Earnings call transcript: Ford Q3 2025 beats estimates, stock surges

Ford Motor Company reported robust financial results for the third quarter of 2025, with earnings per share (EPS) and revenue both exceeding analyst forecasts. The company’s EPS of $0.45 surpassed the expected $0.35, marking a 28.57% surprise. Revenue reached $50.5 billion, beating the forecast of $46.91 billion by 7.65%. Following the announcement, Ford’s stock climbed 11.34% in after-hours trading to $13.84.

Key Takeaways

• Ford’s Q3 2025 EPS and revenue significantly exceeded forecasts.
• The stock surged by 11.34% following the earnings announcement.
• Strategic initiatives in EV and hybrid technology are progressing well.
• Operational improvements include increased production capacity and AI deployment.
• External factors like tariffs and supply chain disruptions present challenges.

Company Performance

Ford demonstrated strong performance in Q3 2025, with global revenue increasing by 9% year-over-year. The company maintained flat adjusted EBIT at $2.6 billion, while adjusted free cash flow reached $4.3 billion for the quarter. Ford’s cash balance stood at nearly $33 billion, and total liquidity was reported at $54 billion. The company’s strategic focus on EV and hybrid technology, along with operational enhancements, contributed to its positive results.

Financial Highlights

• Revenue: $50.5 billion (+9% YoY)
• Earnings per share: $0.45 (28.57% surprise over forecast)
• Adjusted EBIT: $2.6 billion (flat YoY)
• Free Cash Flow: $4.3 billion in Q3, $5.7 billion YTD

Earnings vs. Forecast

Ford’s Q3 2025 results exceeded expectations, with EPS of $0.45 compared to the forecasted $0.35, resulting in a 28.57% surprise. Revenue also surpassed forecasts, reaching $50.5 billion against an expected $46.91 billion, a 7.65% surprise. This performance indicates a strong quarter for Ford, reflecting successful execution of its strategic initiatives.

Market Reaction

Following the earnings announcement, Ford’s stock surged by 11.34% in after-hours trading, reaching $13.84. This positive market reaction reflects investor confidence in the company’s financial performance and strategic direction. Currently, the stock is trading close to its 52-week high of $13.97, indicating strong market sentiment.

Outlook & Guidance

Ford provided guidance for 2025, with adjusted EBIT expected between $6 billion and $6.5 billion and adjusted free cash flow projected at $2 billion to $3 billion. The company anticipates $1 billion in cost improvements for 2026 and sees opportunities for mix optimization with potential EPA compliance rule changes.

Executive Commentary

CFO Sherry House highlighted the company’s consistent execution of its Ford+ plan, stating, "Our underlying business is strong, and importantly, we are starting to more consistently execute and deliver our Ford+ plan." CEO Jim Farley emphasized the strategic importance of Ford’s EV initiatives, noting, "We think this product’s literally at the center of the future of the EV market in The US."

Risks and Challenges

• Tariff-related costs are expected to create a $1 billion headwind in 2025.
• Supply chain disruptions, such as the Novelis fire, may impact production.
• The EV market’s growth rate and adoption remain uncertain.
• Warranty costs, while expected to decrease, remain a focus area for cost reduction.
• Potential geopolitical and economic factors could influence future performance.

Q&A

During the earnings call, analysts inquired about the impact of the Novelis fire, which is expected to result in a loss of 90,000 to 100,000 units in Q4. Questions also focused on the company’s tariff strategies and the ongoing reevaluation of its EV strategy in response to market conditions.

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

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Good day, everyone. My name is Leila,

Leila, Conference Operator: and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Third Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ 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.

