Earnings call transcript: Ford Q3 2025 beats earnings expectations, stock dips

Ford Motor Company (F), with a market capitalization of $48.99 billion, reported its third-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.45, compared to the forecasted $0.35. Revenue also exceeded expectations, reaching $50.5 billion against a forecast of $46.91 billion. Despite these positive results, Ford’s stock saw a slight decline of 0.72% in regular trading hours, closing at $12.43, before a minor uptick of 0.4% in aftermarket trading. InvestingPro data shows 6 analysts have revised their earnings upward for the upcoming period, suggesting continued momentum. The company maintains a healthy dividend yield of 6.29%, significantly above the industry average.

Key Takeaways

• Ford’s Q3 2025 EPS of $0.45 exceeded forecasts by 28.57%.
• Revenue for the quarter was $50.5 billion, a 7.65% surprise over expectations.
• Stock closed down 0.72% despite strong earnings, reflecting cautious investor sentiment.
• Adjusted EBIT guidance for the full year was lowered due to a Novelis fire.
• Ford is advancing its electric vehicle (EV) initiatives and hybrid options.

Company Performance

Ford demonstrated robust financial performance in the third quarter of 2025, with revenue growing by 9% year-over-year. The company maintained its adjusted EBIT at $2.6 billion, consistent with the previous year, while reporting an adjusted free cash flow of $4.3 billion for the quarter. Ford’s cash balance stood at nearly $33 billion, supporting a total liquidity of $54 billion. According to InvestingPro analysis, Ford’s financial health score stands at 2.55 (GOOD), with particularly strong marks in price momentum and relative value. The company’s impressive free cash flow yield of 21% underscores its operational efficiency and ability to generate cash. For deeper insights into Ford’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The company continues to lead in the hybrid truck market with a 70% share and holds a strong position in the full-size pickup segment.

Financial Highlights

• Revenue: $50.5 billion, up 9% YoY
• Earnings per share: $0.45, surpassing forecast by 28.57%
• Adjusted EBIT: $2.6 billion, flat YoY
• Adjusted Free Cash Flow: $4.3 billion in Q3
• Total Liquidity: $54 billion

Earnings vs. Forecast

Ford’s actual EPS of $0.45 exceeded the forecasted $0.35, resulting in a 28.57% surprise. Revenue also surpassed expectations at $50.5 billion, compared to the forecast of $46.91 billion, marking a 7.65% surprise. This performance highlights Ford’s resilience and operational efficiency in a challenging market environment.

Market Reaction

Despite beating earnings expectations, Ford’s stock experienced a slight decline of 0.72% during regular trading hours, closing at $12.43. However, in aftermarket trading, the stock saw a modest rise of 0.4% to $12.48. This mixed market reaction may reflect investor concerns over the company’s revised full-year EBIT guidance and broader market trends. With a beta of 1.54 and trading at a P/E ratio of 15.82, Ford shows higher volatility than the broader market. InvestingPro analysis suggests the stock is slightly overvalued at current levels, though it maintains strong fundamentals with a 14-year track record of consistent dividend payments.

Outlook & Guidance

Ford revised its full-year 2025 adjusted EBIT guidance to a range of $6 to $6.5 billion, down from a previous range of $7 to $8.5 billion, primarily due to the impact of a fire at Novelis. The company is focusing on launching a new universal EV platform and expanding its hybrid vehicle lineup. Ford anticipates significant cost improvements in 2026 and is preparing for the launch of its EV platform in 2027.

Executive Commentary

"Our Ford Plus plan is designed to win in the market," stated Jim Farley, President and CEO, emphasizing the company’s strategic focus. Kumar Galhotra, Chief Operating Officer, highlighted, "Improving quality is the single biggest driver to close our cost gap." Farley also expressed optimism about the new EV platform, saying, "We think this product is literally at the center of the future of the EV market in the U.S."

Risks and Challenges

• Supply Chain Disruptions: Ongoing semiconductor shortages could impact production.
• Market Saturation: Increased competition in the EV market may pressure margins.
• Regulatory Changes: Potential EPA regulation changes could alter market dynamics.
• Cost Management: Achieving $1 billion in cost improvements by 2026 is crucial.
• Tariff Impacts: Similar tariff impacts are expected in 2026, requiring strategic mitigation.

Q&A

During the earnings call, analysts inquired about the impact of the Novelis fire and Ford’s recovery strategies. Concerns were also raised about semiconductor supply chain challenges, which Ford is actively addressing. The company discussed efforts to reduce warranty costs and mitigate tariff impacts, highlighting its strategic focus on operational efficiency and cost management.

Ford Motor (F)ull transcript - Ford Motor (F) Q3 2025:

Leila, Conference Operator: Good afternoon. My name is Leila, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Third Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, and if you have joined via the webinar, please use the raise hand icon, which can be found on the bottom of your webinar application. If you have joined by phone, please dial 9 on your keypad to raise your hand. At this time, I would like to turn the call over to Lynn Antipas Tyson, Chief Investor Relations Officer.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Thank you, Leila, and welcome to the Ford Motor Company’s Third Quarter 2025 Earnings Call. With me today are Jim Farley, President and CEO, Sherry House, CFO, Andrew Frick, President, Ford Blue and Model e, and Kumar Galhotra, Chief Operating Officer. Joining us for Q&A will be Cathy O’Callaghan, CEO of Ford Credit, and Steve Crowley, Chief Policy Officer and General Counsel. Also with us is Alicia Bowler-Davis, President of Ford Pro. Jim will give a high-level overview, followed by Kumar on industrial progress, Andrew on market dynamics, and Sherry on our financial review and guidance. We’ll be referencing non-GAAP measures today. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You can find the deck at shareholder.ford.com. Our discussion also includes forward-looking statements; our actual results may differ. The most significant risk factors are included on page 20 of our deck.

