Q1 2026 Ford Motor Co Earnings Call

April 29, 2026

Speaker #1: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, please use the raise hand function, which can be found on the black bar at the bottom of your screen.

Speaker #1: At this time, I would like to turn the call over to Lynn Antipas Tyson, Chief Investor Relations Officer.

Speaker #2: Thank you, Layla, and welcome to FORD Motor Companies' first quarter 2026 earnings call. With me today are Jim Farley, President and CEO, and Sherry House, CFO.

Speaker #2: Joining us for Q&A is Andrew Crick, President of Ford Blue and Model E; Alicia Bowler Davis, President of Ford Pro, Kumar Galhotra, Chief Operating Officer; and Cathy O'Callaghan, CEO of Ford Credit.

Speaker #2: Jim will give a high-level overview of the business, and Sherry will provide added texture on the financials and guidance. We'll be referring to non-GAAP measures today.

Speaker #2: These are reconciled to the most comparable US 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.

Speaker #2: The most significant risk factors are included on page 19 of our deck. Unless otherwise noted, all comparisons are year-over-year. Company EBIT, EPS, and pre-cash flow are on an adjusted basis.

Speaker #2: Upcoming IR engagements include Naveen Kumar, CFO of Ford Pro, at the Deutsche Bank, Global Auto Industry Conference in New York on May 19th. Now I'll turn the call over to Mr. Farley.

Speaker #3: Thank you, Lynn. and thanks to all of you for joining us. I wanted to thank the Ford team, all of our dealers, and our partners for a strong start to this year.

Speaker #3: Our results this quarter: 43.3 billion in revenue, 3.5 billion in adjusted EBIT, reflect a sharp execution and the momentum we're building for our Ford Plus plan.

Speaker #3: Accordingly, we're raising our full-year adjusted EBIT guidance to between 8.5 and 10.5 billion dollars. These results are encouraging. But the bigger story is the modern Ford that's now taking shape.

Speaker #3: For five years, we have relentlessly built the foundation of Ford Plus. We've strengthened our industrial system, made real progress on quality, cost, and advanced our software capability and customer experience.

Speaker #3: Earlier this month, we took the next step in that evolution by establishing an end-to-end organization. Product creation and industrialization. We unified our advanced technology, digital, and design teams with our global industrial system.

Speaker #3: This change aligns with the most intensive product and software rollout in our history. By 2030, almost all of our global volume will feature next-generation electric architectures and in-house software.

Speaker #3: This applies to every propulsion type, as we deliver and scale high-quality, software-defined vehicles. This new organization allows for faster decision-making, and reduced complexity. This is the moment we integrate the digital soul of the vehicle, the software, all the silicon, and the user experience with our world-class industrial execution.

Speaker #3: Among other things, this alignment will support our high-margin software and physical services revenue, which was over $15 billion last year. And we expect to grow that $15 billion nearly 8% annually through the end of the decade.

Speaker #3: This service growth is driven by offering customers indispensable digital experiences and investing in after-sale aftermarket sales, with a focus on customer uptime, expanding our parts catalog, and enhancing our service network.

Speaker #3: We're also learning we're also leaning into the Skunk Works model, to improve all of Ford's. They've done an incredible job creating the UEV platform, which represents a step change in efficiency and cost, especially for the EV market.

Speaker #3: But at Ford, we're now integrating these Skunk Work breakthroughs back into our mainstream products and processes. We're applying their advanced tools and physics-based cost modeling to the highest volume internal combustion and hybrid lines.

Speaker #3: This, of course, will reduce our costs and improve quality across the board. Our product pipeline is aggressive, between now and '29, we will refresh 80% of our North American portfolio and 70% of our global portfolio by volume.

Speaker #3: This includes the next-generation F-150 and Super Duty, among many others. It also includes the launch of our universal EV platform in 2027, from our Louisville assembly plant in Kentucky, we are scaling that plant, we're significant volume, to accommodate a variety of vehicles off that single platform.

Jim Farley: Breakthroughs back into our mainstream products and processes. We're applying their advanced tools and physics-based cost modeling to the highest volume internal combustion and hybrid lines. This, of course, will reduce our cost and improve quality across the board. Our product pipeline is aggressive. Between now and 2029, we will refresh 80% of our North America portfolio and 70% of our global portfolio by volume. This includes the next generation F-150 and Super Duty, among many others. It also includes the launch of our universal EV platform in 2027 from our Louisville assembly plant in Kentucky. We are scaling that plant for significant volume to accommodate a variety of vehicles off that single platform. Speaking of electrification, our strategy remains focused on powertrain choice, not nameplate complexity.

Speaker #1: Right.

Speaker #2: Back into our mainstream products, and processes. We're applying their advanced tools and physics-based cost modeling to the highest volume internal combustion and hybrid lines.

Speaker #3: And speaking of electrification, our strategy remains focused on powertrain choice, not nameplate complexity. By the end of the decade, 90% of our global nameplates will offer electrified powertrains, including advanced hybrids, extended-range electric vehicles, and full EVs.

Speaker #2: This, of course, will reduce our costs and improve quality across the board. Our product pipeline is aggressive between now and '29. We will refresh 80% of our North America portfolio and 70% of our global portfolio by volume.

Speaker #3: Our financial health is driven by a leaner, more effective industrial system. We're on track to deliver another over a billion dollars in material and warranty cost improvements this year.

Speaker #2: This includes the next-generation F-150 and Super Duty, among many others. It also includes the launch of our universal EV platform in 2027. From our Louisville assembly plant in Kentucky, we are scaling that plant for significant volume, to accommodate a variety of vehicles off that single platform.

Speaker #3: And we will never stop. Our focus on quality is paying off. JD Power's recently ranked Ford number four in the 2026 US customer service index, our best performance in 30 years.

Speaker #2: And speaking of electrification, our strategy remains focused on powertrain choice, not nameplate complexity. By the end of the decade, 90% of our global nameplates will offer electrified powertrains, including advanced hybrids, extended range, electric vehicles, and full EVs.

Speaker #3: Finally, we remain resilient in the face of global uncertainty, regarding the conflict in the Middle East, of course, our priority is our team and the safety of them.

Jim Farley: By the end of the decade, 90% of our global nameplates will offer electrified powertrains, including advanced hybrids, extended range electric vehicles, and full EVs. Our financial health is driven by a leaner, more effective industrial system. We're on track to deliver another over $1 billion in material and warranty cost improvements this year. We will never stop. Our focus on quality is paying off. J.D. Power recently ranked Ford number 4 in the 2026 U.S. Customer Service Index, our best performance in 30 years. Finally, we remain resilient in the face of global uncertainty. Regarding the conflict in the Middle East, of course, our priority is our team and the safety of them. We're monitoring the situation and working to minimize risk and find opportunities in much the same way we have navigated the pandemic, the semiconductor shortage, tariff headwinds, and others.

Jim Farley: By the end of the decade, 90% of our global nameplates will offer electrified powertrains, including advanced hybrids, extended range electric vehicles, and full EVs. Our financial health is driven by a leaner, more effective industrial system. We're on track to deliver another over $1 billion in material and warranty cost improvements this year. We will never stop. Our focus on quality is paying off. J.D. Power recently ranked Ford number four in the 2026 U.S. Customer Service Index, our best performance in 30 years. Finally, we remain resilient in the face of global uncertainty. Regarding the conflict in the Middle East, of course, our priority is our team and the safety of them. We're monitoring the situation and working to minimize risk and find opportunities in much the same way we have navigated the pandemic, the semiconductor shortage, tariff headwinds, and others.

Speaker #3: We're monitoring the situation and working to minimize risk and find opportunities in much the same way we have navigated the pandemic, the semiconductor shortage, tariff headwinds, and others.

Speaker #2: Our financial health is driven by a leaner, more effective industrial system. We're on track to deliver another over $1 billion in material and warranty cost improvements this year.

Speaker #3: We have the muscle memory to find cost offsets, adjust our product mix quickly, and proactively manage our supply chain in times of stress and crisis.

Speaker #3: My ma-main message today is this: Ford is a fundamentally stronger, more modern company. We have a foundation built on industrial fitness. We have the technology and we now have the unified organization to not just deliver, but to compete to win.

Speaker #2: And we will never stop. Our focus on quality is paying off. JD Power's recently ranked FORD number four in the 2026 US Customer Service Index.

Speaker #2: Our best performance in 30 years. Finally, we remain resilient in the face of global uncertainty, regarding the conflict in the Middle East. Of course, our priority is our team and the safety of them.

Speaker #3: Ford is focused on execution, quality, and thrilling our customers. Over to you, Sherry.

Speaker #2: We're monitoring the situation and working to minimize risk and find opportunities as much the same way we've navigated the pandemic, the semiconductor shortage, tariff headwinds, and others.

Speaker #1: Thank you, Jim, and hello, everyone. Before I walk you through the details of our performance this quarter, let me start with a few items I know are top of mind for you.

Speaker #1: First, in Q1, we recognized a $1.3 billion benefit related to IEPA tariffs. This one-time adjustment largely benefits Ford Blue and Ford Pro at about $700 million, and $500 million respectively.

Speaker #2: We have the muscle memory to find cost offsets, adjust product mix quickly, and proactively manage our supply chain in times of stress and crisis.

Jim Farley: We have the muscle memory to find cost offsets, adjust our product mix quickly, and proactively manage our supply chain in times of stress and crisis. My main message today is this: Ford is a fundamentally stronger, more modern company. We have a foundation built on industrial fitness. We have the technology, and we now have the unified organization to not just deliver, but to compete to win. Ford is focused on execution, quality, and thrilling our customers. Over to you, Sherry.

Speaker #2: My main message today is this: FORD is a fundamentally stronger, more modern company. We have a foundation built on industrial fitness. We have the technology and we now have unified organization to not just deliver, but to compete to win.

Speaker #1: They are related to IEPA tariffs paid between March 2025 and February 2026. Second, our novellist recovery is progressing as expected. We still expect a $1 billion improvement in EBIT year over year, weighted towards the second half.

Speaker #2: FORD is focused on execution, quality, and thrilling our customers. Over to you, Sherry.

Speaker #1: This is not this is net of $1.5 billion to $2 billion of one-time incremental costs to secure alternatively sourced aluminum until the novellist facility is operating at full throughput later this year.

Speaker #3: Thank you, Jim, and hello, everyone. Before I walk you through the details of our performance score, let me start with the slogans from our top-of-mind for you.

Sherry House: Thank you, Jim, and hello, everyone. Before I walk you through the details of our performance this quarter, let me start with a few items I know are top of mind for you. First, in Q1, we recognized a $1.3 billion benefit related to IEEPA tariffs. This one-time adjustment largely benefits Ford Blue and Ford Pro at about $700 million and $500 million, respectively. They are related to IEEPA tariffs paid between March 2025 and February 2026. Second, our Novelis recovery is progressing as expected. We still expect a $1 billion improvement in EBIT year-over-year, weighted towards the H2. This is net of $1.5 billion to 2 billion of one-time incremental costs to secure alternatively sourced aluminum until the Novelis facility is operating at full throughput later this year. Third, relative to U.S.

Sherry House: Thank you Jim and hello everyone. Before I walk you through the details of our performance this quarter, let me start with a few items I know are top of mind for you. First, in Q1, we recognized a $1.3 billion benefit related to IEEPA tariffs. This one-time adjustment largely benefits Ford Blue and Ford Pro at about $700 million and $500 million, respectively. They are related to IEEPA tariffs paid between March 2025 and February 2026. Second, our Novelis recovery is progressing as expected. We still expect a $1 billion improvement in EBIT year-over-year, weighted towards the H2. This is net of $1.5 to 2 billion of one-time incremental costs to secure alternatively sourced aluminum until the Novelis facility is operating at full throughput later this year. Third, relative to US

Speaker #3: First, in Q1, we recognized a 1.3 billion benefit related to IEP tariffs. This one-time adjustment largely benefits FORD Blue and FORD Pro at about 700 million in 500 million respectively.