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 twenty twenty five earnings call. With me today are Jim Farley, President and CEO Sherry House, CFO Andrew Frick, President, Ford Blue and Model E and Kumar Gahhotra, Chief Operating Officer. Joining us for Q and A will be Kathy 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 dot com. Our discussion also includes forward looking statements, where 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 18 and Sherry House at the Barclays Conference in New York on November 19. 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 Otsego, New York. Sherry will provide details for the financial impact of the Novella’s fire, and 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 a thousand 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 time frame 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 $50,500,000,000 in revenue and $2,600,000,000 in adjusted EBIT. Once again, we made meaningful progress in cost and quality, thanks to the disciplined execution of our industrial team. Kumar 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 our 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 duties 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 UEV later this year, and we are on track to start production of our LFP cells at 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. And our largest near term opportunity is closing that cost gap and achieving world class quality. Kumar?

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 J. D. Power warranty analytics data. Also, Ford was the most awarded brand in J. D.

Power 2025 US 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. Now it takes time for these improvements to improve our recall numbers as older models have to work their way out of the system. But we’re already seeing our recall costs shift towards more aged vehicles. And 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 to track for a net $1,000,000,000 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, and 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 make fleets. There’s 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 FleetPro 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 SAAR of $17,000,000 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-one 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. And 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 fifty five to fifty nine 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.

Lynn Antipas Tyson, Chief Investor Relations Officer, 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, and that progress is evident in our ongoing performance. In the third quarter, our strong product lineup drove global revenue growth of over 9%, roughly one and a half times faster than our growth in wholesales. And we delivered adjusted EBIT of $2,600,000,000, flat with the prior year, despite absorbing a net tariff headwind of $700,000,000. 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 is 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 $4,300,000,000 in the third quarter with 5,700,000,000.0 year to date. We ended the quarter with nearly 33,000,000,000 in cash and 54,000,000,000 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 UEB 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 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 17,400,000,000.0, and EBIT was 2,000,000,000 with a robust double digit margin. Revenue and volume grew by 119%, 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 $3,600,000,000 loss. Roughly 3,000,000,000 of this is from our first generation products, Mach E, Lightning, Puma, Explorer, Capri. The balance is investment in our next generation vehicles, including our UEV platform. The only practical way to improve the profitability of our Gen one vehicles is through one of the more of the following, pricing, new cost reductions, and improved fixed cost leverage.

Given current industry trends, it’s clear. Scaling fixed cost 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 US 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 $1,500,000,000 with revenue growth exceeding the rate of wholesale unit growth, highlighting the strength of our diverse product lineup. Higher costs were driven by tariffs, which muted progress in warranty.

Adverse exchange was also a headwind, driven by a weaker US dollar against the euro and Thai baht. Ford Credit delivered over 600,000,000 of EBT, up 16%, reflecting improved financing margin. Ford Credit also made a $350,000,000 distribution in the We continue to originate a high quality book with US retail and lease FICO scores again exceeding seven fifty for the quarter. So 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 seven and eight and a half billion. This original guidance was provided before tariffs, which we have fully absorbed. Additionally, adjusted free cash flow is trending better than the guidance we provided in July of between 3 and a half and 4 and a half billion dollars. Between ’25 2025 and 2026, we expect Novelis to be a headwind of 1,000,000,000 or less. For 2025, we expect an adjusted EBIT headwind of 1 and a half to $2,000,000,000 in the fourth quarter for Novelis.

And we currently have line of sight to mitigate at least $1,000,000,000 in 2026, and we are working to improve the situation further. We also expect an adjusted free cash flow headwind of 2 to $3,000,000,000 in the fourth quarter. Keep in mind, the 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 $1,000,000,000 net headwind for 2025, down from $2,000,000,000. This brings our updated adjusted EBIT guidance for 2025 to between six to six and a half billion dollars with adjusted free cash flow of between 2 and $3,000,000,000.

