to the Financial Statements.

We expect that the regulatory and market dynamics we have observed in the EV market will continue to occur, which may have a substantial adverse impact on our results of operations and/or business, including our investments in supply, production capacity, and equity method investments.

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 second quarter of 2026, the net loss attributable to Ford Motor Company was $1,327 million, and Company adjusted EBIT was $2,503 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 58 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):

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(a)Includes related tax effect on special items and tax special items.

We recorded $4,179 million of pre-tax special item charges in the second quarter of 2026, primarily reflecting charges we recognized upon the closing of the transactions contemplated by the BOSK JVDA and charges related to the EV program cancellations previously announced in December 2025.

We recorded a $1,152 million benefit from tax special items in the second quarter of 2026, primarily reflecting the tax effect of pre-tax special item charges and a $273 million benefit from the recognition of a U.S. Qualified Opportunity Zone tax incentive.

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 purpose 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 second quarter and first half 2026 key metrics for the Company, compared to a year ago.

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(a)See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.

In the second quarter of 2026, our diluted earnings/(loss) per share of Common and Class B Stock was a loss of $0.33, and our diluted adjusted earnings per share was $0.42.

Net income/(loss) margin was negative 2.7% in the second quarter of 2026, down 2.7 percentage points from a year ago. Company adjusted EBIT margin was 5.2% in the second quarter of 2026, up 0.9 percentage points from a year ago.

The table below shows the details of our second quarter and first half 2026 net income/(loss) attributable to Ford and Company adjusted EBIT (in millions).

__________

(a)See Non-GAAP Financial Measure Reconciliations section for reconciliation to GAAP.

The year-over-year decrease of $1,291 million in net income is primarily explained by higher special item charges, as described on page 36, offset partially by lower taxes. The year-over-year increase of $363 million in Company adjusted EBIT in the second quarter of 2026 primarily reflects higher Ford Blue and Model e EBIT and improved Ford Credit EBT, offset partially by lower Ford Pro EBIT.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

The tabl

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Key Trends and Economic Factors Affecting Ford and the Automotive Industry

Trade Policy. To the extent governments in various regions implement or intensify restrictions or barriers to trade, such as tariff or non-tariff barriers, export controls, currency manipulation, or policies that otherwise favor domestic companies, there can be a significant negative impact on manufacturers based in other markets.

Tariffs implemented to date in the United States and elsewhere have caused significant disruption, increased costs (both directly and indirectly), and uncertainty in the automotive industry, including for Ford, other OEMs, suppliers, and dealers, as well as customers. Moreover, tariffs implemented or increased in the United States and elsewhere in the future may exacerbate these impacts. Further, instability in the supply chain exacerbated by tariffs and other industry concerns, such as China’s restriction on the export of rare earth minerals and various components, has resulted in production disruptions and increased costs and heightens the risk of future production disruptions and additional cost increases. Tariffs have affected and will continue to affect all OEMs, to various degrees.

In 2025, Ford’s gross costs related to tariffs implemented or revised in 2025 was about $3 billion, including the impact of tariff relief, and the net EBIT impact was about $2 billion after offsets. This relief is subject to periodic approval by the U.S. Department of Commerce and may be revised based on factors such as U.S. production and import content levels. As of December 31, 2025, we recognized a receivable of $974 million reflecting tariffs paid but for which we had not yet received refunds. Although we have started to receive refunds, the timing for our receipt of refunds is uncertain and is subject to changes in trade policy. Tariffs, particularly on auto parts for U.S. assembly, if sustained for an extended period of time, will have a significant adverse effect on U.S. production and the overall automotive industry.

For additional information regarding the impact and potential impact of trade policy and tariffs on our business, see the Outlook section on page 74 of this Report and Item 1A. Risk Factors.

Production and Supply Chain. Market volatility and shifting global supply chains have continued to create some production constraints, though conditions have improved from the immediate post-COVID period. As we adjust to shifting market conditions and balance our production mix, continued uncertainty with regard to current and future levels of tariffs, as discussed above, could have a significant impact on our supply chain and, in turn, our production. We continue to reevaluate our supply base and sourcing decisions and may in the future incur charges to improve flexibility and cost competitiveness.

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. Although the ultimate impact on Ford is uncertain, we experienced lower production in the fourth quarter of 2025 driven by the Novelis fires, which we expect to recover partially in 2026. For more information regarding the impact and potential impact of the Novelis fires on our business, see the Outlook section on page 74 of this Report.

See Item 1A. Risk Factors for additional discussion of the risks related to disruptions to Ford’s and Ford’s suppliers’ production and operations.