Speaker #1: Third, relative to US inventory, we expect to remain within our target of $55 to $65 retail-day supply for the year. F-Series sales remain healthy, as inventory recovers from the novellist supply disruption.

Speaker #3: They're re related to IEP tariffs paid between March 2025 and February 2026. Second, our November recovery is progressing as expected. We still expect a 1 billion improvement in EBIT year over year, weighted towards the second half.

Speaker #1: America's best-selling truck delivered year over year retail share improvement of 30 basis points in March, and we are carrying that momentum into Q2. Our team has effectively managed tight retail-day supply by helping dealers fill inventory gaps, while ensuring high-demand trim levels are in ample supply.

Speaker #3: This is not net of 1.5 billion to 2 billion of one-time incremental costs to secure alternatively sourced aluminum until the novellas facility is operating at full throughput later this year.

Speaker #1: We are also producing a richer mix of product, as we continue to ramp novellists. And importantly, on average, we are spending less on incentives than our competitors.

Speaker #3: Third, relative to US inventory, we expect to remain within our target of 55 to 65 retail day supply for the year. That's through sales remain healthy, as inventory recovers from the novellas supply disruption.

Speaker #1: In fact, for the quarter, F-150 had the highest retail share, highest average transaction price, and the lowest incentive spend per unit versus our key competition.

Sherry House: Inventory, we expect to remain within our target of 55 to 65 retail days supply for the year. F-Series sales remain healthy as inventory recovers from the Novelis supply disruption. America's best-selling truck delivered year-over-year retail share improvement of 30 basis points in March. We are carrying that momentum into Q2. Our team is effectively managing tight retail days supply by helping dealers fill inventory gaps while ensuring high-demand trim levels are in ample supply. We are also producing a richer mix of product as we continue to ramp Novelis. Importantly, on average, we are spending less on incentives than our competitors. In fact, for the quarter, F-150 had the highest retail share, highest average transaction price, and the lowest incentive spend per unit versus our key competition. Now turning to the quarter.

Speaker #1: Now, turning to the quarter, we delivered adjusted EBIT of $3.5 billion, or $2.2 billion excluding the impact of the IEPA. The strength in the quarter versus our original guidance was primarily supported by a change in calendarization of cost improvements and timing of investments.

Speaker #3: America's best-selling trucks deliver year over year retail improvement of 30 basis points in March and we are carrying that momentum into Q2. Our team has effectively managed tight retail day supply by helping dealers fill inventory gaps while ensuring high-demand trim levels are in ample supply.

Speaker #1: Growth in software and physical services and higher net pricing. Our global revenue grew by over 6% despite a nearly 4% decline in volume, which was expected as we exited low-margin products like Escape and North America and Focus in Europe.

Speaker #3: We are also producing a rich mix of products. If we continue to remain novellas, and importantly, on average, we are spending less on incentives than our competitors.

Speaker #3: In fact, for the quarter, F-150 has the highest retail share, the highest average transaction price, and the lowest incentive spend per unit versus our key competition.

Speaker #1: In the US, we had our highest Q1 share of revenue in five years. Led by large utilities, and trucks. Adjusted free cash flow was a use of $1.9 billion in the quarter.

Speaker #3: Now, turning to the quarter, we delivered adjusted EBIT of $3.5 billion, or $2.2 billion, including the impact of the IEP. The strength in the quarter versus our original guidance was primarily supported by a change in calendarization of cost improvements and timing of investments.

Speaker #1: More than explained by unfavorable timing differences, higher net spending, and changes in working capital. On a full-year basis, we expect timing differences and working capital to be favorable.

Sherry House: We delivered adjusted EBIT of $3.5 billion or $2.2 billion, excluding the impact of the IEEPA. The strength in the quarter versus our original guidance was primarily supported by a change in calendarization of cost improvements and timing of investments, growth in software and physical services, and higher net pricing. Our global revenue grew by over 6% despite a nearly 4% decline in volume, which was expected as we exited low-margin products like Escape in North America and Focus in Europe. In the U.S., we had our highest Q1 share of revenue in 5 years, led by large utilities and trucks. Adjusted free cash flow was a use of $1.9 billion in the quarter, more than explained by unfavorable timing differences, higher net spending, and changes in working capital.

Speaker #3: Growth in software and physical services and higher net pricing. Our global revenue grew by over 6%, despite a nearly 4% decline in volume, which was expected as we exited low-margin products like Escape and North America and focused on Europe.

Speaker #1: Our balance sheet is strong, with $22 billion in cash and over $43 billion in liquidity, and we remain committed to our investment-grade rating. We repaid our convertible debt without refinancing it, and also relaunched our anti-dilutive share repurchase program, which we completed in the quarter.

Speaker #3: In the US, we had our highest Q1 share of revenue in five years. Led by large utilities and trucks. Adjusted free cash flow was a huge 1.9 billion in the quarter.

Speaker #1: And earlier this month, we successfully renewed our $18 billion corporate credit facilities for another year. Our strong liquidity position provides us with the flexibility to manage in this dynamic environment and invest in higher-return growth opportunities like Ford Energy.

Speaker #3: More than explained by unfavorable timing differences, higher net spending, and changes in working capital. On a full-year basis, we expect timing differences and working capital to be favorable.

Speaker #1: It also allows us to pay consistent shareholder distributions. In fact, yesterday we announced a declaration of our second quarter regular dividend of $0.15 per share, payable on June 1st to shareholders of record on May 12th.

Speaker #3: Our balance sheet is strong. 22 billion in cash for 43 billion in liquidity, and we remain committed to our investment-grade rating. We repaid our universal debt without refinancing it and also relaunched our anti-dilutive share repurchase program, which we completed in the quarter.

Sherry House: On a full year basis, we expect timing differences and working capital to be favorable. Our balance sheet is strong with $22 billion in cash and over $43 billion in liquidity, and we remain committed to our investment-grade rating. We repaid our convertible debt without refinancing it and also relaunched our anti-dilutive share repurchase program, which we completed in the quarter. Earlier this month, we successfully renewed our $18 billion corporate credit facilities for another year. Our strong liquidity position provides us with the flexibility to manage in this dynamic environment and invest in higher return growth opportunities like Ford Energy. It also allows us to pay consistent shareholder distributions. In fact, yesterday we announced the declaration of our Q2 regular dividend of $0.15 per share, payable on 1 June to shareholders of record on 12 May. Now turning to segment highlights.

Speaker #1: Now, turning to segment highlights, Ford Pro achieved EBIT of $1.7 billion, against a backdrop of novellist-related production disruptions. Ford Pro continues to deliver higher margins through a powerful ecosystem of vehicles, software, and physical services.

Speaker #3: And earlier this month, we successfully renewed our 18 billion corporate credit facilities for another year. Our strong liquidity position provides us the flexibility to manage in this dynamic environment and invest in higher-return growth opportunities like Ford Energy.

Speaker #1: We are scaling rapidly, and increasing recurring revenue, which bolsters resiliency. In fact, paid software subscriptions grew to $879,000, a 30% year-over-year increase. By integrating innovations like Ford Pro AI, we can help commercial fleet managers instantly identify maintenance needs, leverage large data models on fuel usage to lower costs, and optimize routes amongst other features all designed to provide better predictability, productivity, and profitability, which our customers require.

Speaker #3: It also allows us to stay consistent, shareholder distributions. In fact, yesterday we announced a declaration of our second quarter regular dividend of 15 cents per share payable on June 1st to shareholders of record on May 12th.

Speaker #3: Now, turning to segment highlights, FORD Pro achieved EBIT of 1.7 billion. Against the backdrop of novellas-related production disruptions, FORD Pro continues to deliver higher margins through a powerful ecosystem of vehicles, software, and physical services.

Sherry House: Ford Pro achieved EBIT of $1.7 billion against the backdrop of Novelis-related production disruptions. Ford Pro continues to deliver higher margins through a powerful ecosystem of vehicles, software, and physical services. We are scaling rapidly and increasing recurring revenue, which bolsters resiliency. In fact, paid software subscriptions grew to 879,000, a 30% year-over-year increase. By integrating innovations like Ford Pro AI, we can help commercial fleet managers instantly identify maintenance needs, leverage large data models and fuel usage to lower costs, and optimize routes, amongst other features, all designed to provide better predictability, productivity, and profitability which our customers require. As we look ahead, the 2027 model year order books are just starting to open, and we are seeing positive early indicators.

Speaker #1: As we look ahead, the 2027 model year order books are just starting to open, and we are seeing positive early indicators. Ford Blue delivered $1.9 billion in EBIT, supported by the sustained sales performance of F-Series and go-to-market discipline.

Speaker #3: We are scaling rapidly and increasing recurring revenue, which bolsters resiliency. In fact, paid software subscriptions grew to 879,000—a 30% year-over-year increase. By integrating innovations like Ford Pro AI, we can help commercial fleet managers instantly identify maintenance needs, leverage large data models and fuel usage to lower costs, and optimize routes, among other features—all designed to provide better predictability, productivity, and profitability, which our customers require.

Speaker #1: Evidenced by Q1 incentive spend below industry average. Additionally, our off-road performance trims now account for nearly a quarter of US sales and Maverick and F-150 continuous the best-selling hybrids in their segments.

Speaker #1: Importantly, Ford Blue's Q1 performance highlights the strength of the underlying business and excluding IEPA. It is representative of its ongoing run rate. For Ford Model E, EBIT was a loss of $777 million, as we now start to benefit from the portfolio changes announced in December.

Speaker #3: As we look ahead, the 2027 model year order books are just starting to open, and we are seeing positive early indicators. FORD Blue delivered 1.9 billion in EBIT, supported by the sustained sales performance of F-Series and market discipline.

Speaker #1: In addition to investing in a leaner, more profitable portfolio, we are actively matching supply with demand globally to optimize profitability. And in the quarter, we benefited from a nearly 35% improvement in our Gen One losses.

Speaker #3: Evidence of Q1 incentive spend below industry average. Additionally, our off-road performance trims now account for nearly a quarter of US sales and Maverick and F-150 continuous the best-selling hybrids in their segments.

Sherry House: Ford Blue delivered $1.9 billion in EBIT, supported by the sustained sales performance of F-Series and go-to-market discipline, evidenced by Q1 incentive spend below industry average. Additionally, our off-road performance trims now account for nearly a quarter of US sales, and Maverick and F-150 continue as the best-selling hybrids in their segments. Importantly, Ford Blue's Q1 performance highlights the strength of the underlying business and excluding IEEPA, is representative of its ongoing run rate. For Ford Model e, EBIT was a loss of -$777 million as we now start to benefit from the portfolio changes announced in December. In addition to investing in a leaner, more profitable portfolio, we are actively matching supply with demand globally to optimize profitability. In the quarter, we benefited from a nearly 35% improvement in our Gen 1 losses.

Speaker #1: We also continue to step up our incremental $1 billion investment in UEV platforms and Ford Energy, as we progress throughout the year. Ahead of their launches, in 2027.

Speaker #3: Importantly, FORD Blue's Q1 performance highlights the strength of the underlying business and excluding IEPA is representative of its ongoing run rate. For four colleagues, EBIT was a loss of 777 million.