Our full year outlook also assumes US industry SAAR of about 16,800,000 units, US industry pricing of about 0.5%, a net cost improvement of $1,000,000,000 excluding the impact of tariffs, and lastly, capital expenditures of about $9,000,000,000. Turning to 2026. While it’s premature to give guidance, I I wanna share some puts and takes as you think about the industry and Ford. First, we have line of sight to recover at least $1,000,000,000 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. And for cost, we plan to deliver another $1,000,000,000 of cost improvements across our industrial system, which will be redeployed to strategic, accretive ICE and hybrid cycle plan actions. Additionally, UEB 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 and 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: We’ll 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 star nine 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 Spak with UBS. Please unmute and ask your question.

Joseph Spak, Analyst, UBS: Thanks, everyone. Maybe just a couple of points of of clarification. I guess I wanna understand, you know, why as of now, you only think you could recover about a billion dollars of the impact from Novelis. And then also just in in some maybe breaking news, there was a a journal article which said Novella’s plans to have the plan back up, you know, by the end of the year. So is that sort of in line with with your thinking and then considered in in your outlook?

Jim Farley, President and CEO, 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 end of the year, we’ll probably lose 90 to a 100,000 units in fourth quarter. We announced today that we will add a third shift at Durbin Truck Plant and higher line speed at Kentucky Truck.

So through those actions, we expect to make up roughly 50,000 of those 100,000 units in 2026. I would just add, it’s important to realize that the makeup capacity next year largely depend on Ford’s capacity makeup. Even if we have more availability of aluminum, the real lever for us is gonna be our own upside, and and we’re working through that. This is still early days. We’ll have a lot more to update through the through this quarter and into next year’s guidance.

But please understand that’s not Novelis restriction. Yeah. Thanks, Jim. All all F Series plants were already running three crew, and Derwent wasn’t, and now it would run three crew as well. So the factories are basically flat out.

Joseph Spak, Analyst, UBS: K. May maybe there’s one more, and I I I guess it’s unfortunate we we keep on having to bring these things up. But maybe you could just update us on how you’re viewing any potential disruption from Snakes Barre chip impact and what kind of supply you have or alternative supply and and whether there’s anything considered for that as well. We

Jim Farley, President and CEO, Ford Motor Company: see this as a political issue. We’re working with US and and Chinese administrations. I was in DC yesterday, actually, and this issue was top of mind for every official we met in the US government. They’re very well aware of it, working to resolve it. These are fairly common parts, mature node semi components 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, you know, 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.

Joseph Spak, Analyst, UBS: Yeah. Appreciate it, Jim. Thank you.

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

Dan Levy, Analyst, Barclays: Hi. Good evening. Thank you for, taking the questions. Kumar or or Jim, I wanted to actually just go to the topic of of warranty. And and thank you, Kumar.

I think you unpacked some of it. But looks like your your warranty expense was better year over year. You’re talking about a billion dollars of better cost next year as well. And I’m wondering if you could just update us at, you know, 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, but we’ve heard about the the improvements in the J.

D. Power survey and and, you know, the efforts you’re taking. But when do we start to see this finally show up, materially in the numbers?

Jim Farley, President and CEO, Ford Motor Company: Thanks for the question. Let me make two points. First, the the the warranty is obviously made up of coverage and FSA costs. FSA costs are not simply a function of number of units. For example, software, OTA repairs, and other repairs like that are significantly cheaper.

And as you mentioned, our initial quality has improved substantially, and the reduction in those coverage costs is expected to offset any potential increase in FSA. And 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. But next year, we expect the total cost coverage plus FSAs to also go down. I and I also wanna highlight our q three warranty costs were down year over year.

Speaker 6: Correct.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: 450,000,000.

Jim Farley, President and CEO, Ford Motor Company: Yeah. It’s a big a a really big achievement by the team really seeing that coverages flow through, one of the reasons why we’re able to offset the tariffs.

Dan Levy, Analyst, Barclays: Great. Thank you. Just as a follow-up, wanted to ask a question about industry competitive dynamics. And I know the the incremental 50,000 units of capacity is really just to make up for some of the the lost the lost volume from 25 here from the fire. But you’re 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?