Unless otherwise noted, all comparisons are year-over-year. Company, EBIT, EPS, and free cash flow are on an adjusted basis. Upcoming IR engagements include Andrew Frick at the Scotiabank Conference in Toronto on November 18th, and Sherry House at the Barclays Conference in New York on November 19th. Now I’d like to turn the call over to Jim.

Jim Farley, President and CEO, Ford Motor Company: Thanks, Lynn. Before I get started on earnings, I wanted to welcome Alicia Bowler-Davis to our team and to all of you. Her leadership is critical as we build our incredible powerhouse, Ford Pro, into a durable product-software-services powerhouse. Alicia will cover Pro, starting on our fourth quarter earnings call. I’d like to thank the Ford team, as well as our suppliers and all of our dealers, for delivering a very strong quarter. We not only solidly beat expectations, but our underlying performance has us on track to raise our full-year 2025 EBIT guidance if it weren’t for the impact of the Novelis fire in Oswego, New York. Sherry will provide details of the financial impact of the Novelis fire, but I’m very pleased with our team’s swift and decisive response to this challenge.

We immediately mobilized a dedicated crisis team, worked around the clock with Novelis to secure alternative aluminum sources for our operational lines and accelerate the plant’s recovery. Several top leaders and I personally visited the site to support all of these efforts. In addition, we are adding up to 1,000 new jobs to increase F-series production to recover lost volume and fulfill strong customer demand. We have made substantial progress in a very short timeframe in both reducing the 2025 impact and putting in place an exciting recovery plan for next year. Turning to our results, our Ford Plus plan delivered a record $50.5 billion in revenue and $2.6 billion in adjusted EBIT. Once again, we made meaningful progress in cost and quality, thanks to the disciplined execution of our industrial team. Kumar will share more details.

I’d like to thank President Trump and his team for the recent tariff policy developments, which are favorable to Ford as the most American auto manufacturer. Credit, based on our large U.S. manufacturing volume, will allow us to offset tariffs on imported auto parts we need for our strong American production and manufacturing base. In addition, tariffs leveling the playing field for those imported medium and heavy-duty trucks is a positive for Ford because we are no longer disadvantaged for building every single one of our Super Duty trucks here in the United States. We also continue to watch for relief from tailpipe emissions, which may come as soon as the end of this year. Federal legislation has already scaled back California’s ZEV rules, and we anticipate a meaningful reduction in federal requirements next year. We are adjusting our product mix accordingly.

Our Ford Plus plan is designed to win in the market. Among four key trends, markets are more regional now. We all need tailored strategies. Customers are more fragmented between retail and commercial. This requires unique services and digital solutions for both. The competition is getting tougher. Namely, the Chinese OEMs are expanding globally, and the industry faces lower returns due to the EV overcapacity and global pressures. Thankfully, our strategy plays to our strengths at Ford: iconic work vehicles, passion products like Mustang, and the off-road franchises like Bronco and Raptor. We’re also prioritizing hybrids across our lineup, including the development of extended-range hybrid options. In the near term, I believe EV adoption will now only be about 5% of the U.S. market, but this is going to grow, especially for affordable EV vehicles.

We are well positioned for this with the universal EV platform, which underpins digitally advanced, very spacious, and appealing products that start at around $30,000. This is not a distant plan. It’s right around the corner for us at Ford. Sourcing is at 95% complete now. We are testing vehicles. We’ll begin installing equipment in Louisville for the EV later this year, and we are on track to start production of our LFP cells at the Marshall, Michigan, plant later this year. To compete, we need innovation and hyper-cost efficiency. In this capital-intensive environment, smart partnerships will be essential to us. Our largest near-term opportunity is closing that cost gap and achieving world-class quality. Kumar?

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: Thank you, Jim. Our industrial platform is delivering tangible progress in quality, cost, and modernization. Improving quality is the single biggest driver to close our cost gap. Better quality lowers warranty expense and reduces recalls. Four key elements are essential for sustainable warranty cost reduction: seamless launch execution, minimal defects, greater reliability and durability, and time. You need time to clear the car part of old issues. It all starts with a clean launch. A bad launch creates years of warranty and recall problems. Over the past two years, we have radically improved our launch quality. We are on track for best-in-class performance across six nameplates, with three more nameplates in the top quartile. This is based on JD Power warranty analytics data. Also, Ford was the most awarded brand in JD Power 2025 U.S. initial quality study.

We’re also catching defects earlier in the process through rigorous engineering reviews, where leaders sign off to ensure accountability and fixes happen in real time. Our next focus is on long-term reliability and durability. We’ve identified the specific parts and systems needed to achieve industry-leading reliability. To get there, we’ve implemented a new powertrain testing regimen that is up to seven times longer than before. It includes extreme use cases that help us find issues we previously only found years after the vehicle was in the field. It takes time for these improvements to improve our recall numbers, as older models have to work their way out of the system. We’re already seeing our recall costs shift towards more aged vehicles. Since the peak recall period is in years three to five, we expect a meaningful improvement soon.