Speaker #1: As a result, we expect first quarter to be the strongest quarter for Model E this year. Ford Credit delivered a solid quarter, with EBT of $783 million, up $200 million, reflecting improvements in financing margin, and enabled by a high-quality book of business, results also benefited from favorable performance on our derivatives.

Speaker #3: As we now start to benefit from the portfolio changes announced in December, in addition to investing in a leaner, more profitable portfolio, we are actively matching supply with demand globally to optimize profitability.

Speaker #3: And in the quarter, we benefited from a nearly 35% improvement in our Gen One losses. We also continue to step up our incremental $1 billion investment in UEV platforms and Ford Energy as we progress throughout the year.

Speaker #1: Our portfolio performance is strong, and we maintain a highly disciplined approach to capital reserve, and risk management practices. So let me turn to our 2026 outlook.

Speaker #3: Ahead of their launches, in 2027, as a result, we expect first quarter to be the strongest quarter for Model E this year. For credit, we delivered a solid quarter with EBT of 783 million, up 200 million, reflecting improvements in financing margin enabled by high-quality business.

Sherry House: We also continue to step up our incremental $1 billion investment in UEV platform and Ford Energy as we progress throughout the year, ahead of their launches in 2027. As a result, we expect Q1 to be the strongest quarter for Model e this year. Ford Credit delivered a solid quarter with EBT of $783 million, up $200 million, reflecting improvements in financing margin and enabled by a high-quality book of business. Results also benefited from favorable performance on our derivatives. Our portfolio performance is strong, and we maintain a highly disciplined approach to capital reserve and risk management practices. Let me turn to our 2026 outlook.

Speaker #1: For the full year, we now expect company-adjusted EBIT of $8.5 billion to $10.5 billion, adjusted free cash flow of $5 billion to $6 billion, and capital expenditures of $9.5 billion to $10.5 billion.

Speaker #1: Which reflects our shift toward higher-return growth opportunities including $1.5 billion for Ford Energy this year. Our guidance does not include the potential impacts of a sustained conflict in the Middle East or a significant downturn in the US economy, which could have a material impact on industry demand.

Speaker #3: Results also benefited from favorable performance on our derivatives. Our portfolio performance is strong and we maintain a highly disciplined approach to capital reserve and risk management practices.

Speaker #3: So let me turn to our 2026 outlook. For the full year, we now expect company-adjusted EBIT of $8.5 billion to $10.5 billion, adjusted free cash flow of $5 billion to $6 billion, and capital expenditures of $9.5 billion to $10.5 billion.

Speaker #1: Our full-year segment outlook stays steady, with Ford Pro EBIT of $6.5 billion to $7.5 billion, Model E losses of $4 billion to $4.5 billion, Ford Credit EBT of about $2.5 billion, and for Ford Blue, we have increased our guidance by $500 million to $4.5 billion to $5 billion.

Sherry House: For the full year, we now expect company-adjusted EBIT of $8.5 to 10.5 billion dollars, adjusted free cash flow of $5 to 6 billion, and capital expenditures of $9.5 to 10.5 billion, which reflects our shift toward higher return growth opportunities, including $1.5 billion for Ford Energy this year. Our guidance does not include the potential impacts of a sustained conflict in the Middle East or a significant downturn in the US economy, which could have a material impact on industry demand. Our full-year segment outlook stays steady with Ford Pro EBIT of $6.5 to 7.5 billion, Model E losses of $4 to 4.5 billion, Ford Credit EBT of about $2.5 billion.

Speaker #3: Which reflects our shift toward higher-return growth opportunities including 1.5 billion for Ford Energy this year. Our guidance is not to include the potential impacts of a sustained conflict in the Middle East or a significant downturn in the US economy, which could have material impact on industry demand.

Speaker #1: Driven by a stronger underlying business. Our guidance continues to assume a US SAR of $16 million to $16.5 million units, and flat industry pricing.

Speaker #1: Now, some context and important puts and takes for the year. We have the $1.3 billion full-time IEPA tariff benefit, but we now expect commodity headwinds of just above $2 billion.

Speaker #3: Our full-year segment outlook stays steady, with FORD Pro EBIT of 6.5 billion to 7.5 billion, Model E losses of 4 billion to 4.5 billion, FORD Credit EBT of about 2.5 billion, and for FORD Blue, we've increased our guidance by 500 million.

Speaker #1: About $1 billion higher than our previous estimate. Largely due to higher aluminum pricing driven by global supply constraints. Note, though, this excludes novellist-related aluminum costs.

Speaker #3: To 4.5 billion to 5 billion. Driven by a stronger underlying business. Our guidance continues to assume the US SAR of 16 million to 16.5 million units, and flat industry pricing.

Speaker #1: The impact of ongoing tariffs is unchanged. At about $1 billion, it is now a part of our run rate costs. This excludes the IEPA benefit and novellist temporary costs.

Sherry House: For Ford Blue, we have increased our guidance by $500 million to $4.5 billion to $5 billion, driven by a stronger underlying business. Our guidance continues to assume a US SAR of 16 million to 16.5 million units in flat industry pricing. Now some context and important puts and takes for the year. We have the $1.3 billion full-time IEEPA tariff benefit, but we now expect commodity headwinds of just above $2 billion, about $1 billion higher than our previous estimate, largely due to higher aluminum pricing driven by global supply constraints. Note though, this excludes Novelis-related aluminum costs. The impact of ongoing tariffs is unchanged at about $1 billion and is now a part of our run rate costs. This excludes the IEEPA benefit and Novelis temporary costs.

Speaker #3: Now, some context on important puts and takes for the year. We have the 1.3 billion full-time IEPA tariff benefit, but we now expect to not be headless of just about $2 billion.

Speaker #1: As Jim mentioned, we're on track for $1 billion improvement in material costs and warranty reductions on top of the $1.5 billion of cost reductions we delivered in 2025.

Speaker #3: About $1 billion higher than our previous estimate. Largely due to higher aluminum pricing, driven by global supply constraints. Note, though, this excludes novellas-related aluminum costs.

Speaker #1: We continue to expect a net $1 billion improvement from the novellist recovery. And as I mentioned earlier, about $1 billion of incremental investment in Model E to support the ramp of UEV platform and Ford Energy.

Speaker #3: The impact of ongoing tariffs is unchanged, at about $1 billion, and is now a part of our run rate costs. This excludes the IEPA benefit, and novellas' temporary costs.

Speaker #1: Our Q1 performance highlights the benefits of our Ford Plus priorities. Rigorously optimizing revenue across every segment through leading products and high-growth services, improving operating leverage, and exercising smart, accretive capital allocation decisions.

Speaker #3: As mentioned, run track for $1 billion improvement in material costs and warranty reductions, on top of the 1.5 billion of cost reductions we delivered in 2025.

Speaker #1: The increase in our full-year adjusted EBIT guidance underscores these benefits. Thank you. And I'll now turn it over to the operator so we can take your questions.

Speaker #3: We continue to expect a net $1 billion improvement from the novellas' recovery. And as I mentioned earlier, about $1 billion of incremental investment in Model E to support the ramp of UEV platforms and Ford Energy.

Sherry House: As Jim mentioned, we're on track for $1 billion improvement in material costs and warranty reductions on top of the one and a half billion of cost reductions we delivered in 2025. We continue to expect a net $1 billion improvement from the Novelis recovery. As I mentioned earlier, about $1 billion of incremental investment in Ford Model e to support the ramp of UEV platform and Ford Energy. Our Q1 performance highlights the benefits of our Ford+ priorities, rigorously optimizing revenue across every segment through leading products and high-growth services, improving operating leverage, and exercising smart, accretive capital allocation decisions. The increase in our full-year adjusted EBIT guidance underscores these benefits. Thank you. I'll now turn it over to the operator, so we can take your questions.

Speaker #2: If you would like to ask a question, please use the raise hand function, which can be found on the black bar at for as many questions as possible, please limit to one question.

Speaker #3: Our Q1 performance highlights the benefits of our Ford+ priorities: rigorously optimizing revenue across every segment through leading products and high-growth services, improving operating leverage, and exercising smart, accretive capital allocation decisions.

Speaker #2: Your first question will come from Joseph Spak with UBS, your line is now open. Please go ahead.

Speaker #3: Good afternoon, everyone. Sherry, maybe just to pick up right up on the commodity increase you mentioned about a billion, just trying to contextualize what you're assuming here, because I think in the past you talked about call it an $8 billion steel aluminum buy, I think 40% of that's aluminum.

Speaker #3: The increase in our full-year adjusted EBIT guidance underscores these benefits. Thank you. And I'll now turn it over to the operator so we can take your questions.

Speaker #1: If you would like to ask a question, please use the right-hand function, which will be found in the left bar at the bottom of the screen.

Speaker #3: There's been some hedging, and this is really only nine months. So I know prices have really gone up, but it looks like a pretty big number.

Speaker #1: To leave time for as many questions as possible, please limit to one question. Your first question will come from Dispatch with UBS. Your line is now open.

Speaker #3: So I just want to help understand what your thinking for the balance of the year, and then how you would advise investors to think about that rate heading into '27.

Speaker #1: Please go ahead.

Operator: If you would like to ask a question, please use the raise hand function, which can be found in the black bar at the bottom of your screen. To leave time for as many questions as possible, please limit to one question. Your first question will come from Joseph Spak with UBS. Your line is now open. Please go ahead.

Speaker #2: Good afternoon, everyone. Sherry, maybe just to jump right off on the odd increase you mentioned—about a billion. I'm just trying to contextualize what you're assuming here, because I think in the past you talked about $8 billion still going to buy, and I think 40% of that's aluminum.

Speaker #2: Sure. Well, it's going to be a bit hard to be able to predict 2027 at this point, given the volatility that we've seen in the commodities.

Speaker #2: But let me just tell you, in the near term, what I'm seeing. So with respect to steel and aluminum, in particular, even before the Middle East situation started, we were already seeing global industry shortages.

Joseph Spak: Good afternoon, everyone. Sherry, maybe just to pick up right up on the commodity increase, you mentioned about $1 billion. Just trying to contextualize what you're assuming here because I think in the past you talked about call it an $8 billion steel aluminum buy. I think 40% of that's aluminum. You know, there's been some hedging, and this is really only 9 months. I know prices have really gone up, but it looks like a pretty big number. I just wanna help understand what you're thinking for the balance of the year and then, you know, how you would advise investors to sort of think about that rate heading into 2027.

Speaker #2: There's been some hedging, and this is really only nine months. So I know a lot of prices have really gone up. It looks like a pretty big number.

Speaker #2: So I just want to help understand what your thinking for the balance of the year, and then how you advise investors to think about that rate heading into '27.

Speaker #2: And that was first. Then you had the Middle East, and then you have to remember that Ford also has the aluminum supply shortage with respect to our primary aluminum supply.

Speaker #3: Sure. Well, it's going to be a bit hard to predict 2027 at this point, given the volatility that we've seen in the commodities. But let me just tell you in the near term what I'm seeing.

Speaker #2: Which is novellist. These costs are not related to novellist. We've packaged those separately. We talk about those separately. And when I talk about a $1 billion year-over-year improvement due to novellist, that includes all the tariff costs.

Speaker #3: So with respect to steel and aluminum, in particular, even before the Middle East situation started, we were already seeing global increased shortages. And that was first in the Middle East.