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: Yes. Dan, it’s Andrew. Thank you for the question. As we look at the industry pricing this year, it’s up about a half a point, and we expect that to remain strong. And when you look at the strength of some of the segmentation out there, like full size pickups, it also remains very strong within within the industry itself.

So 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: And the reason why we feel comfortable is when you look at the underlying segment drivers, fuel price, you know, construction, they’re very strong for those segments. And as well, our competitors and Ford have a relatively new lineup. We have a new Expedition Navigator. We have a a very still new f one fifty. We we are the Super Duty is basically still brand new, and we have hybrid lineup that others don’t have.

So I think it’s a combination of our optimism about the freshness of of our lineup as well as the underlying drivers of the segmentation.

Dan Levy, Analyst, Barclays: Great. Thank you.

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

Mark Delaney, Analyst, Goldman Sachs: Yes. Good afternoon, and thank you very much for taking the questions. I want to start on emissions. Jim, you mentioned last quarter that the new emissions rules could be a multibillion dollar opportunity for FORWARD over a two year period. And Sherry, you said today about the company having opportunities to optimize on mix for next year.

So is that multibillion dollar figure still the right metric for investors? And 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: There’s two thank you for your question. There’s two principal drivers for investors for for emissions in The US 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 and we don’t have to use them.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: That’s right.

Jim Farley, President and CEO, Ford Motor Company: That 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. So even if we have basically maxed out in industrial manufacturing capacity, we still have lots of levers to sell what customers really want. And we’ll put a finer point in all that for in in the year end when we look at next year’s guidance.

Anything to add, Sherry?

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. Just that, we have purchase obligations about 2 and a half billion dollars, and we think a lot of that may go away, you know, with with q four. And 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. So that’s that’s a big part of what is being reduced.

Mark Delaney, Analyst, Goldman Sachs: 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 $1,000,000,000 lower tariff headwind and then subtract the Novelis cost. You end up right at the midpoint of your new EBIT guidance for 2025. So it doesn’t appear on the surface that the 3Q strength is continuing into 4Q and maybe there’s some timing, that’s happening in 3Q and goes away.

But but maybe that’s the wrong interpretation and and and really you’re tracking more to the high end of, the outlook for the year. So any more color you can share around how to think about, profit trends in the core business would be helpful. Thanks.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. So let me just start by saying, our business has been performing exceptionally well. And as a result, we would have guided $8,000,000,000 plus. With that, you take out the Novelis, EBIT impact of 1 and a half to 2,000,000,000, and that’s how you get to the 6 and a 6 and a half billion. If you would have taken our prior guidance of 6 and a half to seven and a half and took out the 1 and a half to two, we would have been guiding at five to five and a half.

So, indeed, we do have progress in the business. It is partially because of the improvements in the tariffs, and that’s gonna be a billion dollars. But 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.

Jim Farley, President and CEO, Ford Motor Company: Thank you.

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

Edison Yu, Analyst, Deutsche Bank Research: Hey. Can you hear me?

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

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

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

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. So the, the changes in policy, the proclamation that happened last Friday gave us a billion dollars of benefit, and that’s now allowing us to offset more of our parts tariffs expense. So that’s gonna be the primary improvement that we saw that was driving the billion dollars that I just talked about, leading to just a $1,000,000,000 net impact for this year and enabling us to have a similar impact on tariffs and costs for next year. So, basically, you know, what’s gonna be left is you’re gonna be left with the with auto parts tariffs that that don’t have, you know, offset, steel and aluminum in particular. And that’s gonna 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 US content offset that were allowed.

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

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: That’s right. But when you look at the, impacts, we’re expecting it to be very similar this year. Yep.

Edison Yu, Analyst, Deutsche Bank Research: Understood. That’s right. Thank you.

Jim Farley, President and CEO, Ford Motor Company: Thank you for the for

Edison Yu, Analyst, Deutsche Bank Research: the detail. And then just a follow-up on, I think some of the comments you made about about Model e investment. I I guess, how are we thinking about, you know, the Skunk Works efforts now? Obviously, you talked a lot about, you know, the missions being huge, you know, potential tailwind. But, you know, obviously, there’s you spent all this effort on on the next gen EV platform.