On cost, we delivered another quarter of year-over-year improvement and are on track for a net $1 billion improvement this year, excluding the impact of tariffs. Lower material cost, freight and duty efficiency, and lower warranty contributed to this. This is the result of a fundamental change in our team’s operational DNA. We have dedicated work streams, reducing the cost of parts, optimizing repair times, and transforming how we negotiate with our suppliers. We’re also modernizing our facilities and IT to unlock the next level of efficiency. We are systemically deploying AI across the entire industrial system. For example, we have significantly improved CAD loading times to less than a minute. We have added 900 AI-powered cameras across our plants to detect quality issues at the source and help us mitigate supply disruptions. Thank you. Now over to Andrew.

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Thank you, Kumar. I will start with Ford Pro, which is thriving due to our diverse vehicle lineup, service parts penetration, and growth in our integrated software and services. Our specialized dealer network is a significant competitive advantage that is difficult to replicate. Dealers recognize the importance of customer uptime, and they continue to invest, adding another 1,700 service bays and 500 mobile service vans over this past year. This makes Ford the largest mobile fleet in the U.S., providing a structural advantage and brand differentiation for both Pro and retail customers. We have intentionally diversified our revenue streams for more durable profits. For example, softness in government sales this year was offset by strength in small to medium businesses, or SMB. Our channel mix is now well balanced across large corporations, SMBs, and government and rental fleets.

In software, Pro’s paid subscriptions grew 8% to 818,000 subscribers, and we’re also seeing growth in our ARPU and attach rates. This is producing a flywheel effect. For example, customers who subscribe to our fleet software have a service parts capture rate up to 20 points higher, which also helps us win sales from new competitors in multi-meg fleets. There is upside to software via strategic partnerships. Our new partnership with ServiceTitan, the largest software provider to the trades, is a notable example of this. We are embedding our real-time vehicle data directly into their workflow, combining the insights from Ford Pro’s data services with ServiceTitan’s Fleet Pro software for a real-time view of fleet vehicle data. Customers will be able to manage vehicle maintenance, streamline services, and simplify repairs. Now, in our home market, industry conditions were strong this quarter, with a SAR of 17 million and positive pricing.

Our total U.S. share grew to 12.8%, with growth outpacing the industry despite our phase-out of the Edge, driven by key products like F-150, Bronco, Explorer, and Expedition. In fact, the all-new Expedition is red hot, gaining over three points of segment share, with 75% of customers choosing high-end trims like Tremor. We continue to lead the hybrid truck market with about 70% share. Lastly, our ample inventory does position us for a strong fourth quarter and helps to insulate our retail sales from the near-term impact of Novelis. We will end this year with leaner retail stock levels between 55 to 59 days supply, with gross stock down 11%. As we look at 2026, even with our net recovery, we forecast being down roughly another 6% to about 520,000 units of gross stock. A disciplined approach, yet still leaving us headroom to look for more market opportunities.

Now I’d like to turn it over to Sherry.

Sherry House, CFO, Ford Motor Company: Thank you, Andrew. Ford continues to make great strides in our journey to build a higher growth, higher margin, more capital-efficient, and durable business. That progress is evident in our ongoing performance. In the third quarter, our strong product lineup drove global revenue growth of over 9%, roughly 1.5 times faster than our growth in wholesales. We delivered adjusted EBIT of $2.6 billion, flat with the prior year, despite absorbing a net tariff headwind of $700 million. The durability of our business is strengthening. Over the past three years, total company EBIT from software and physical services has grown by over 20%, and our revenue growth has diversified across regions, segments, channels, and software and physical services. Furthermore, our industrial system has delivered on their commitment to consistently deliver cost improvements, excluding the impact of tariffs.

Total company adjusted free cash flow was strong at $4.3 billion in the third quarter, with $5.7 billion year to date. We ended the quarter with nearly $33 billion in cash and $54 billion in liquidity. Our balance sheet is a competitive advantage. We are disciplined in our capital allocation strategy, and we are focused on the areas driving expected profitable growth, such as our next-generation EV platform launching in 2027. We remain committed to our investment-grade rating in returning capital to shareholders. Today, we announced the declaration of our fourth quarter regular dividend of $0.15 per share, payable on December 1 to shareholders of record on November 7. Now, turning to the segments, Ford Pro delivered another solid quarter. Revenue was $17.4 billion, and EBIT was $2 billion, with a robust double-digit margin. Revenue and volume grew by 11% and 9% respectively.

Growth in EBIT was driven by volume and continued improvement in warranty and material cost, partially offset by tariff impacts and pricing normalization in Europe and North America. Ford Model e delivered both revenue and volume growth, driven by new product introductions in Europe. EBIT losses increased due to lower net pricing and an increase in spending on our next-generation vehicles. Let me give you additional color on Model e. Year to date, Model e is at a $3.6 billion loss. Roughly $3 billion of this is from our first-generation products: Mach-E, Lightning, Puma, Explorer, and Capri. The balance is investment in our next-generation vehicles, including our next-generation EV platform. The only practical way to improve the profitability of our Gen 1 vehicles is through one or more of the following: pricing, new cost reductions, and improved fixed cost leverage.

Given current industry trends, it’s clear scaling fixed costs is a challenge for most of the industry. You can see this in the multitude of recent program cancellations and charges globally. We’ve been proactive. Over two years ago, we reduced our planned battery capacity by 35%, and last year, we canceled our three-row program, making room for additional commercial vehicle volume. Clearly, near-term U.S. customer and market realities for EVs continue to evolve. We will have more to share about how we are adapting to these changes at a later date. Ford Blue achieved EBIT of $1.5 billion, with revenue growth exceeding the rate of wholesale unit growth, highlighting the strength of our diverse product lineup. Higher costs are driven by tariffs, which muted progress in warranty. Adverse exchange was also a headwind, driven by a weaker U.S. dollar against the euro and Thai baht.

