Navigating Turbulent Times: Ford’s Financial Performance in 2024

Ford Motor Company faced a challenging business environment in 2024, navigating a range of economic and industry factors that impacted its financial results. Despite these headwinds, the automaker reported solid performance, with net income of $5.9 billion and adjusted EBIT of $10.2 billion for the full year.

Trade Policy Tensions One of the key issues affecting Ford was the ongoing trade policy landscape. Governments around the world have implemented or increased tariffs and other trade barriers, which can have a significant negative impact on manufacturers based in other markets. The new, substantial tariff increases on imports to the United States from Canada, Mexico, and China announced in early 2025, if implemented and sustained, would have a major adverse effect on the overall automotive industry, including Ford and its supply chain.

Supply Chain Disruptions While Ford saw improved supply chain resilience in 2024, production constraints due to capacity and labor shortages remained an issue as the company adjusted to shifting market conditions. The increased tariffs could further disrupt Ford’s supply chain and production. To address these challenges, Ford continues to reevaluate its supply base and sourcing decisions, which may result in additional charges in the future.

Currency Volatility Globally, central banks have begun shifting monetary policy, leading to unpredictable movements in exchange rates. Currency fluctuations can directly impact Ford’s financial flows and the pricing of vehicles exported to overseas markets. In some markets, exchange rates are heavily influenced or controlled by governments, adding to the uncertainty.

Pricing Pressure Despite elevated vehicle pricing over the past year, Ford has already observed some declines in new and used vehicle prices as auto production recovers from the semiconductor shortage. Intense competition and excess capacity are likely to put downward pressure on inflation-adjusted prices, including increased marketing incentives, contributing to a challenging pricing environment for the automotive industry.

Electric Vehicle Market Dynamics Ford continues to invest in its electric vehicle (EV) strategy, but has observed lower-than-anticipated industry-wide EV adoption rates and near-term pricing pressures. This has led the company to adjust its spending, production, and product launches to better match the pace of EV adoption. Ford may incur additional expenses and cash expenditures related to the cancellation of a previously announced all-electric three-row SUV program. Further, significant changes in the EV demand environment could result in incremental competitive pricing actions and additional expenses related to payments to EV-related suppliers, asset write-downs, or other matters.

Commodity and Energy Prices Prices for commodities remain volatile, with the net impact on Ford and its suppliers being higher material costs overall. To help ensure supply of critical raw materials, such as those used in batteries for electric vehicles, Ford has entered into multi-year sourcing agreements and may enter into additional agreements. The global energy transition and geopolitical dynamics are also contributing to ongoing volatility in oil and other energy prices.

Vehicle Profitability Ford’s financial results depend on the profitability of the vehicles it sells, which can vary significantly by vehicle line. In general, larger vehicles tend to command higher prices and be more profitable than smaller vehicles. Government regulations aimed at reducing emissions and increasing fuel efficiency may also increase the cost of vehicles by more than the perceived benefit to consumers, potentially dampening margins.

Inflation and Interest Rates Ford continues to see lingering impacts on its business due to inflation, including ongoing geopolitical volatility, driving up energy prices, freight premiums, and other operating costs. Interest rates have increased significantly and are only now beginning to reverse, which may drive a higher cost of capital for the business. At Ford Credit, rising interest rates may impact its ability to source funding and offer financing at competitive rates, reducing its financing margin.

Segment Performance Ford’s performance in 2024 was mixed across its business segments:

Ford Blue: This segment, which includes the company’s traditional internal combustion engine vehicles, saw a 2% decrease in wholesales, primarily due to the end of production of the Fiesta in Europe and the Edge in North America. Full-year revenue was flat, but EBIT decreased by $2.2 billion to $5.3 billion, driven by unfavorable exchange, adverse mix, lower wholesales, and higher costs.

Ford Model e: This segment, focused on electric vehicles, saw a 9% decrease in wholesales, reflecting lower Mustang Mach-E and F-150 Lightning sales due to competitive market conditions. Revenue decreased 35%, and the EBIT loss widened by $375 million to $5.1 billion, primarily due to lower net pricing amid industrywide competitive pressures, partially offset by lower costs.

Ford Pro: This commercial and fleet-focused segment performed well, with a 9% increase in wholesales, primarily reflecting higher sales of the Super Duty and Transit family of vehicles. Revenue increased 15%, and EBIT improved by $1.8 billion to $9.0 billion, driven by favorable market factors, partially offset by higher material and warranty costs.

Ford Credit Ford Credit, the company’s financing arm, saw its earnings before taxes (EBT) increase by $323 million to $1.7 billion in 2024. This was primarily driven by higher financing margin and favorable volume and mix, partially offset by higher operating lease depreciation and retail credit losses.

Outlook for 2025 For 2025, Ford expects adjusted EBIT of $7.0 billion to $8.5 billion and adjusted free cash flow of $3.5 billion to $4.5 billion. The company’s outlook assumes a U.S. industry sales range of 16.0 million to 16.5 million units and lower pricing across the industry as inventory levels normalize.

At the segment level, Ford expects:

• Ford Pro EBIT of $7.5 billion to $8.0 billion, reflecting continued strength of core products and services along with moderated pricing across fleets.
• Ford Blue EBIT of $3.5 billion to $4.0 billion, reflecting lower wholesales and exchange rate pressures, partially offset by cost efficiencies.
• Ford Model e EBIT loss of $5.0 billion to $5.5 billion, reflecting continued pricing pressure and ongoing investments in next-generation products, offset partially by cost efficiencies.
• Ford Credit EBT of about $2.0 billion.

The company also noted that the recently announced tariffs on imports to the United States could have a significant adverse effect on its earnings if implemented and sustained for an extended period.

Liquidity and Capital Resources At the end of 2024, Ford had total balance sheet cash, cash equivalents, marketable securities, and restricted cash of $38.6 billion, with Company cash (excluding Ford Credit) of $28.5 billion and total Company liquidity of $46.7 billion.

Ford’s material cash requirements include capital expenditures, raw material and component purchases, regulatory compliance credits, marketing incentives, warranty and field service actions, debt repayments, pension contributions, employee costs, and strategic investments, among others. The company plans to utilize its liquidity and cash flows from operations to fund these requirements.

In 2024, Ford’s Company adjusted free cash flow was $6.7 billion, slightly lower than the previous year. The company’s capital spending was $8.6 billion and is expected to be in the range of $8 billion to $9 billion in 2025.

Ford Credit remains well-capitalized, with a strong balance sheet and diversified funding sources. The financing arm ended 2024 with $25.2 billion in net liquidity available for use.

Conclusion Ford faced a challenging operating environment in 2024, navigating trade policy tensions, supply chain disruptions, currency volatility, pricing pressure, and evolving dynamics in the electric vehicle market. While the company’s overall financial performance was solid, with net income of $5.9 billion and adjusted EBIT of $10.2 billion, the results were mixed across its business segments.

Looking ahead, Ford’s outlook for 2025 reflects cautious optimism, with expectations of improved performance in its Ford Pro segment and continued progress in its electric vehicle initiatives, tempered by headwinds in its Ford Blue and Ford Model e segments. The company’s strong liquidity position and ongoing focus on cost management and strategic investments position it to navigate the industry’s turbulent times.

However, the potential impact of the recently announced tariffs on imports to the United States remains a significant risk factor that could adversely affect Ford’s earnings if implemented and sustained. The company’s ability to adapt to the evolving market conditions, manage its supply chain, and execute its electrification strategy will be crucial in determining its long-term success.