Are there just high level are there kind of changes we we’re thinking about related to that? How does 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 fourth quarter of this year, I believe, will be we believe will be very different in ’27 to ’35, you know, when that vehicle’s out in the market. And and so two things to think about. First of all, the UEV 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 continue to evolve and maybe the regulations evolve.

We think this product’s literally at the center of the future of the EV market in The US.

Edison Yu, Analyst, Deutsche Bank Research: Our

Leila, Conference Operator: next question will come from Ryan Brinkman with JPMorgan.

Ryan Brinkman, Analyst, JPMorgan: Regarding Novelis impact, you know, 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 September, you were fortunately sitting on an eighty eight day supply of F Series more than GM at seventy days. Full size pickup segment average, I think, is seventy eight days. And of course, you operate with far less during the chip shortage.

So how are you thinking about that impact or about managing that impact from a customer perspective?

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: Yes. 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. And that’s why I wanted to make the comment on where we expect to end the quarter, you know, in the midpoint of our range just to give you confidence in how we’re we’re managing the Novelis impact.

Ryan Brinkman, Analyst, JPMorgan: Very helpful. Thank you.

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

Leila, Conference Operator0: Hey, guys. I’m not sure if you could hear me.

Leila, Conference Operator: We can. Please go

Jim Farley, President and CEO, Ford Motor Company: ahead. We can.

Leila, Conference Operator0: Great. Thanks so much for for taking my question. Ford and Ford Credit both have very strong balance sheets. It’s a 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, Gordon Ford Credit rolled out, but appeared to be successful plan offers subvented financing, the f one fifty to subprime customers, kind of providing them an opportunity to enjoy, you know, a lower loan rate, kind of reserve for higher FICO scores, perhaps easing some affordability issues. So maybe you can kind of explore, what opportunities you could maybe provide your customers through creative strategies around loans and rates given the strong balance sheet.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Thank you for the question. Yeah. 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 one fifty. We haven’t changed our purchasing policy or 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. So I think these programs this program proved to be very effective.

Overall, it didn’t change our average FICO scores. In fact, it went up. But these are sort of opportunities that we can look at on ongoing basis.

Leila, Conference Operator0: Just so I’m clear, I I I believe your your subprime is a very small part of

Jim Farley, President and CEO, Ford Motor Company: the overall book. Very small.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. It’s it’s very small. In fact, our high risk portfolio mix is just 3%, and it’s been very sustainable at 3% for quite some time now.

Leila, Conference Operator0: Okay. I think that’s that’s comforting for people, but also maybe an opportunity to expand some loans to more subprime and potentially get more more sales done wouldn’t wouldn’t be a terrible thing also. So I I appreciate the question and the answer. I appreciate it.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. Thanks. We we we’re concentrated on helping sell more more products, so we’re very open to new ideas.

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

Leila, Conference Operator0: I wish.

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

Speaker 6: Great. Thank you. Good evening, everyone. Just wanted to go back to the the the powertrain and segment mix opportunity next year, maybe trim mix as well with the compliance costs. To what extent would that optimization end up pushing up your your ATPs?

And and if so, how confident are you given some of the affordability constraints that you can kind of pass that that mix optimization through to the consumer?

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: It’s Andrew. Thank you for the question. Well, our ATPs are really strong right now, as you know, and we are among the leaders in an above segment average. But I think the 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.

Speaker 6: Terrific. That’s helpful. As a quick follow-up, maybe on the quarter, if you could talk through the drivers behind Blues improved pricing, I think $400,000,000 was better than what you did last quarter as well as any additional color on fleet pricing in the quarter? Well,

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: I think, in general, as I mentioned earlier, the industry pricing is up zero five point. Retail is up more. It’s very strong right now, up 1.7 points. 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. And fortunately for us, in our portfolio and where it 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: And one of the great offsets that we’ve been able to manage this year with Ford Pro is not rely on the traditional fleet business. Andrew, maybe you want to talk about the changing mix of our Pro business.