Sherry House: Sure. Well, it's gonna be a bit hard to be able to predict 2027 at this point, given the volatility that we've seen in the commodities, but let me just tell you in the near term what I'm seeing. With respect to steel and aluminum, you know, in particular, even before the Middle East situation started, we were already seeing global industry shortages, and that was first. You had the Middle East, and then you have to remember that Ford also has the aluminum supply shortage with respect to our primary aluminum supplier, which is Novelis. These costs are not related to Novelis. We package those separately. We talk about those separately. When I talk about a $1 billion year-over-year improvement due to Novelis, that includes all the tariff costs.

Speaker #2: But this is related to the exposures that we have in aluminum and steel predominantly.

Speaker #3: And then you have to remember that Ford also has the aluminum supply shortage with respect to our primary aluminum supply. Which is novellas. These costs are not related to novellas.

Speaker #3: All right. And then I guess just a second question, maybe is there any update you could provide us on the novellist timeline? I mean, I think there was some preliminary thought it could come online in the summer.

Speaker #3: We package them separately. We talk about those separately. And when I talk about a $1 billion year-over-year improvement due to novellas, that includes the tariff costs.

Speaker #3: Are we sort of on track there? And if that happens, how are you thinking about that headwind you mentioned? I'm just trying to sort of figure out the phasing timing, because I guess my prior assumption was that most of that novellist headwind would have been more in the first half if it was sort of expected to ramp through the year.

Speaker #3: But this is related to the exposures that we have in aluminum and steel predominantly.

Speaker #2: Okay. I guess just a second question. Maybe is there any update you could provide us on the novellas' timeline? I mean, I think there's some preliminary thought that could come online in the summer.

Speaker #3: But I'm not quite certain that that's sort of still the case. So maybe you could just help us with some of that cost phasing time.

Sherry House: This is related to the exposures that we have in aluminum and steel predominantly.

Speaker #4: Yeah, Joe, this is Kumar. Your assumption's correct. We are still expecting the hot mill to restart in May. There are two aspects of bringing any mill back online.

Speaker #2: Are we sort of on track there? And if that happens, how are you thinking about that heading? I'm just trying to figure out the phasing timing because I guess my prior assumption was that most of that novellas' headwind did more in the first half if it was sort of expected to ramp through the year.

Joseph Spak: Okay. I guess just a second question maybe, is there any update you could provide us on the Novelis timeline? I mean, I think it, you know, there was some preliminary thought it could come online in the summer. Are we sort of on track there? If that, if that happens, how are you thinking about that headwind you mentioned? I'm just trying to sort of figure out the phasing timing because, you know, I guess my prior assumption was that most of that Novelis headwind would have been more in H1 if it was sort of expected to ramp through the year. I'm not quite certain that that's sort of still the case. Maybe you could just help us with some of that cost phasing timing.

Speaker #4: There's the restart itself. And then there's the ramp-up. So all the enablers for both of these aspects are on track. In the event the relaunch doesn't go according to plan, we do have contingency plans in place.

Speaker #2: But I'm not quite certain that that's sort of the case. You could help us with that cost phasing time.

Speaker #4: That means we have additional aluminum supply to ensure our plant production schedules aren't interrupted. So the mill should be back online. And if we have any hiccups, we have contingency plans for the rest of the year.

Speaker #4: Yeah, Joe, this is Kumar. Your assumption's correct. We are still expecting the restart in May. There are two aspects of bringing any milk back online.

Speaker #3: And Joe, as you would expect it, Jim, we have bi-grade with several grades, bi-step in the process. We track it every day. We know exactly the situation we have, the float we have.

Speaker #4: There's the restart itself. And then there's the ramp-up. So all the investors for both of these aspects are on track. In the event the relaunch doesn't go according to plan, we do have contingency plans in place.

Kumar Galhotra: Yeah, Joseph Spak, this is Kumar Galhotra. Your assumption's correct. We are still expecting the hot mill to restart in May. There are two aspects to bringing any mill back online. There's the restart itself, and then there's the ramp-up. All the enablers for both of these aspects are on track. In the event the relaunch doesn't go according to plan, we do have contingency plans in place. That means we have additional aluminum supply to ensure our plant production schedules aren't interrupted. The mill should be back online, and if we have any hiccups, we have contingency plans for the rest of the year. Joseph Spak, as you would expect at CHIM, we have by grade, several grades, by step in the process. We track it every day. We know exactly the situation we have, the float we have.

Speaker #3: And we also have learned how to back up the aluminum supply. As Kumar said, in case the mill ramps slower, or the actual start date is later.

Speaker #4: That means we have additional aluminum supply to ensure our plant production schedules aren't interrupted. So milk should be back online, and we have any hiccups.

Speaker #4: We have contingency plans for the rest of the year.

Speaker #3: Thank you.

Speaker #2: Joe, as you would expect, it should. We have bi-grade with several grades, bi-step process. We try to do it every day. We know exactly the situation we have, the float we have.

Speaker #2: Your next question will come from Dan Levy with Barclays. Dan, I see you're unmuted. Please go ahead.

Speaker #5: Hi. Can you hear me now?

Speaker #2: And we also have learned how to back up the aluminum supply. As Kumar said, in case the mill ramps slower, or the actual start date is later.

Speaker #2: We can, yes. Go ahead.

Speaker #5: Okay. Thanks for taking the questions. We know within the guidance that effectively the IEPA refund is being offset by the raw mass. So really, the net of the guidance improvements coming from improved operations, maybe you can just in the improved operations, beyond the warranty material which looks like that's consistent, and how much runway do you have on this?

Speaker #4: Thank you.

Speaker #1: Your next question will come from Dan Levy with Barclays. Dan, I see you're unmuted. Please go ahead.

Kumar Galhotra: We also have learned how to back up the aluminum supply, as Kumar said, in case the mill ramps slower or the actual start date is later.

Jim Farley: We also have learned how to back up the aluminum supply, as Kumar said, in case the mill ramps slower or the actual start date is later.

Speaker #5: And can this offset any increases in raw mass that you might be seeing in '27 as just given the staggering of costs that are going to be hitting?

Speaker #5: Hi. Can you hear me now?

Speaker #1: We can.

Speaker #5: Okay, thanks for taking questions. We know within the guidance that, effectively, the IEPA refund is being offset by the raw mass. So really the net of the guidance improvements is coming from improved operations.

Joseph Spak: Thank you.

Speaker #2: Yes. So as we look at kind of what some what's the basically the basis of our billion-dollar raise? Versus guidance, that's going to be software and physical services is one of the biggest components there.

Operator: Your next question will come from Dan Levy with Barclays. Dan, I see you've unmuted. Please go ahead.

Speaker #5: Maybe you can just un the improved operations beyond the warranty and materials. That's consistent. And how much runway do you have on this? And can this offset any increases in raw mass that you might be seeing in '27 and just give a staggering of costs that are going to be hitting?

Dan Levy: Hi, can you hear me now?

Operator: We can, yes. Go ahead.

Dan Levy: Okay. Thanks for taking questions. We know within the guidance that effectively the IEEPA refund is being offset by the raw mats. Really the net of the guidance improvement's coming from improved operations. Maybe you can just on the improved operations beyond the warranty material, which looks like that's consistent, and how much runway do you have on this? Can this offset, you know, any increases in raw mats that you might be seeing in 2027 as just given the staggering of costs that are gonna be hitting?

Speaker #2: The Ford Pro business continues to have very high paid subscribers. We now are up at 879,000, as I said, and some of our prepared remarks gets 30% on a year-over-year basis.

Speaker #2: The enterprise is also doing quite well across the physical services and the software. The other item that was really big for us in Q1 was the net pricing.

Speaker #3: Yeah. Since we're looking at kind of what's basically the basis of our billion-dollar raise versus guidance, that's going to be software and physical services—it's one of the biggest components there.

Speaker #2: As we said, the share of revenue highest in five years and this was really led, as we said, by full-size utilities and trucks. And then we did have some timing differences in cost.

Speaker #3: The Ford Pro business continues to have very high paid subscribers. We now are up at $879,000, as I said, in some of our prepared remarks.

Speaker #2: So some items hit in Q1 that we were expecting to hit in Q2, and that was very favorable for us. So we took all that underlying performance into consideration.

Sherry House: Yes. As we look at, you know, what's the basis of our $1 billion raise versus guidance, it's gonna be software and physical services is one of the biggest components there. You know, the Ford Pro business continues to have very high paid subscribers. We now are up at 879,000, as I said in some of our prepared remarks. That's 30% on a year-over-year basis. The enterprise is also doing quite well across the physical services and the software. The other item that was really big for us in Q1 was the net pricing. As we said, you know, the share of revenue highest in 5 years. You know, this was really led, as we said, by full-size utilities and trucks.

Speaker #3: That's 30% on a year-over-year basis. The enterprise is also doing quite well across the physical services and the software. The other item that was really big for us in Q1 was the net pricing.

Speaker #2: We felt that if half a billion dollars was the amount to be able to pull through for the full year, and that's why our guidance reflects that.

Speaker #3: As we said, the share of revenue highest in five years this was really led, as we said, by full-size utilities and trucks. And then we did have some timing differences in cost.

Speaker #2: Your next question will come from Andrew Porcocco with Morgan Stanley.

Speaker #3: Some items in Q1 that we're expecting to hit in Q2, and that was very favorable for us. So when we took all that underlying performance into consideration, we felt that if half a billion dollars was the amount to be able to pull through for the full year, and that's why our guidance reflects that.

Speaker #5: Great. Thanks so much for taking the question. I did want to come back to the guidance here. And maybe I'm missing some of the moving pieces.

Speaker #5: But if I just look at your first quarter performance, 3.5 billion of adjusted EBIT, I think you had been essentially signaling sequentially flat, which would have been like 1.1 billion for the first quarter.

Sherry House: We did have some timing differences in cost, so some items hit in Q1 that we were expecting to hit in Q2, and that was very favorable for us. When we took all that underlying performance into consideration, we felt that a half a billion dollars was the amount to be able to pull through for the full year, and that's why our guidance reflects that.

Speaker #1: Your next question will come from Andrew Porkoko with Morgan Stanley.

Speaker #5: So you essentially beat by two and a half billion in the first quarter, of which a little bit over one is from IEPA. But that would imply even though that's offset by some incremental cost headwinds on the commodity side, it would imply downside or some incremental costs elsewhere if your guides only increasing by 500 million.

Speaker #5: Great. Thanks so much for taking the question. I did want to come back to the guidance here. And maybe I'm missing some of the moving pieces.

Speaker #5: But I'd just like to first order performance. 3.5 billion of adjusted EBIT. I think you had been essentially signaling sequentially flat, which would have been like 1.1 billion for the first quarter.

Speaker #5: So can you maybe just help us break down some of those moving pieces in case I'm kind of missing anything in that bridge?

Operator: Your next question will come from Adam Jonas with Morgan Stanley.

Speaker #5: So you essentially beat by $2.5 billion in the first quarter, of which a little bit over $1 billion is IEPA. But that would imply, even though that's offset by some incremental cost headwinds on the commodity side, it would imply downside or some incremental cost elsewhere if your guidance is only increasing by $500 million.

Speaker #2: Yeah, I don't think you're missing anything in the bridge. It's just, as I said, we had the three components that were really driving this performance.

Adam Jonas: Great. Thanks so much for taking the question. I did wanna come back to the guidance here. Maybe I'm missing some of the moving pieces, but if I just look at your Q1 performance, $3.5 billion of adjusted EBITDA. I think you had been essentially signaling sequentially flat, which would've been like $1.1 billion for Q1. You essentially beat like $2.5 billion in Q1, of which a little bit over $1 billion is from IEEPA. That would imply, like even though that's offset by some incremental cost headwinds on the commodity side, it would imply downside or some incremental costs elsewhere if your guide's only increasing by $500 million.