Electric Vehicle Market. Although we are investing in our EV strategy, we anticipate that the EV market will continue to evolve. To date, we have observed lower-than-anticipated industrywide EV adoption rates due to changes in consumer sentiment, competitive dynamics, legal and policy changes, and significant developments in vehicle pricing dynamics, among other factors that we continue to monitor. The trend may be further exacerbated as policy changes in the United States have reduced or eliminated supply- and demand-side EV incentives, which may further slow the adoption of EVs. Moreover, potentially significant reductions in the stringency of federal emissions and fuel economy standards and federal legislation that eliminated the authority of California and other states to implement and enforce their most stringent emissions standards and zero-emission vehicle sales requirements, and other actions that may be forthcoming, may add to the disruption of the market for EVs in the United States, our largest market. These developments, which may continue to affect the pace of EV adoption, could extend the period of underutilization of EV production capacity across the industry.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

This environment has led us, and may in the future lead us, to adjust our investments, spending, production, and product and future technology launches to better match the pace of EV adoption. As a result of the lower-than-anticipated adoption rates, near-term pricing pressures, and other factors, we have recorded and may continue to incur charges related to payments to our EV-related suppliers (battery, raw material, or otherwise), inventory adjustments, impairments, or other matters.

For example, in 2024, we announced the cancellation of an all-electric three-row SUV program. The impact of that cancellation also resulted in changes to future technology and product launches. Through December 31, 2025, we incurred expenses of $2.4 billion related to these actions, all of which we reported as special items. Although we do not expect to incur significant additional expenses, cash payments related to these actions will continue through 2026.

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. As a result of the challenges facing the EV market and the decisions we made in response to those challenges, we recorded the following charges as special items: an $8.4 billion pre-tax non-cash impairment charge, including goodwill, for our Model e long-lived assets; $1.1 billion of non-cash asset write-downs related to the EV program cancellations described above; and $1.2 billion of other charges to be paid in cash (primarily related to contractual commitments related to those programs). We may incur additional expenses and cash expenditures of up to about $4 billion 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. The value of the liabilities assumed is expected to exceed the value of the assets received; accordingly, we do not expect to recover the carrying amount of our investment in BOSK. Therefore, in the fourth quarter of 2025, we recorded a $3.2 billion pre-tax non-cash impairment charge as a special item.

Upon closing of the transactions contemplated by the JVDA (expected in the first half of 2026), we expect to recognize additional special item charges of about $3 billion, which includes about $500 million of cash expenditures. For additional information about BOSK and the JVDA, see Note 23 of the Notes to the Financial Statements.

In total, in the fourth quarter of 2025, we recorded about $13.8 billion of charges related to our updated EV strategy and the expected disposition of our BOSK investment.

These regulatory and market dynamics 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, the pace of EV adoption and slower-than-anticipated development of the EV market may impact our strategy to comply with regulatory emissions and fuel economy standards and zero-emission vehicle requirements. Although recent actions taken and expected to be taken in the United States and elsewhere may eliminate or reduce the stringency of such standards, if consumers do not purchase our EVs and other highly fuel-efficient vehicles in sufficient numbers, it may be difficult for Ford to meet applicable environmental standards in certain markets and may force us to take various product-led actions (e.g., curtailing the production and sale of certain internal combustion vehicles) that could have substantial adverse effects on our sales volume and operations and/or purchase compliance credits from third parties.

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” above.

Currency Exchange Rate Volatility. Although a few global central banks have raised interest rates recently, most remain in the process of lowering policy rates that had been elevated in order to address inflation concerns. As these policy rates shift, central banks need to carefully balance the risk that inflation remains elevated against the heightened financial and economic risks associated with high interest rates. This is notable for many emerging markets, which may also face increased exposure to commodity prices and political instability, contributing to unpredictable movements in the value of their exchange rates. In addition to direct impacts on the financial flows of global automotive companies, currency movements can also impact pricing of vehicles exported to overseas markets. In most markets, exchange rates are market-determined, and all are impacted by many different macroeconomic and policy factors, and thus likely to remain volatile. However, in some markets, exchange rates are heavily influenced or controlled by governments.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Pricing Pressure. Despite vehicle pricing remaining elevated over the last year due to strong demand, lingering supply shortages, tariffs, and inflationary costs, we have already observed some declines in new and used vehicle prices, especially in the EV segment, but it is unclear whether industry prices will decline fully to pre-COVID-19 pandemic levels as costs remain elevated. Intense competition and excess capacity are likely to put downward pressure on inflation-adjusted prices, including increased marketing incentives, for similarly contented vehicles and contribute to a challenging pricing environment for the automotive industry in most major markets.

Commodity and Energy Prices. Prices for commodities remain volatile. Spot prices for various commodities have recently diverged, as weakening global EV demand mitigates price increases for battery-related commodities, while base metals such as steel and aluminum face tariff-related impacts, and precious metals (e.g., palladium) also remain at elevated price levels due to geopolitical uncertainty and other factors. Overall, the net impact on us and our suppliers has been higher material costs. To help ensure supply of raw materials for critical components, we, like others in the industry, have entered into multi-year sourcing agreements and may enter into additi

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