Ford Credit delivered over $600 million of EBT, up 16%, reflecting improved financing margin. Ford Credit also made a $350 million distribution in the quarter. We continue to originate a high-quality book, with U.S. retail and lease FICO scores again exceeding 750 for the quarter. Let me turn to our 2025 outlook. Excluding Novelis, our underlying business continues to perform well. In fact, we are tracking at the high end of the adjusted EBIT guidance range we provided in February, of between $7 billion and $8.5 billion. This original guidance was provided before tariffs, which we have fully absorbed. Additionally, adjusted free cash flow is turning better than the guidance we provided in July, of between $3.5 billion and $4.5 billion. Between 2025 and 2026, we expect Novelis to be a headwind of $1 billion or less.

For 2025, we expect an adjusted EBIT headwind of $1.5 billion to $2 billion in the fourth quarter for Novelis, and we currently have line of sight to mitigate at least $1 billion in 2026, and we are working to improve the situation further. We also expect an adjusted free cash flow headwind of $2 billion to $3 billion in the fourth quarter. Keep in mind that production disruptions result in an oversized short-term impact on our working capital, which will reverse next year. Given the recent announcements by the administration, we now expect tariffs will be a $1 billion net headwind for 2025, down from $2 billion. This brings our updated adjusted EBIT guidance for 2025 to between $6 to $6.5 billion, with adjusted free cash flow of between $2 and $3 billion. Our full-year outlook also assumes U.S. industry SAR of about 16.8 million units, U.S.

industry pricing of about 0.5%, a net cost improvement of $1 billion, excluding the impact of tariffs, and lastly, capital expenditures of about $9 billion. Turning to 2026, while it’s premature to give guidance, I want to share some puts and takes as you think about the industry and Ford. First, we have line of sight to recover at least $1 billion related to Novelis. For tariffs, we expect a net full-year impact similar to 2025. For compliance, the evolving global emissions landscape is expected to eliminate 2026 compliance headwinds, thereby unlocking opportunities to optimize our mix of ICE, hybrids, and EVs and reduce reliance on credits. For cost, we plan to deliver another $1 billion of cost improvements across our industrial system, which will be redeployed to strategic accretive ICE and hybrid cycle plan actions.

Additionally, EV platform spending will continue to increase as we ramp our Marshall LFP battery plant and change over to the Louisville assembly plant ahead of the 2027 launch. Before we go to Q&A, let me end with this. Our underlying business is strong, and importantly, we are starting to more consistently execute and deliver our Ford Plus plan. I’ll now turn the call over to the operator.

Leila, Conference Operator: will now move to our question and answer session. If you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. If you have joined by phone, please dial 9 on your keypad to raise your hand. When you are called on, please unmute your line and ask your question. We will now pause a moment to assemble the queue. Your first question will come from the line of Joseph Spack with UBS. Please unmute and ask your question.

Thanks, everyone. Maybe just a couple of points of clarification. I guess I want to understand why, as of now, you only think you could recover about $1 billion of the impact from Novelis. Also, just in some maybe breaking news, there was a journal article which said Novelis plans to have the plant back up by the end of the year. Is that sort of in line with your thinking and considered in your outlook?

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Yeah, thanks, Joe. This is Kumar. Thanks for the question, and thank you for your very thoughtful paper on this earlier. Yes, that is in line with our communication with Novelis. The Hot Mill, which is down now, will be operational in late November, early December. It’ll then go through a quick ramp-up through December. Between now and the end of the year, we’ll probably lose 90,000 to 100,000 units in the fourth quarter. We announced today that we will add a third shift at Dearborn Truck Plant and higher line speed at Kentucky Truck. Through those actions, we expect to make up roughly 50,000 of those 100,000 units in 2026.

Jim Farley, President and CEO, Ford Motor Company: I would just add, it’s important to realize that the makeup capacity next year will largely depend on Ford’s capacity makeup.

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Yes.

Jim Farley, President and CEO, Ford Motor Company: Even if we have more availability of aluminum, the real lever for us is going to be our own upside. We’re working through that. This is still early days. We’ll have a lot more to update through this quarter and into next year’s guidance. Please understand that’s not Novelis’ restriction.

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Yeah, thanks, Jim. All F-series plants were already running three crew, and Dearborn wasn’t, and now it will run three crew as well. The factories are basically flat out.

OK. Maybe there’s just one more, and I guess it’s unfortunate we keep on having to bring these things up. Maybe you could just update us on how you’re viewing any potential disruption from Sivers Semiconductors chip impact and what kind of supply you have or alternative supply, and whether there’s anything considered for that as well.

Jim Farley, President and CEO, Ford Motor Company: We see this as a political issue. We’re working with U.S. and Chinese administrations. I was in D.C. yesterday, actually. This issue is top of mind for every official we met in the U.S. government. They’re very well aware of it, working to resolve it. These are fairly common parts, mature nodes, semicomponents like diodes and transistors. We’re maximizing our buy of these components. We got really good at doing that during the chip crisis. I think all the OEMs are doing the same thing. At the moment, the run-out dates look very close to the date when we may see a resolution. It’s an industry-wide issue. A quick breakthrough is really necessary to avoid fourth quarter production losses for the entire industry. That’s all I’m willing to say at this point.