Andrew Percoco: Great. Thanks so much for taking the question. I did wanna come back to the guidance here. Maybe I'm missing some of the moving pieces, but if I just look at your Q1 performance, $3.5 billion of adjusted EBITDA. I think you had been essentially signaling sequentially flat, which would've been like $1.1 billion for Q1. You essentially beat like $2.5 billion in Q1, of which a little bit over $1 billion is from IEEPA. That would imply, like even though that's offset by some incremental cost headwinds on the commodity side, it would imply downside or some incremental costs elsewhere if your guide's only increasing by $500 million. Can you maybe just help us break down some of those moving pieces in case I'm kind of missing anything in that bridge?

Speaker #2: And we're pulling through the amount of it that is sustainable. Some of it was timing differences. So we didn't want to put timing differences into a guidance raise.

Speaker #5: So can you maybe just help us break down some of those moving pieces in case I'm kind of missing anything in that bridge?

Speaker #5: Okay. Got it. And then Jim, maybe one for you. There's been a lot of headlines recently around some potential partnerships between Ford and some of the Chinese OEMs.

Speaker #3: Yeah, I don't think you're missing anything in the bridge. It's just, as I said, we had the three components that were really driving this performance.

Speaker #3: And we're pulling through the amount of it that is sustainable. Some of it was timing differences. So we didn't want to put timing differences into a guidance raise.

Speaker #5: And even outside of Ford, there's just a lot of focus in the marketplace around some of these vehicles coming out of China eventually, potentially making their way into the US.

Adam Jonas: Can you maybe just help us break down some of those moving pieces in case I'm kind of missing anything in that bridge?

Speaker #5: Can you just give us your updated thoughts on what that could look like and maybe any involvement that you might be interested in doing there?

Speaker #5: Okay. Got it. And then Jim, maybe one for you. There's been a lot of headlines recently around some potential partnerships between Ford and some of the Chinese OEMs.

Sherry House: I don't think you're missing anything in the bridge. It's just as I said, you know, we had the three components that were really driving this performance, and we're pulling through the amount of it that is sustainable. Some of it was timing differences. We didn't want to put timing differences into a guidance raise.

Speaker #4: Sure. I'm sure glad there is a lot of focus on it. As America's largest auto producer, we are totally dedicated to a thriving US auto industry.

Speaker #5: And even outside of Ford, there's just a lot of focus in the marketplace around some of these vehicles coming out of China, eventually potentially making their way into the US.

Speaker #4: And of course, safeguarding our country's industrial base and that's just not economic vitality. It's also a national security as a country. And when we see China and Japan and South Korea they've really prioritized their domestic auto industry and manufacturing for these same reasons.

Speaker #5: Can you just give us your updated thoughts on what that would look like and maybe any involvement that you might be interested in doing there?

Adam Jonas: Okay, got it. Jim, maybe one for you. You know, there's been a lot of headlines recently around some potential partnerships between Ford and some of the Chinese OEMs. Even outside of Ford, there's just a lot of focus in the marketplace around these vehicles coming out of China eventually potentially making their way into the US. Can you just give us your updated thoughts on what that could look like and maybe any involvement that you might be interested in doing there?

Andrew Percoco: Okay, got it. Jim, maybe one for you. You know, there's been a lot of headlines recently around some potential partnerships between Ford and some of the Chinese OEMs. Even outside of Ford, there's just a lot of focus in the marketplace around these vehicles coming out of China eventually potentially making their way into the US. Can you just give us your updated thoughts on what that could look like and maybe any involvement that you might be interested in doing there?

Speaker #2: Sure. I'm sure glad there is a lot of focus on it. As America's largest auto producer, we are totally dedicated to a thriving US auto industry.

Speaker #4: That I mentioned. I would say to answer your question, we leverage global partnerships and even IP sharing. Including with the Chinese OEEs to grow our business around the world.

Speaker #2: And of course, safeguarding our country's industrial base is not economic vitality. It's also a national security as a country. And when we see China and Japan and South Korea they've really prioritized their domestic auto industry and manufacturing for these same reasons.

Speaker #4: And but we are really fully committed to a level playing field here in the US. And also safeguarding our home market because of the importance of the auto industry and our industrial base.

Jim Farley: Sure. I'm sure glad there is a lot of focus on it. As America's largest auto producer, we are totally dedicated to a thriving US auto industry and of course, safeguarding our country's industrial base. That's just not economic vitality, it's also national security as a country. When we see China and Japan and South Korea, they've really prioritized their domestic auto industry and manufacturing for these same reasons that I mentioned. I would say, to answer your question, we leverage global partnerships and even IP sharing, including with the Chinese OEs to grow our business around the world. We are really fully committed to a level playing field here in the US and also safeguarding our home market because of the importance of the auto industry and our industrial base, you know?

Speaker #2: As I mentioned, I would say, to answer your question, we leverage global partnerships and even IP sharing, including with the Chinese OEEs, to grow our business around the world.

Speaker #4: So how I would think about it is Ford continues to be a global company. We want to have the rights to win around the globe.

Speaker #2: And but we are really fully committed to a level playing field here in the US. And also safeguarding our home market. Because of the importance of the auto industry and our industrial base, so how I would think about it is Ford, Ford continues to be a global company.

Speaker #4: We need IP and partnerships outside the US to do that. And when it comes to the US industry itself, we are extremely protective as we should be like China, South Korea, and Japan are.

Speaker #4: What that means in specific policies that will play out in our strategy as a company. But as America's number one auto producer, you can understand our perspective.

Speaker #2: We want to have the rights to win around the globe. We need IP and partnerships outside the US to do that. And when it comes to the US industry itself, we are extremely protective as we should be like China, South Korea, and Japan are.

Speaker #5: That's great. Thank you.

Speaker #2: Your next question will come from Alex Perry with Bank of America.

Speaker #2: What that means in specific policies that will play out in our strategy as a company. But as America's number one auto producer, you can understand our perspective.

Speaker #6: Hi, thanks for taking my questions here. In the materials, I thought it was interesting. I think you said that off-road performance trims account for 25% of the overall sales mix.

Jim Farley: How I would think about it is Ford continues to be a global company. We wanna have the rights to win around the globe. We need IP and partnerships outside the US to do that. When it comes to the US industry itself, we are extremely protective, as we should be, like China, South Korea, and Japan are. What that means in specific policies, that will play out in our strategy as a company. As America's number one auto producer, you can understand our perspective.

Speaker #6: Can you give us a little bit more on the strategy here and a little more color on how this is trended historically? Is the strategy to prioritize some of these higher margin trims while production remains constrained?

Speaker #5: That's great. Thank you.

Speaker #1: Your next question will come from Alex Perry with Bank of America.

Speaker #6: Hi. Thanks for taking my questions here. In the materials, I thought it was interesting. I think you said that off-road performance trends account for 25% of the overall sales mix.

Speaker #6: And maybe just remind us on the profitability of some of these off-road trims for this company average. Thanks.

Speaker #6: Can you give us a little bit more on the strategy here, and a little more color on how this is trending historically? Is the strategy to prioritize some of these higher-margin trims while production remains constrained?

Speaker #4: Yeah, thanks. This is Andrew. Thanks for the question. Yes, that is part of our strategy. It's a big piece of why our blue business is doing well overall.

Adam Jonas: That's great. Thank you.

Andrew Percoco: That's great. Thank you.

Speaker #4: In fact, if you look at our wholesales this past quarter and the first quarter, they were relatively flat, but we had an improved mix of Explore, Expedition.

Speaker #6: And maybe just remind us on profitability of some of these off-road trims for this company average? Thanks.

Operator: Your next question will come from Alex Perry with Bank of America.

Alex Perry: Hi. Thanks for taking my questions here. In the materials, I thought it was interesting, I think you said that off-road performance trims account for 25% of the overall sales mix. Can you give us a little bit more on the strategy here and a little more color on how this has trended historically? Is the strategy to prioritize some of these higher margin trims while production remains constrained? Maybe just remind us on the profitability of some of these off-road trims versus company average. Thanks.

Speaker #4: We phased out Escape. We're in the sell down of that and our F series remains strong. And we actually grew our share in the off-road space 25% of our volume, but our share actually grew by 7/10 of a point.

Speaker #2: Yeah, thanks. This is Andrew. Thanks for the question. Yes, that is part of our strategy. It's a big piece of why our Blue business is doing well overall.

Speaker #2: In fact, if you look at our wholesales this past quarter and the first quarter, they were relatively flat. But we had an improved mix of Explore, Expedition.

Speaker #4: Which was really important. So and that's because we're able to lean into across multiple vehicles now. Series like Tremor and Raptor and really drive those mixes.

Speaker #2: We phased out Escape. We're in the sales end of that. And our sales remain strong. We actually grew our share in the off-road space 25% of our volume, but our share actually grew by 7/10 of a point.

Speaker #4: So it is relatively more profitable and it all plays back to our overall strategy of leaning into our profit pillars and winning with passion products.

Andrew Frick: Yeah. Thanks. This is Andrew. Thanks for the question. Yes, that is part of our strategy. It's a big piece of why our Ford Blue business is doing well overall. In fact, if you look at our wholesales this past quarter in Q1, they were relatively flat, but we had an improved mix of Explorer, Expedition. We phased out Escape, we're in the sell-down of that, and our F-Series remained strong. We actually grew our share in the off-road space, 25% of our volume, but our share actually grew by 0.7 of a point, which was really important. That's because we're able to lean into across multiple vehicles now, series like Tremor and Raptor, and really drive those mixes.

Speaker #2: Which was really important. So and that's because we're able to lean into across multiple vehicles now. Series like Tremor and Raptor. And really drive those mixes.

Speaker #6: No boring products.

Speaker #5: Perfect. Really helpful. And just a follow-up on commodities. Can you just remind us how you're sort of hedged across the various commodities? And with the $2 billion commodity headwind, does this assume that prices sort of stay where they are today?

Speaker #2: So it is relatively more profitable. And it all plays back to our overall strategy of leaning into our profit pillars and winning with cash products.

Speaker #6: No brand products.

Speaker #5: So if they were to come down, this would provide a little bit of cushion in the guide?

Speaker #5: Perfect. Really helpful. And just a follow-up on commodities. Can you just remind us how you sort of hedged across the various commodities? And with the $2 billion commodity headwind, does this assume that prices sort of stay where they are today?

Speaker #2: Yes. The Ford forecast that we gave you does the guidance we gave you assumes that they stay where they are, which as you would know, the forward curves are up.

Speaker #2: We have a large number of contract types that we use. We have in some cases, we have fixed costs. Other contracts, multi-year contracts. We have a lot of contracts that are based on indices and the impact is quarter lagging.

Speaker #5: So if you were to come down, this would provide a little bit of cushion in the guide?

Sherry House: It is relatively more profitable, and it all plays back to our overall strategy of leaning into our profit pillars and winning with passion products.

Speaker #3: Yes. The Ford forecast that we give ive you does the guide we gave you assumes that they stay where they are, which, as you would know, the forward curves are up.

Jim Farley: No boring products.

Speaker #2: So you're going to have a range there. We also look at natural hedges that we have in our business as well. So when we looked a hedge, we're taking the entire portfolio into consideration.

Sherry House: Mm-hmm.

Speaker #3: We have a large number of contracts that we use. We have some cases where we have fixed costs. Other contracts are multi-year contracts. We have a lot of contracts that are based on indices and the impact of quarter lagging.