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: Yes. We’ve continued to increase our overall services as a percent of EBIT. Just a couple 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 rental.

So we are very well balanced, very diversified both on the vehicle side and also with the sale services.

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

Speaker 6: Terrific. That’s all

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: we’ve able to grow. Your

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

Leila, Conference Operator1: Thanks for taking my question. I just want one quick clarification. So the net impact on tariffs on ’20 by 1,000,000,000 and the ’26 to be similar, Do do you mean to say that the ’26 net tariff, assuming everything we know now is is also 1,000,000,000?

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. Let me let me clarify. So for q four of this year, we expect an EBIT impact of 1 and a half to $2,000,000,000 due to, Novelis. Then due to tariffs, we’re expecting to see a positive, in the q four because we are going to get the receivable for the billion dollars. So that’s that’s gonna be a positive in q four.

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

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Sure if you were originally talking about the Novellas because the numbers

Leila, Conference Operator0: No.

Leila, Conference Operator1: No. The The the the the tariffs. So because I remember in q q, it was, like, negative 800, three q negative 700. So it’s like a plus 500 for q four to get to that one bill. I’m just understanding how to think about Yep.

’26.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: What’s gonna happen is you would have tariff costs, and it’ll be offset by this billion dollars that is retroactive that’s coming in in q four. So to date, we’re at, like, 1.7, and then you’ll be able to take the billion off. You’ll you’ll encounter a little bit more next quarter, but you’ll be positive for q four.

Leila, Conference Operator1: Got it. Got it. Thank you. And and a quick follow-up. As you pivot, let’s say, from, you know, EV to I ICE, just understanding how that works.

Clearly, there’s, you know, stranded costs. We We saw the EV losses worsen sequentially. I know some of that was investment. But how should we think about EV losses going forward, like, to next year as if volumes come down? I know some of the plant the plants are flexible, some of them are dedicated, but how should we think about that?

Jim Farley, President and CEO, Ford Motor Company: We’ll be excited to give you an update, after fourth quarter as we look into next year.

Leila, Conference Operator1: Got it. Thanks.

Jim Farley, President and CEO, Ford Motor Company: Very good decision for the come.

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

Leila, Conference Operator2: Oh, great. Thank you so much. 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, etcetera. Is there a sense that those were supply constrained, like you were constraining supply of those and that there’s a large amount of like unmet demand in there?

Like 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? And essentially, what is the size of the opportunity here?

Andrew Frick, President, Ford Blue and Model E, Ford Motor Company: Well, Emmanuel, it’s Andrew again. Yes. So in in 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. So we would suppress some of the natural demand within that. So as we look at next year and our overall building mix, we’ll obviously match that customer demand.

We don’t want to overproduce against that. So we can remain disciplined. And we’ll take a look vehicle by vehicle like we always do to maximize our mix within. One of

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

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: only other thing that I would add, I just wanna 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. And so it’s just really important that everyone understands that we were facing a headwind, and so that’s gonna help to eliminate a year over year impact.

Leila, Conference Operator2: Great. And then just one additional question on guidance, comparing it to just the most recent one that you had provided last quarter. So if I basically take the current guidance adjusted for the Novelis fired, but also the $1,000,000,000 benefit from lower tariff outlook, it seems like it’s essentially an unchanged guidance versus last quarter. And that’s despite essentially assuming now, I guess expecting now for the industry better SAAR as well as better pricing. So 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?

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: No, none to note. Mean, as I said, I mean, were going be $8,000,000,000 plus. When you take that 1,500,000,000.0 to 2,000,000,000 off, it gets you to the 6 to 6 and a half. You add the billion dollars of tariffs. But we also are performing at the higher end of the guidance that we had put out there at at the beginning of the year.