OK. Appreciate it, Jim. Thank you.

Leila, Conference Operator: Our next question will come from Dan Levy with Barclays.

Hi. Good evening. Thank you for taking the questions. Kumar or Jim, I wanted to actually just go to the topic of warranty. Thank you, Kumar. I think you unpacked some of it. It looks like your warranty expense was better year over year. You’re talking about $1 billion of better cost next year as well. I’m wondering if you could just update us where we are on the path to breaking that cost curve on warranty. I know this is sort of the question that keeps on coming up. We’ve heard about the improvements in the JD Power survey and the efforts you’re taking. When do we start to see this finally show up materially in the numbers?

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Thanks for the question. Let me make two points. First, the warranty is obviously made up of coverage and FSA costs. FSA costs are not simply a function of a number of units. For example, software, OTA repairs, and other repairs like that are significantly cheaper. As you mentioned, our initial quality has improved substantially. The reduction in those coverage costs is expected to offset any potential increase in FSA. I use the word potential increase intentionally because given the large car part, it is somewhat difficult to precisely forecast the FSA number and the FSA cost. Next year, we expect the total cost coverage plus FSA to also go down.

Jim Farley, President and CEO, Ford Motor Company: I also want to highlight our Q3 warranty costs were down year over year.

Correct.

Sherry House, CFO, Ford Motor Company: $450 million.

Jim Farley, President and CEO, Ford Motor Company: Yeah, it was a big, really big achievement by the team, really seeing that coverage just flow through. One of the reasons why we were able to offset the tariffs.

Great. Thank you. Just as a follow-up, I wanted to ask a question about industry competitive dynamics. I know the incremental 50,000 units of capacity is really just to make up for some of the lost volume from 2025 here from the fire. You’re raising your capacity. We know that your other competitors in trucks are taking some capacity actions as well. What is your comfort that the industry price discipline that we’ve seen can be maintained even with this incremental capacity coming online?

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: Yeah, Dan, it’s Andrew. Thank you for the question. You know, as we look at the industry pricing this year, it’s up about 0.5%, and we expect that to remain strong. When you look at the strength of some of the segmentation out there, like full-size pickups, it also remains very strong within the industry itself. We see strength as we move forward in those key segments, which are very important to us.

Jim Farley, President and CEO, Ford Motor Company: The reason why we feel comfortable is when you look at the underlying segment drivers, fuel price, construction, they’re very strong for those segments. As well, our competitors and Ford have a relatively new lineup. We have a new Expedition, Navigator, and a very still new F-150. The Super Duty is basically still brand new, and we have a hybrid lineup that others don’t have. I think it’s a combination of our optimism about the freshness of our lineup, as well as the underlying drivers of the segmentation.

Great. Thank you.

Leila, Conference Operator: Your next question will come from Mark Delaney with Goldman Sachs.

Yes. Good afternoon, and thank you very much for taking the questions. I wanted to start on emissions. Jim, you mentioned last quarter that the new emissions rules could be a multibillion-dollar opportunity for Ford over a two-year period. Sherry, you said today about the company having opportunities to optimize on mix for next year. Is that multibillion-dollar figure still the right metric for investors? Should investors think about that as being all additive to current EBIT, or is some of this about avoiding future compliance costs that will no longer come into effect?

Jim Farley, President and CEO, Ford Motor Company: Thank you for your question. There are two principal drivers for investors for emissions in the U.S. to think about. The first is a different regime, if it’s confirmed in December, whenever it will be, will allow us to minimize the cost of credits that we would buy. We had those as optionality, and we don’t have to use them.

Sherry House, CFO, Ford Motor Company: That’s right.

Jim Farley, President and CEO, Ford Motor Company: That’s a really big advantage. The second one is the monetization of that is very much centered around mix, mix of powertrains, mix of series, mix of vehicles. Even if we have basically maxed out industrial manufacturing capacity, we still have lots of levers to sell what customers really want. We’ll put a finer point on all that in the year-end when we look at next year’s guidance. Anything to add, Sherry?

Sherry House, CFO, Ford Motor Company: Yeah, just that we have purchase obligations of about $2.5 billion, and we think a lot of that may go away with Q4. We’re already 40% lower from where we started the year with the purchase obligations because the ZEV-related credits went away, and we had no obligation any longer to those contracts. That’s a big part of what is being reduced.

Thank you. My other question was about better understanding what’s happening with profits in the business this year, excluding tariffs and the aluminum issue. If I walk from the midpoint of the EBIT guidance given with the July call, I add in the $1 billion lower tariff headwind and then subtract the Novelis cost, you end up right at the midpoint of your new EBIT guidance for 2025. It doesn’t appear on the surface that the Q3 strength is continuing into Q4, and maybe there’s some timing that’s happening in Q3 and goes away. Maybe that’s the wrong interpretation, and really, you’re tracking more to the high end of the outlook for the year. Any more color you can share around how to think about profit trends in the core business would be helpful. Thanks.

Yeah, let me just start by saying our business has been performing exceptionally well. As a result, we would have guided $8 billion plus. With that, you take out the Novelis EBIT impact of $1.5 to $2 billion, and that’s how you get to the $6 to $6.5 billion. If you would have taken our prior guidance of $6.5 to $7.5 and took out the $1.5 to $2, we would have been guiding at $5 to $5.5. Indeed, we do have progress in the business. It is partially because of the improvements in the tariffs, and that’s going to be $1 billion. Before we even got to that, we’ve had material cost improvements, the credit business has been performing well, and pricing and volume has also been strong.