Alex Perry: Perfect. Really helpful. Just a follow-up on commodities, can you just remind us how you're sort of hedged across the various commodities? With the $2 billion, you know, commodity headwind, does this assume that prices sort of stay where they are today, so if they were to come down, this would provide a little bit of cushion in the guide?

Speaker #2: And we feel that we've got a pretty good handle to be able to provide you what we did in terms of commodities for the balance of the year.

Speaker #3: So you're going to have a range there. We also look at natural hedges that we have in our business as well. So when we looked ahead, we're taking the entire portfolio into consideration.

Speaker #2: If they go up substantially from here, we obviously back sharing that with you. But you're right. If they go down, that will be a net positive to the business.

Sherry House: Yes. The forward forecast that we gave you, the guidance we gave you assumes that they stay where they are, which, as you would know, the forward curves are up. We have a large number of contract types that we use. We have, in some cases, we have fixed, you know, fixed costs, other contracts, multi-year contracts. We have a lot of contracts that are based on indices, and the impact is a quarter lagging. You're gonna have a range there. We also look at natural hedges that we have in our business as well. When we look to hedge, we're taking the entire portfolio into consideration. We feel that we've got a pretty good handle to be able to provide you know, what we did in terms of commodities for the balance of the year.

Speaker #3: And we feel that we've got a pretty good handle to be able to provide you what we did in terms of commodities, the balance of the year.

Speaker #5: Perfect. Incredibly helpful. Best of luck going forward.

Speaker #4: Thank you.

Speaker #2: Thank you. Your next question will come from Mark Delaney with Goldman Sachs.

Speaker #3: If they go up substantially from here, we obviously would back sharing that with you. But you're right. If they go down, that would be a net positive to the business.

Speaker #5: Yes, good afternoon. Thank you very much for taking the question. I was hoping to start on the comments the company spoke about and has prepared remarks on software and physical services.

Speaker #5: Perfect. Incredibly helpful. Best of luck going forward.

Speaker #5: I think you said you expect the $15 billion of revenue coming from those areas to grow at a nearly 8% rate annually through the end of the decade, which is a pretty good outlook over several years.

Speaker #2: Thank you.

Speaker #3: Thank you.

Speaker #1: Your next question will come back to Lenny with Goldman Sachs.

Speaker #5: Yes, good afternoon. Thank you very much for taking the question. I was hoping to start on the comments the company made about preparing marks on software and physical services.

Speaker #5: So can you help investors to better understand what's driving that degree of revenue growth over the coming years? And more importantly, what does that mean for EBIT?

Speaker #5: I think you said you expect the $15 billion of revenue coming from those areas to grow at a nearly 8% rate annually. In the decade, which is a pretty good outlook over several years.

Speaker #4: Sure. This has been a critical part of our path to 8%. And we've been planning for many years. As you can imagine, before I answer your question directly, we've had to invest a lot in our advanced electric architectures.

Sherry House: If they go up substantially from here, we obviously would be back sharing that with you. You're right, if they go down, that will be a net positive to the business.

Speaker #5: So can you help investors to better understand what's driving that degree of revenue growth over the coming years? And more importantly, what does that mean for you?

Alex Perry: Perfect. Incredibly helpful. Best of luck going forward.

Jim Farley: Thank you.

Sherry House: Thank you.

Speaker #2: Sure. This has been a critical part of our path to 8%. And we've been planning for many years. As you can imagine, before I answer your question directly, we've had to invest a lot in our intellectual architectures.

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

Speaker #4: And our dealers haven't had to invest a lot in dealer capacity for the service really our focus is on two key areas. We have a lot more focus than these two, but these are the ones driving our business.

Mark Delaney: Yes, good afternoon. Thank you very much for taking the questions. I was hoping to start on the comments the company spoke about in its prepared remarks on software and physical services. I think you said you expect the $15 billion of revenue coming from those areas to grow at a nearly 8% rate annually through the end of the decade, which is a pretty good outlook over several years. Can you help investors to better understand what's driving that degree of revenue growth over the coming years? More importantly, what does that mean for EBIT?

Speaker #4: The first is our after-sales parts business. This is a really key focus for the Ford team. We see growth in Pro. Our dealers are massively investing in capacity for Pro.

Speaker #2: And our dealers haven't had to invest a lot in dealer capacity for the service. Really, our focus is on two key areas. We have a lot more focus on these two.

Speaker #2: But these are the ones driving our business. The first is our after-sales parts business. This is a really key focus for the Ford team.

Speaker #4: But we're also becoming a lot more successful in wholesaling parts from our dealers to third-party repair shops throughout the US. As I mentioned, we're going to expand our parts catalog in terms of price and diversity.

Jim Farley: Sure. You know, this has been a critical part of our path to 8%. We've been planning for many years. As you can imagine, before I answer your question directly, we've had to invest a lot in our advanced electric architectures, and our dealers have had to invest a lot in dealer capacity for the service. Really, our focus is on 2 key areas. We have a lot more focus than these 2, but these are the ones driving our business. The first is our after-sales parts business. This is a really key focus for the Ford team. We see growth in Pro. Our dealers are massively investing in capacity for Pro. We're also becoming a lot more successful in wholesaling parts from our dealers to third-party repair shops throughout the US.

Speaker #2: We see growth in Pro. Our dealers are massively investing in capacity for Pro. But we're also becoming a lot more successful in wholesaling parts from our dealers with third-party repair shops throughout the US.

Speaker #4: And we're going to start to focus on not just Ford parts, but multi-make parts. And I think the other key distinguishing element for Ford is that we have started to really get good at remote service.

Speaker #2: As I mentioned, we're going to expand our parts catalog in terms of price and diversity. We're going to start to focus on not just Ford parts, but multi-make parts.

Speaker #4: Almost 20% of all Ford's repair now is done outside the dealership at our customers' location. And for our Pro customers, there are especially excited about this because they don't have to they don't have to come into the dealership.

Speaker #2: And I think the other key distinguishing element for Ford is that we have started to really get good at remote service. Almost 20% of all Ford's repairs now are done outside the dealership at our customers' locations.

Speaker #4: And this is really expanded our revenue on after-sales. Inside the company, we're very focused on improving our repair order duration. That gives our dealers more capacity, so to speak, without having to build any more capacity.

Speaker #2: And we're a Pro customer. They're especially excited about this because they don't have to come into the dealership, and this has really expanded our revenue on after-sales.

Speaker #4: I think you know our growth in ADAS, our growth in Pro Intelligent that Sherry mentioned, are both signature parts of our integrated services that seem to be growing about 30 to 40 percent a quarter.

Jim Farley: As I mentioned, we're gonna expand our parts catalog in terms of price and diversity, and we're gonna start to focus on not just Ford parts, but multi-make parts. I think the other key distinguishing element for Ford is that we have started to really get good at remote service. Almost 20% of all Ford's repair now is done outside the dealership at our customer's location. For our Pro customers, they're especially excited about this because they don't have to come into the dealership. This has really expanded our revenue on after sales. Inside the company, we're very focused on improving our repair order duration. That gives our dealers more capacity, so to speak, without having to build any more capacity.

Speaker #2: Inside the company, we're very focused on improving our repair order duration. That gives our dealers more capacity so to speak without having to build any more capacity.

Speaker #2: I think you know our growth in ADAS. Our growth in Pro Intelligent, that Sherry mentioned, are both signature parts of our integrated services that seem to be growing about 30% to 40% a quarter.

Speaker #4: With very high margins. When you look at the margins of the part business and the software business, this $15 billion that will be growing at 8% a year is highly profitable for the company.

Speaker #4: It also has a different revenue risk than our vehicle business. It's more of an annuity. And a lot of it tends to be any cyclical.

Speaker #2: With very high margins. When you look at the margins of the part business and the software business, this $15 billion that will be growing at 8% a year is highly probable for the company.

Speaker #4: That means that when the car business goes down, people tend to repair their vehicles. So this fitness we're developing on the parts side will help us on the anti-cyclical side.

Speaker #2: It also has a different revenue risk than our vehicle business. It's more of an annuity. And a lot of it tends to be any cyclical.

Speaker #4: That gives you, I think, some window and hopefully we'll be giving you more and more insights as to our ADAS strategy and Pro Intelligence product rollout in the coming years.

Speaker #2: That means that when the car business goes down, people tend to repair their vehicles. So this fitness we're developing on the parts side will help us on the anti-cyclical side.

Jim Farley: I think you know our growth in ADAS, our growth in Pro Intelligence that Sherry House mentioned, are both signature parts of our integrated services that seem to be growing about 30% to 40% a quarter with very high margins. You look at the margins of the part business and the software business, this $15 billion that will be growing at 8% a year is highly profitable for the company. It also has a different revenue risk than our vehicle business. It's more of an annuity, and a lot of it tends to be anti-cyclical. That means that when the car business goes down, people tend to repair their vehicles. This fitness we're developing on the parts side will help us on the anti-cyclical side.

Speaker #2: That gives you, I think, some window. And hopefully, we'll be giving you more and more insights as to our ADAS strategy. And Pro Intelligence product rollout.

Speaker #5: It's very helpful. My other question was on the pickup market. And Ford obviously has a very strong franchise in that segment with the F series.

Speaker #5: But you've also spoken to adding more product with the UEV-based pickup model coming in and then also the ice truck you've talked about coming out of the Tennessee factory.

Speaker #2: In the coming years.

Speaker #5: It's very helpful. My other question was on the pickup market. Travis has a very strong franchise in the F series. You've also spoken to adding more product with the UEV-based pickup model coming.

Speaker #5: We've also seen competitors lean into that segment more. So as you think about all the new models coming into the pickup space, maybe talk more on how much of the market you think pickups can make up in the future.

Speaker #5: And then also the ICE truck you’ve talked about coming out of the C factory. We also see competitors leaning into that segment more. So as you think about all the new models coming into the pickup space, maybe talk more on how much of the market you think pickups could make up.

Speaker #5: And then as you think about more supply coming into pickups, what are implications for profit margins and that important category? Thanks.

Speaker #4: Yeah. Thank you for the question, Mark. This is Andrew. And I think it's important when you talk about the truck business, maybe to look at it through the lens of both retail and commercial.

Speaker #5: In the future. And then as you think about more supply coming into pickups, what are implications for profit margins in that important category? Thanks.

Jim Farley: You know, that gives you, I think, some window, and hopefully we'll be giving you more and more insights as to our ADAS strategy, and Pro Intelligence product with rollout in the coming years.

Speaker #4: Because they're both really important parts of those of both customer groups. On the retail side, the truck business has historically been with the full-size pickup.

Speaker #2: Yeah. Thank you for that question, Travis. This is Andrew. And I think it's important when you talk about the truck business, maybe to look at it through the lens of both retail and commercial.

Mark Delaney: It's very helpful. My other question was on the pickup market, and Ford obviously has a very strong franchise in that segment with the F-Series. You've also spoken to adding more product with the UEV-based pickup model coming in, and then also the ICE truck you've talked about coming out of the Tennessee factory. We've also seen competitors lean into that segment more. As you think about all the new models coming into the pickup space, maybe talk more on how much of the market you think pickups can make up in the future. Then as you think about more supply coming into pickups, what are implications for profit margins in that important category? Thanks.

Speaker #2: Because they're both really important parts of both customer groups. On the retail side, the truck business has historically been with the full-size pickup—and any pickup—but what we've been able to do is really expand those pickup segments themselves.

Speaker #4: And medium pickup. But what we've been able to do is really expand that pickup segments themselves. Maverick has created a whole new segment. And we've been able to really take advantage of that.

