Ford Motor Company 6.500% Notes

Solid Q3 profitability; guidance raised (key “good”): - Ford generated $2.7B adjusted EBIT in Q3 (reported as +3% adjusted EBIT YoY on -2% revenue). - Raised full-year 2026 adjusted EBIT guidance to $10.5B–$11.0B (up from prior low-end; high-end unchanged in context). - Full-year adjusted free cash flow guidance unchanged: $6B–$7B; capex unchanged: $9.5B–$10.5B. - Company ended Q3 with $25.3B cash and $46.4B total liquidity; investment-grade rating maintained. - 4Q regular dividend declared: $0.15/share.

Auto business focus: trucks/vans/SUVs + industrial cost discipline (good + operational “why”): - Strategy remains: grow auto in North America, transform EV with less capital, expand auto adjacencies (software/services/parts/financing), and diversify via Ford Energy. - Q3 highlights: - F-Series: highest retail share among full-size truck brands; on pace for 50th straight year as best-selling truck. - Maverick: best-selling hybrid pickup in the U.S. - Transit: best-selling van in the U.S.; Ford leads three-row SUVs (Expedition/Explorer). - Quality improving: topped J.D. Power 2026 IQS; warranty actions ongoing. - Cost/warranty progress: - Ex Novelis and tariffs, Ford reduced warranty & material costs by $1.5B in 2025 and is on track for another ~$1B in 2026 (material to margins/cash flow). - Accelerating the “fit/lean” industrial system (example: Super Duty ramp in Oakville exceeding plan; next-gen F-150 is being heavily durability-tested).

Model e turnaround path: breakeven still targeted for 2029 (mixed “bad + ongoing hope”): - Q3 Model e: EBIT loss $1.1B on $1.2B revenue; EBIT improved +25% YoY (so loss narrowing, but still negative). - Full-year 2026 Model e losses unchanged ~ $4B. - Next-gen timing and financial logic: - Ford reaffirmed breakeven by 2029, with profit step-up expected in 1H 2028 as UEV (Fathom) and Ford Energy ramp with revenue. - Main launch risks remain supplier readiness for high-quality, at-rate production; not framed as battery-cost risk primarily. - Surprising angle / demand interpretation (potential positive): - Management says the affordable EV segment is constrained, pushing buyers toward used vehicles; Fathom’s target MSRP under ~$30K is positioned to serve a large “new + used” market and potentially also attract ICE/hybrid customers due to low total operating cost.