Thank you.

Leila, Conference Operator: Our next question will come from Doug Carson with B of A. Doug, your line is open. Feel free to unmute. We can go to our next question, and we’ll return to Doug. For our next question, we’ll go to Edison Yu with Deutsche Bank Research.

Hey, can you hear me?

We can. Please go ahead.

OK, thanks.

Jim Farley, President and CEO, Ford Motor Company: Yes. Yes.

Thanks for taking the question. First one, I think you mentioned that looking at next year, the tariff impact should be similar. Can you just walk us through some of the assumptions around that? I would have thought some of maybe the changes in policy could help.

Sherry House, CFO, Ford Motor Company: Yeah, the changes in policy, the proclamation that happened last Friday, gave us $1 billion of benefit. That’s now allowing us to offset more of our parts tariffs expense. That’s going to be the primary improvement that we saw driving the $1 billion that I just talked about, leading to just a $1 billion net impact for this year and enabling us to have a similar impact on tariffs and costs for next year. Basically, what’s going to be left is you’re going to be left with auto parts tariffs that don’t have offset, steel and aluminum in particular. That’s going to be both the tariffs of steel and aluminum, as well as any of the pricing impacts that come through, and then any of the vehicle import tariffs that are not offset by the U.S. content offset that we’re allowed.

Jim Farley, President and CEO, Ford Motor Company: The time frame is different. This year was a partial year. Next year is a full year.

Sherry House, CFO, Ford Motor Company: That’s right. When you look at the impacts, we’re expecting it to be very similar for this year.

Understood. Thanks for the detail. Just a follow-up on, I think, some of the comments you made about Model e investment. I guess, how are we thinking about the Skunk Works efforts now? Obviously, you talked a lot about the missions being a huge potential tailwind. Obviously, you spent all this effort on the next-gen EV platform. Are there, just high-level, are there kind of changes we’re thinking about related to that? How does one kind of move forward?

Jim Farley, President and CEO, Ford Motor Company: Great question. You know, the EV North America market we’re seeing now in the fourth quarter of this year, I believe will be, we believe will be very different in 2027 through 2035 when that vehicle is out in the market. Two things to think about. First of all, the EV platform was designed for two priorities: the lowest possible cost platform with multiple top hats in one facility, and designed to really compete in the heart of what we believe is the new EV market in North America, which is affordable commuter vehicles. We expect adoption will increase over time, and the market will continue to evolve, and maybe even regulations evolve. We think this product is literally at the center of the future of the EV market in the U.S.

Thank you.

Leila, Conference Operator: Our next question will come from Ryan Brinkman with J.P. Morgan.

Hi. Thanks for taking my question. Regarding Novelis’ impact, clearly, there’s some shifting here of production and wholesales impacting the cadence of earnings and cash flows that matters to investors. Maybe with regard, though, to the impact on retail sales and the customer, what are you expecting there? It looks like at the end of September, you were fortunately sitting on an 88-day supply of F-series, more than GM at 70 days. Full-size pickup segment average, I think, is 78 days. Of course, you operated with far less during the chip shortage. How are you thinking about that impact or about managing that impact from a customer perspective?

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: Yeah, I think this is Andrew. Thanks for the question, Ryan. We believe we have enough stock to insulate us from the impact on Novelis in the fourth quarter, given where we started the quarter. That is why I wanted to make the comment on where we expect to end the quarter in the midpoint of our range, just to give you confidence in how we’re managing the Novelis impact.

Very helpful. Thank you.

Leila, Conference Operator: For our next question, we’ll return to Doug Carson with B of A. You may now unmute and ask your question.

Jim Farley, President and CEO, Ford Motor Company: I’m not sure if you could hear me.

Leila, Conference Operator: We can. Please go ahead.

Jim Farley, President and CEO, Ford Motor Company: Great, thanks so much for taking my question. Ford and Ford Credit both have very strong balance sheets. It’s a true asset, certainly for bondholders and, I think, equity alike. The leverage has been very low. The cash balance is very high. In late September, Ford and Ford Credit rolled out what appeared to be a successful plan to offer a subvented financing of the F-150 to subprime customers, providing them an opportunity to enjoy a lower loan rate, kind of reserved for higher FICO scores, perhaps easing some affordability issues. Maybe you can explore what opportunities you could provide customers through creative strategies around loans and rates, given the strong balance sheet.

Sherry House, CFO, Ford Motor Company: Thank you for the question. We ran at the last few weeks of September what we call a no-tier upgrade marketing program, and it really was to generate news for the F-150. We haven’t changed our purchasing policy or our risk appetite, but we’re really focused on ensuring that we use these sort of incentives to structure deals for customers that they can afford their monthly payments on a sustainable basis. I think this program proved to be very effective. Overall, it didn’t change our average FICO scores. In fact, it went up. These are sort of opportunities that we can look at on an ongoing basis.

Jim Farley, President and CEO, Ford Motor Company: Just so I’m clear, I believe your subprimes are a very small part of the overall budget.

Sherry House, CFO, Ford Motor Company: Very small. Yeah, it’s very small. In fact, our high-risk portfolio mix is just 3%, and it’s been very sustainable at that 3% for quite some time now.

Jim Farley, President and CEO, Ford Motor Company: I think that’s comforting for people, but also maybe an opportunity to expand some loans to more subprime and to potentially get more sales done, wouldn’t be a terrible thing also. I appreciate the question and the answer. I appreciate it.