Speaker #4: In fact, we've changed if you look at the trends in the market, you've seen a lot of car buyers go into truck. And even utilities go into truck.

Speaker #2: Maverick has created a whole new segment, and we've been able to really take advantage of that. In fact, we've changed—if you look at the trends in the market, you've seen a lot of car buyers go into truck.

Speaker #4: And we think that trend will continue especially with the type of packaging that we're going to be able to provide. It worked on Maverick.

Speaker #4: And we are really excited about packaging that that has to really appeal to not just truck buyers, but to source from SUV buyers as well.

Speaker #2: And even utilities go into truck. And we think that trend will continue especially with the type of packaging that we're going to be able to provide.

Sherry House: Yeah. Thank you for the question, Mark. This is Andrew, I think it's important when you talk about the truck business maybe to look at it through the lens of both retail and commercial because they're both really important parts of both customer groups. On the retail side, you know, the truck business has historically been with the full-size pickup and medium pickup, but what we've been able to do is really expand that the pickup segments themselves. Maverick has created a whole new segment. We've been able to really take advantage of that. In fact, if you look at the trends in the market, you've seen a lot of car buyers go into truck and even utilities go into truck.

Andrew Frick: Yeah. Thank you for the question, Mark. This is Andrew, I think it's important when you talk about the truck business maybe to look at it through the lens of both retail and commercial because they're both really important parts of both customer groups. On the retail side, you know, the truck business has historically been with the full-size pickup and medium pickup, but what we've been able to do is really expand that the pickup segments themselves. Maverick has created a whole new segment. We've been able to really take advantage of that. In fact, if you look at the trends in the market, you've seen a lot of car buyers go into truck and even utilities go into truck.

Speaker #4: So we see the pickup market growing. And it's really growing across segments and price points on the retail side. And Alicia, maybe on the commercial side.

Speaker #2: It worked on Maverick, and we are really excited about the UEV pickup and the packaging that that has to really appeal to not just truck buyers, but to source from SUV buyers as well.

Speaker #2: On the commercial side, I would just ask I'll just comment similar to what Andrew said. We have commercial buyers that buy pickup trucks from Maverick size all the way up to our F750.

Speaker #2: So we see the pickup market growing. And it's really growing across segment and price points. Retail side. And Alicia, maybe on the commercial side.

Speaker #3: On the commercial side, I would just ask I'll just comment similar to what Andrew said. We have commercial buyers that buy pickup trucks from Maverick size all the way up to our F750.

Speaker #2: And we have products in those segments. And we also have diverse powertrains. And we see that continuing to grow. We continue to have strong orders for 2026.

Speaker #3: And we have products in those segments. And we also have diverse powertrains. And we see that continue to grow. We continue to have strong orders for 2026.

Speaker #2: Right now, complete customers. And we continue to see we just opened our 27 model year order books. And we're starting we're seeing some early indicators.

Jim Farley: We think that trend will continue, especially with the type of packaging that we're going to be able to provide. It worked on Maverick, and we are really excited about the UEV pickup and the packaging that has to really appeal to not just truck buyers, but to source from SUV buyers as well. We see the pickup market growing, and it's really growing across segments and price points on the retail side. Alicia maybe on the commercial side.

Andrew Frick: We think that trend will continue, especially with the type of packaging that we're going to be able to provide. It worked on Maverick, and we are really excited about the UEV pickup and the packaging that has to really appeal to not just truck buyers, but to source from SUV buyers as well. We see the pickup market growing, and it's really growing across segments and price points on the retail side. Alicia maybe on the commercial side.

Speaker #2: So we know the demand is there. It's strong. And we want to make sure that we have offerings from the very beginning. Maverick all the way to the higher pickup trucks.

Speaker #3: Right now, completely because we continue to see we opened our 27 model year order books. And we're starting to see some early indicators. So we know the demand is there.

Speaker #4: How we like to think about is that we want a future-proof our truck business. To do that, we want to offer customers more choice on the powertrain side and tie the powertrains to other benefits that a truck customer would want, like a hybrid for Pro Power on board.

Speaker #3: It's strong. And we want to make sure that we have offerings from the very beginning. Maverick all the way to the higher pickup trucks.

Speaker #2: How we like to think about is that we want a future-proof our truck business. To do that, we want to offer customers more choice in the powertrain side and tie the powertrains to other benefits that a truck customer would want, like a hybrid for Pro Power on board.

Alicia Boler Davis: On the commercial side, I would just ask, I'll just comment similar to what Andrew said. We have commercial buyers that buy pickup trucks from Maverick size all the way up to our F-750. We have products in those segments. We also have diverse powertrains. We see that continuing to grow. We continue to have strong orders for 2026 right now from fleet customers. We continue to see. We just opened our 2027 model year order books. We're seeing some early indicators. We know the demand is there, is strong. We wanna make sure that we have offerings from the very beginning, Maverick, all the way to the higher pickup trucks.

Speaker #4: And part of protecting is not just having an affordable electric pickup or hybrid throughout our lineup, but it's also having a flow of customers that move through our lineup over time.

Speaker #2: And better protecting is not just having an affordable electric pickup or hybrid throughout our lineup, but it's also having a flow of customers that move through our lineup over time.

Speaker #4: On the Pro side, it helps us with adjacency sales. But on the retail side, those Maverick, those UEV sales, they are juggernaut for loading our whole pickup business and the strength over time.

Speaker #2: On the Pro side, it helps us with adjacency sales. But on the retail side, those Maverick, those UEV sales, they are juggernauts for loading our whole pickup business and the strength over time.

Speaker #4: Because we haven't seen our competitors invest like we have. I think the other thing that gets maybe overlooked about Ford's pickup strategy is our global strategy.

Speaker #2: Because we haven't seen our competitors invest like we have. I think the other thing that gets me overlooked about Ford's pickup strategy is our global strategy.

Jim Farley: How we like to think about, is that we want to future-proof our truck business. To do that, we want to offer customers more choice on the powertrain side and tie the powertrains to other benefits that a truck customer would want, like a hybrid for Pro Power Onboard. Part of protecting is not just having an affordable electric pickup or hybrid throughout our lineup, but it's also having a flow of customers that move through our lineup over time. On the pro side, it helps us with adjacency sales, but on the retail side, those Maverick, those UEV sales, they are a juggernaut for loading our whole pickup business and the strength over time because we haven't seen our competitors invest like we have. I think the other thing that gets maybe overlooked about Ford's pickup strategy is our global strategy.

Speaker #4: Ford is really number one or number two in most markets around the globe. They're a large pickup markets in Thailand, Africa, the Middle East, and South America.

Speaker #2: Ford is really number one or number two in most markets around the globe. They're a large pickup market in Thailand, Africa, the Middle East, and South America.

Speaker #4: And Ranger is number one or number two in every one of those segments. And we are future-proofing those lineups now as we speak. With different powertrains and even more affordable options.

Speaker #2: And Ranger is number one or number two in every one of those segments. And we are future-proofing those lineups. Now, as we speak, with different powertrains and even more affordable options.

Speaker #4: And this is critical because we're seeing new competition in those markets from the Chinese. And so our pickup strategy is a global strategy. We're trying to learn from the past where we're trying to future-proof it in a way from oil shocks or movement of powertrain to actually price points.

Speaker #2: And this is critical because we're seeing new competition in those markets from the Chinese. And so our pickup strategy is a global strategy. We're trying to learn from the past where we're trying to future-proof it in a way from wheel shocks or movement of powertrain to actually price points.

Speaker #1: Your next question will come from Emmanuel Rosner with Wolf Research.

Speaker #5: Oh, great. Thank you so much. Could you give us a sense of expected cadence of earnings over the rest of the year? And in particular, maybe drivers of the much lower pace of earnings over the rest of it?

Jim Farley: Ford is really number 1 or number 2 in most markets around the globe. There are large pickup markets in Thailand, Africa, the Middle East, and South America. Ranger is number 1 or number 2 in every 1 of those segments, and we are future-proofing those lineups now as we speak with different powertrains and even more affordable options. This is critical because we're seeing new competition in those markets from the Chinese. Our pickup strategy is a global strategy. We're trying to learn from the past where we're trying to, you know, future-proof it in a way from oil shocks or movement of powertrain to actually price points.

Speaker #1: Your next question will come from Emmanuel Rosner with Wolf Research.

Speaker #5: Great. Thank you so much. Could you give us a sense of expectations of earnings over the rest of the year? And in particular, maybe drivers of the much lower pace earnings over the rest of it?

Speaker #5: With having done three and a half billion dollars in the first quarter, that means you're guiding at midpoint for $6 billion combined over the next three, which is quite low, I guess, by historical standard.

Speaker #5: With having done three and a half billion dollars in the first quarter, that means you're guiding at midpoint for $6 billion combined over the next three, which is quite low.

Speaker #5: I understand that commodities is obviously going to get sequentially quite a bit worse. But then I would have sought the novelis cost would also start going away in the second half.

Speaker #5: I guess by historical standards. I understand that commodities is obviously going to get sequentially quite a bit worse. But then I would have sought Nobel's costs would also start going away in the second half.

Speaker #5: So maybe some of the puts and takes and the cadence, please.

Speaker #2: Yeah. So as you move into the next half, obviously one of the big things is you're not going to have the repeat of AIFA.

Speaker #5: So maybe some of the puts and takes and the cadence, please.

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

Speaker #3: Yes. As you move into the next half, obviously one of the big things is you're not going to have the repeat of IE bus.

Speaker #2: So that's $1.3 billion. Positive, as you said, with respect to novelis is we start to gain more volume but we are going to be hit more as we're more towards the end of the year on commodities.

Emmanuel Rosner: Great. Thank you so much. Could you give us a sense of expected cadence of earnings over the rest of the year, and in particular, maybe drivers of, you know, the much lower pace of earnings over the rest of it? With having done three and a half billion dollars in Q1, that means you're guiding at midpoint for $6 billion combined over the next three, which is, you know, quite low, I guess, by historical standard. I understand that, you know, commodities, you know, is obviously gonna get sequentially quite a bit worse, but then I would have thought the Novelis cost, you know, would also, you know, start going away in H2. Maybe some of the puts and takes in the cadence, please.

Speaker #3: That's $1.3 billion. Positive as you said, with respect to Novellis, as we start to gain more volume. But we are going to be hit more as we're more towards the end of the year on commodities.

Speaker #2: As I alluded to earlier, and also the other thing is we are investing more in our launches right now. And that's going to be in Beth, our battery electric stationary storage business, the UEV platform, and also Oakville in Canada.

Speaker #3: I alluded to earlier and also the other thing is we are investing more in our launches right now. And that's going to be in BESS, our battery electric substation storage business, the UEV platform, and also Oakville in Canada.

Speaker #2: So we have those investments that are going in and ramping as we exit the year. And there's cash elements of that too, not just CapEx.

Speaker #3: So we have those investments that are going in and ramping as we exit the year. And there's cash elements of that too, not just CapEx.

Speaker #2: So that and commodities. Non-repeat of AIFA. But then the positive is novelis.

Speaker #3: So, in commodities, there's a non-repeat of IE bus, but the positive is bus.

Sherry House: Yeah. As you move into the next H2, obviously one of the big things is you're not gonna have the repeat of IEEPA. That's +$1.3 billion, as you said, with respect to Novelis as we start to gain more volume. We are gonna be hit more as we're more towards the end of the year on commodities, as I alluded to earlier. The other thing is we are investing more in our launches right now, and that's gonna be in BESS, our battery electric stationary storage business, the UEV platform, and also Oakville in Canada. We have those investments that are going in and ramping as we exit the year, and there's cash elements of that too, not just CapEx.