And the reason for that is credit’s been doing good, material costs have been doing good, the pricing and volume have been solid. And so that’s why we were at the higher end of the guidance.

Leila, Conference Operator2: Okay. Yeah. I’ll I’ll I’ll take it offline on the sell side call. But I appreciate all the color.

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

Leila, Conference Operator3: Great. Thanks for taking my question. Just wanted to follow-up. I’m actually, I guess, I’m getting a little confused with some of the puts and takes. If look at the midpoint of guidance, Q4 is like $550,000,000 I thought you just said that tariffs would be a refund of a billion, and then the Novelis so it just would imply almost, like, break negative if it wasn’t for the the tariff refund.

And then it’s just even if I add Nobelis, then it would still imply a pretty big drop underlying, from q three at 02/06 to to q four. Am I misunderstanding the the the the commentary there?

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: We we would have been at 8,000,000,000 plus. You take out the Novelis impact in q four, so that’s gonna be 1 and a half to 2,000,000,000, which gets you to the 6 to 6 and a half for 2025. Now when I talk about makeup, that’s in 2026. So that’s where you get the billion dollars back in EBIT, not in ’25.

Leila, Conference Operator3: So so I guess I’m just on the prior question, so year to date, you have, like, what was it, 1,700,000,000 of tariff costs. The guide for the year is a billion. What should

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yep.

Leila, Conference Operator3: How are we getting there for q four? Is that the I thought that was the refund? Or maybe I misunderstood that. Sorry.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Yeah. That’s right. So as of last Friday when the proclamation was signed, we now can apply a greater percentage of the MSRP tariff, offset to our parts. And now that we can do that as of last Friday, we’re going to get a billion dollars of benefit. We couldn’t record that in the q three numbers because our books were already closed, and this just happened last Friday.

So now you’re gonna see a receivable in q four that’s more than gonna offset what the tariff cost would be in q four. And then when you add q one, q two, q three, q four together with that positive receivable, you’ll reach 1,000,000,000 net for the full year.

Leila, Conference Operator3: Okay. Got it. And then just, I guess, to follow-up on your your color on 2026. You highlighted cost is a billion positive. Novelis, it would be a billion help into next year.

Any color? I think in the past, you’ve talked about around 600,000,000 of sort of the regulatory costs just structurally going away as a tailwind. And did did I catch the commentary on inventory? It’ll be actually down again next year, so we should kinda have a little bit of destocking, factor that we should be thinking about too?

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: Well, Colin, there’s a lot of texture we wanna take you through as we position 2026 and beyond, and we’re gonna do that properly, at q four earnings. And so for now, I just said, you know, we’ve got some tailwinds and headwinds that I wanted you to know. Tariff’s roughly the same. Tailwinds make up Novelis, likely removal of the EPA compliance headwind, you know, continued cost savings, but then headwinds are gonna be investments in our launches in Marshall and Louisville and investments in the cycle plan. So that’s that’s, what we’re able to share at this time, and we look forward to sharing more with you in our q four earnings.

Leila, Conference Operator3: Okay. Alright. Thanks for taking my question.

Leila, Conference Operator: That was your final question.

Lynn Antipas Tyson, Chief Investor Relations Officer, Ford Motor Company: I’ll let you in the call today.

Jim Farley, President and CEO, Ford Motor Company: Wanna say Mhmm. I just wanna say one thing. We appreciate all of our investors and the people that analyze our industry very carefully. I just wanna note that I know Adam Jonas is moving on to another segment, and I wanted to thank you for your for your activist investor point of view. You certainly helped us be better managers and stewards of the company, and I think we just wanted to say thank you as a management team for all of all of you for what you do.

But it when someone moves on like Adam, we wanna highlight that. Thanks. Okay. Well, 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, and 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 twenty twenty five earnings call. Thank you for your participation. You may now disconnect.

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