Sherry House, CFO, Ford Motor Company: Yeah, thanks. We’re concentrated on helping sell more products. We’re very open to new ideas.

Jim Farley, President and CEO, Ford Motor Company: You must have some dealer friends. I wish.

Leila, Conference Operator: Our next question will come from Etai Michaeli with TD Cowen.

Great, thank you. Good evening, everyone. Just wanted to go back to the powertrain and segment mix opportunity next year, maybe trim mix as well, with the compliance costs. To what extent will that optimization end up pushing up your ATPs? If so, how confident are you, given some of the affordability constraints, that you can kind of pass that mix optimization through to the consumer?

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: It’s Andrew. Thank you for the question. Our ATPs are really strong right now, as you know, and we are among the leaders and above segment average. I think at the core of what it allows us to do is build the customer demand and give us the flexibility to manage our mix, as Jim mentioned earlier, on certain vehicles, especially as we look at some of our off-road derivatives like Tremor and Raptor. It gives us some headroom in that to actually manage the mix within selected vehicles.

Terrific. That’s helpful. As a quick follow-up, maybe on the quarter, if you could talk through the drivers behind Blue’s improved pricing. I think $400 million was better than what you did last quarter, as well as any additional color on fleet pricing in the quarter. Thank you.

I think in general, as I mentioned earlier, the industry pricing is up 0.5%. Retail is up more. It’s very strong right now, up 1.7%. It’s driven by a lot of the tariff pricing through the year. If you look at the counterbalance, that fleet has been down a bit. It’s primarily in the van business. Fortunately for us in our portfolio and what plays to our strength, our Super Duty pricing and full-size pickup has remained very strong for us throughout the entire year.

Jim Farley, President and CEO, Ford Motor Company: One of the great offsets that we’ve been able to manage this year with Ford Pro is not relying on the traditional fleet business. Andrew, maybe you want to talk about the changing mix of our Pro business.

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: Yes, we’ve continued to increase our overall services as a % of EBIT. Just a couple of years ago, we were around 13%, and we are now well on our way to hit our 20% total EBIT. Across the channels, we’ve also been able to diversify. We’re roughly a third of our channel mix now amongst large corporations, a third with small-medium businesses, and a third with government and daily rentals. We are very well balanced, very diversified, both on the vehicle side and also with the services.

Jim Farley, President and CEO, Ford Motor Company: That strength in small-medium business, SMB, we call it, is really a key accomplishment by the team. We heavily focus on that group. We’re continuing to try to grow that mix of that group, and that helps us a lot de-risk any kind of pricing risk on the fleet.

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: Yes.

Terrific. That’s all.

We have been able to grow.

Leila, Conference Operator: Your next question will come from Tom Narion with RBC Capital Markets.

Thanks for taking the question. Just one quick clarification. The net impact on tariffs on 2025 is $1 billion and 2026 to be similar. Do you mean to say that the 2026 net tariff, assuming everything we know now, is also $1 billion?

Sherry House, CFO, Ford Motor Company: Yeah, let me clarify. For Q4 of this year, we expect an EBIT impact of $1.5 to $2 billion due to Novelis. Due to tariffs, we’re expecting to see a positive in Q4 because we are going to get the receivable for the $1 billion. That’s going to be a positive in Q4. I wasn’t sure if you were originally talking about the Novelis because of the numbers.

Jim Farley, President and CEO, Ford Motor Company: No, no, no. The tariffs. I remember in Q2, it was like negative $800 million, Q3 negative $700 million. It’s like a plus $500 million for Q4 to get to that $1 billion. I’m just understanding how to think about 2026.

Sherry House, CFO, Ford Motor Company: What is going to happen is you would have tariff costs, and it’ll be offset by this $1 billion that is retroactive that’s coming in in Q4. To date, we’re at like $1.7 billion, and then you’ll be able to take the $1 billion off. You’ll encounter a little bit more next quarter, but you’ll be positive for Q4.

Jim Farley, President and CEO, Ford Motor Company: Got it. Thank you. A quick follow-up. As you pivot, let’s say, from EV to ICE, just understanding how that works. Clearly, there’s stranded costs. We saw the EV losses worsen sequentially. I know some of that was investment. How should we think about EV losses going forward, like to next year, you know, if volumes come down? I know some of the plants are flexible. Some of them are dedicated. How should we think about that? We’ll be excited to give you an update after the fourth quarter as we look into next year.

Got it. Thanks.

Sherry House, CFO, Ford Motor Company: Your next question.

Jim Farley, President and CEO, Ford Motor Company: Your decision for the company.

Leila, Conference Operator: Your next question will come from Emmanuel Rosner with Wolfe Research.

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Great. Thank you so much. I wanted to ask you just a little bit more how to think about the mix optimization opportunity into next year as a result of some of these lower compliance hurdles. I think you mentioned the ability to maybe maximize some of the off-road offering, Raptor, etc. Is there a sense that those were supply constrained, like you were constraining the supply of those, and that there’s a large amount of unmet demand in there? Any sort of way to frame this in terms of how you had been managing the business before as a result of these compliance rules? Essentially, what is the size of the opportunity here?

Kumar Galhotra, Chief Operating Officer, Ford Motor Company: Emmanuel, it’s Andrew again. Yes, when you’re compliance constrained or under certain regulatory policy, we were having to restrain some of the mix because some of the off-road vehicles, like I mentioned before, Tremor and Raptor, are actually very negative against compliance. We would suppress some of the natural demand within that. As we look at next year and our overall building mix, we’ll obviously match that to customer demand. We don’t want to overproduce against that so we can remain disciplined. We’ll take a look vehicle by vehicle, like we always do, to maximize our mix within.

Jim Farley, President and CEO, Ford Motor Company: One of the big opportunities to complement what Andrew said on the series mix nameplate is the hybrid mix. Obviously, we can change the pricing in hybrid and change the demand curve for the vehicle. We’ve had to be very aggressive with hybrid pricing to make sure we cover the right mix. That obviously is a big opportunity for us because the F-150 is a huge volume vehicle for us, and the hybrid F-150 is so popular. We have opportunity there to maximize the company’s results.

Sherry House, CFO, Ford Motor Company: The only other thing that I would add, I just want to make sure everybody understands, is that with the EPA changes that are likely, that is removing a compliance headwind that would have been going into next year. It is really important that everyone understands that we were facing a headwind, and that is going to help to eliminate a year-over-year impact.

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: Great. Just one additional question on guidance, comparing it to the most recent one that you had provided last quarter. If I basically take the current guidance adjusted for the Novelis fire, but also the $1 billion benefit from lower tariff outlook, it seems like it’s essentially an unchanged guidance versus last quarter. That’s despite essentially assuming now, or I guess expecting now for the industry, better SAR as well as better pricing. Are there at the same time some industry or company factors that are playing out maybe a little bit less favorably than three months ago?

Sherry House, CFO, Ford Motor Company: No, none to know. I mean, as I said, we were at $8 billion plus. When you take that $1.5 to $2 billion off, it gets you to the $6 to $6.5. You add the $1 billion to tariffs. We also are performing at the higher end of the guidance that we had put out there at the beginning of the year. The reason for that is credit’s been doing good, material costs have been doing good, the pricing and volume have been solid. That’s why we were at the higher end of the guidance.

Andrew Frick, President, Ford Blue and Model e, Ford Motor Company: OK, I’ll take it offline on the sell-side call. I appreciate all the color.

Leila, Conference Operator: Our final question will come from Colin Langan with Wells Fargo.

Oh, great. Thanks for taking my question. I just wanted to follow up. I’m actually, I guess I’m getting a little confused with some of the puts and takes. If I look at the midpoint of guidance, Q4 is like $550 million. I thought you just said that tariffs would be a refund of $1 billion. Then the Novelis, so it just would imply almost like break negative if it wasn’t for the tariff refund. Even if I add Novelis, then it would still imply a pretty big drop underlying from Q3 at $6 to Q4. Am I misunderstanding the commentary there?

Sherry House, CFO, Ford Motor Company: We would have been at $8 billion plus. You take out the Novelis impact in Q4, so that’s going to be $1.5 to $2 billion, which gets you to the $6 to $6.5 billion for 2025. Now, when I talk about makeup, that’s in 2026. That’s where you get the $1 billion back in EBIT, not 2025.

I’m just on the prior question. Year to date, you have, like, what was it, $1.7 billion of tariff costs. The guide for the year is $1 billion. How are we getting there for Q4? I thought that was the refund, or maybe I misunderstood that. Sorry.

Yeah, that’s right. As of last Friday, when the proclamation was signed, we now can apply a greater % of the MSRP tariff offset to our parts. Now that we can do that as of last Friday, we’re going to get $1 billion of benefit. We couldn’t record that in the Q3 numbers because our books were already closed, and this just happened last Friday. You’re going to see a receivable in Q4 that’s more than going to offset what the tariff cost would be in Q4. When you add Q1, Q2, Q3, and Q4 together with that positive receivable, you’ll reach $1 billion net for the full year.

OK, got it. Just, I guess, a follow-up on your color on 2026. You highlighted cost as $1 billion positive. Novelis would be $1 billion help into next year. Any color? I think in the past, you’ve talked about around $600 million of sort of the regulatory costs just structurally going away as a tailwind. Did I catch the commentary on inventory? It’ll be actually down again next year. We should kind of have a little bit of a destocking factor that we should be thinking about too?

Colin, there’s a lot of texture we want to take you through as we position 2026 and beyond. We’re going to do that properly at Q4 earnings. For now, I just said we’ve got some tailwinds and headwinds that I wanted you to know. Tariffs are roughly the same. Tailwinds make up Novelis, likely removal of the EPA compliance headwind, and continued cost savings. The headwinds are going to be investments in our launches in Marshall and Louisville and investments in the cycle plan. That’s what we’re able to share at this time. We look forward to sharing more with you in our Q4 earnings.

All right, thanks for taking my question.

Leila, Conference Operator: That was your final question. I’ll let Colin finish.

Jim Farley, President and CEO, Ford Motor Company: I just want to say one thing. We appreciate all of our investors and the people that analyze our industry very carefully. I just want to note that I know Adam Jonas is moving on to another segment. I wanted to thank you for your activist investor point of view. You certainly helped us be better managers and stewards of the company. I think we just wanted to say thank you as a management team for all of you for what you do. When someone moves on like Adam, we want to highlight that. Thanks. Thank you, operator, again. To summarize, Ford is addressing the key issues affecting our industry head-on. Our improved industrial system is driving consistent results on cost and quality. Ford Pro is making Total Ford a more durable company and business. We have and will continue to take decisive actions to improve and grow our company.

I’m confident in a stronger Ford as we head into an exciting 2026. Thank you today.

Leila, Conference Operator: This concludes the Ford Motor Company Third Quarter 2025 earnings call. Thank you for your participation. You may now disconnect.

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