Speaker #5: Okay. And cadence-wise, sorry, and then I have another follow-up question. But any sense on is the degradation mostly in the second half or is the second quarter ex-AIFA also quite a bit lower?

Speaker #5: Okay. And cadence-wise, sorry, and then I have another follow-up question. But any sense on the degradation, most of the second half or the second quarter ex-IE bus also quite a bit lower?

Speaker #2: Fairly consistent. I would say as it's Q2, Q3, and Q4.

Speaker #3: Fairly consistent. I would say it's Q2, Q3, and Q4.

Speaker #5: Okay. And then my second question is on free cash flow. Can you give us a bit of color on why free cash flow was almost a burn of $2 billion when EBIT was quite robust, even ex-AIFA?

Speaker #5: Okay. And then my second question is on free cash flow. Can you give us a bit of color on why free cash flow was almost a burn of $2 billion when EBIT was quite robust, even ex-IE bus?

Speaker #5: But I think most importantly, in the guidance, you're not flowing through any of the improved EBITs to the fully free cash flow guidance, even though it seems to be driven by better underlying performance.

Speaker #5: But I think most importantly, the guidance, you're not going through any of the improved EBITs to the fully free cash flow guidance, even though it seems to be driven by better line performance.

Sherry House: That and commodities, non-repeat of IEEPA, but then the positive is Novelis.

Speaker #5: Why is that?

Speaker #2: Yeah. So let me hit your first question first. So with respect to the $1.9 billion usage, in the quarter, it's very typical for us, as you move from Q4 to Q1, to have a usage of cash.

Emmanuel Rosner: Okay. Cadence-wise, sorry, then I have another follow-up question. Any sense on is the degradation mostly in H2 or is Q2 ex IEEPA also, you know, quite a bit lower?

Speaker #3: Yeah. So let me hit your first question first. So the $1.9 billion usage in the quarter, it's very typical for us, as you move from Q4 to Q1, to have a usage gap.

Sherry House: You know, fairly consistent, I would say, is it's Q2, you know, Q3, and Q4.

Speaker #2: And that's because of the higher working capital that is needed where typically at that point, you are drawing down on inventory. You're not typically producing as much.

Speaker #3: And that's because of the higher working capital that is needed where typically at that point, you are drawing down on inventory. You're not typically producing as much the last couple of weeks of the year that was amplified for us with the Novellis disruption as well.

Emmanuel Rosner: Okay. My second question is on free cash flow. Can you give us a bit of color on why, you know, free cash flow was almost a burn of $2 billion when, you know, EBIT was quite robust, even, you know, ex IEEPA? I think most importantly, you know, in the guidance, you're not flowing through any of the improved EBIT to the full year free cash flow guidance, even though it seems to be driven by better underlying performance. Why is that?

Speaker #2: The last couple of weeks of the year, that was amplified for us with the novelis disruption as well. And you're paying out your payables.

Speaker #2: So you're going to have that negative start. In addition, for us, this quarter, our net spending was up. And as I said, we're investing in our future.

Speaker #3: And you're paying out your payables, so you're going to have that negative chart. In addition, for us, this quarter, our net spending was up.

Speaker #2: We've been really transparent about nine and a half to 10 and a half billion this year. And you're spending on UEV. You're spending on Beth.

Speaker #3: And as I said, we're investing in our future. We've been really transparent about nine and a half to 10 and a half billion this year.

Speaker #3: And you're spending on UEV. You're spending on BESS. We're spending on the future. And also, there's timing differences in there. And we pay our compensation bonuses in Q1.

Speaker #2: We're spending on the future. And then also, there's timing differences in there. And we pay our compensation bonuses in Q1. You also have timing differences associated with marketing incentive spends that are taking place as well.

Sherry House: Yeah. Let me hit your first question first. With respect to the $1.9 billion usage in the Q, it's very typical for us as you move from Q4 to Q1 to have a usage of cash, and that's because of the higher working capital that is needed. We're typically at that point, you are drawing down on inventory. You're not typically producing as much the last couple of weeks of the year. That was amplified for us with the Novelis disruption as well, and you're paying out your payables. You're gonna have that negative start. In addition, for us, this Q, our net spending was up. As I said, we're investing in our future.

Speaker #3: You also have timing differences associated with marketing incentives and when those are taking place as well. So those are the big components. We do expect this to reverse.

Speaker #2: So those are the big components. We do expect this to reverse. We do expect our free cash flow guidance to stay at 5 to 6 billion.

Speaker #3: We do expect our free cash flow guidance to stay at 5 to 6 billion. The big change, as you know, was the IE bus tariff of the $1.3 billion.

Speaker #2: The big change, as you know, was the AIFA tariff of the $1.3 billion. And that, we don't have certainty as to when that is going to come in.

Speaker #3: And that we don't have certainty as to when that is going to come in. So we did not put that in the guidance at this time.

Speaker #2: So we did not put that in the guidance at this time. If we get certainty that that's going to be sooner, then we will certainly update accordingly.

Speaker #3: If we get certainty that that's going to be sooner, then we will certainly update accordingly. And we thought it's a little bit early to be pulling through some of the other cash items, given some of the volatility that we're working through.

Speaker #2: And we thought it's a little bit early to be pulling through some of the other cash items given some of the volatility that we're working through.

Sherry House: We've been really transparent about $9.5 to $10.5 billion this year, you're spending on UEV, you're spending on BEV, we're spending on the future. Also, there's timing differences in there, we pay our compensation, you know, bonuses in Q1. You also have timing differences associated with marketing incentive spends that are taking place as well. Those are the big components. We do expect this to reverse. We do expect our free cash flow guidance to stay at $5 to $6 billion. The big change, as you know, was the IEEPA tariff of the $1.3 billion, in that we don't have certainty as to when that is going to come in, we did not put that in the guidance at this time.

Speaker #5: Great. Thank you so much.

Speaker #1: Our next question will come from Edison Yu with Deutsche Bank Research.

Speaker #1: Our next question will come from Edison U with Deutsche Bank Research.

Speaker #6: Hey, thanks for taking our question. Wanted to come back to something that, as you mentioned earlier about the US industrial base how sensible or how realistic is it for Ford to play a bigger role in the kind of defense complex in terms of supplying the Pentagon?

Speaker #6: taking our question. Wanted to come back to some of the you mentioned earlier about the US industrial base. How sensible or how realistic is it for Ford to pay a big role in the kind of defense complex in terms of supplying the Pentagon?

Speaker #4: Well, thank you for your question. As the most American company, Ford has always called the answer to duty to support our country. It was ventilators and COVID.

Speaker #2: Thank you for your question. As most American companies, Ford has always called the answer to duty to support a country. It was then later in COVID, of course, the Arsenal of Democracy.

Sherry House: If we get certainty that that's gonna be sooner, then we will certainly update accordingly. We thought it's a little bit early to be pulling through some of the other cash items given some of the volatility, that we're working through.

Speaker #4: Of course, Arsenal of Democracy. We work with, as you know, we are very successful with our government sales and business and pro. And so we have very close relationships through the vehicle side where I'd be able to say at this point is two things.

Speaker #2: We work with, as you know, we are very successful with government sales, and business, and Pro. And so we have very close relationships through the vehicle side to be able to say at this point, it's two things.

Jim Farley: Great. Thank you so much.

Operator: Our next question will come from Edison Yu with Deutsche Bank Research.

Edison Yu: Hey, thanks for taking our question. Wanted to come back to something that Jim mentioned earlier about, you know, the US industrial base. How sensible or how realistic is it for Ford to play a bigger role in the kind of defense complex in, you know, in terms of supplying the Pentagon?

Speaker #4: First of all, we are in early discussions. The US government, on some defense-related projects, we're not going to go into details of those today.

Speaker #2: First of all, we are in early discussions. The US government, on some defense-related projects, we're not going to go into details of those today.

Speaker #4: In addition, and I would say equally important, is Ford's roles in anchor customer on onshoring critical minerals and many other supply chain vulnerabilities we have in our country.

Speaker #2: In addition, and I would say equally important, is Ford's role in anchoring customers, onshoring critical minerals, and addressing many other supply chain vulnerabilities we have in our country.

Jim Farley: Well, thank you for your question. As the most American company, Ford is always called the answer to duty, you know, to support our country. It was ventilators in COVID, of course, the arsenal of democracy. As you know, we are very successful with our government sales and business in Pro. We have very close relationships through the vehicle side. What I'd be able to say at this point is two things. First of all, we are in early discussions with the US government on some defense-related projects. We're not gonna go into details of those today. In addition, and I would say equally important, is Ford's role as an anchor customer on onshoring critical minerals and many other supply chain vulnerabilities we have in our country.

Speaker #4: And I think you should expect Ford to play an outsized role in manufacturer-grade semiconductors, critical minerals like batteries, and rare earths, and our supply chain is heavily engaged not only with our government but new companies that are starting to emerge in our country to onshore some of this capability.

Speaker #2: And I think you should expect Ford to play an outsized role in manufacturer-grade semiconductors, critical minerals like batteries, and rare earths, and supply chain is heavily engaged not only with our government, but new companies that are starting to emerge in our country to onshore some of this capability.

Speaker #2: And I think maybe perhaps in the short term, that's the biggest role Ford can play in helping our country.

Speaker #4: And I think maybe perhaps in the short term, that's the biggest role Ford can play in helping our country.

Speaker #6: Understood. Understood. And then separate topic, just coming back to autonomy it seems in robotaxi, there's a lot more appetite now for some of these tech companies like Uber and Invidius to sort of quasi-subsidize the OEMs.

Speaker #6: Understood. And then, separate topic—just coming back to autonomy—it seems in robotech, there's a lot more appetite now for some of these tech companies, like Uber and Nvidia, to sort of quasi-subsidize the OEMs.

Speaker #6: Has your kind of thinking about robotech maybe evolved over the last three or four months?

Speaker #6: Has your kind of thinking about robotaxi maybe evolved over the last three or four months?

Jim Farley: I think you should expect Ford to play an outsized role in manufacture-grade semiconductors, critical minerals like batteries and rare earths. Our supply chain is heavily engaged not only with our government, but new companies that are starting to emerge in our country to onshore some of this capability. I think maybe perhaps in the short term, that's the biggest role Ford can play in, you know, helping our country.

Speaker #2: I would say yes. Not just over the last three or four months. Something we've been frankly watching carefully as it evolves because we were involved in Argo and are very well aware of both managing the fleet and the SDS system itself and the progress.

Speaker #4: I would say yes. Not just over the last three or four months. It's something we've been frankly watching carefully as it evolves because we were involved in Argo and are very well aware of both managing the fleet and the SDS system itself and the progress.

Speaker #2: We kind of knew from Argo what to look for as robotaxis became—the SDS itself became more proficient. And we're starting to see that now.

Speaker #4: We kind of knew from Argo what to look for as robotaxis became the SDS itself became more proficient. And we're starting to see that now.

Speaker #2: I think how you should think about Ford's approach is that we are completely focused on having the most efficient EV and the lowest cost of ownership in North America.

Speaker #4: I think how you should think about Ford's approach is that we are completely focused on having the most efficient EV and the lowest cost of ownership in North America.

Edison Yu: Understood. Understood. Separate topic, just coming back to autonomy, it seems in robotaxi there's a lot more appetite now for some of these tech companies like Uber and Waymo to sort of quasi-subsidize the OEMs. Has your kind of thinking about robotaxis maybe evolved over the last, you know, three or four months?

Speaker #2: Number one. And number two, because of our pro-business, we get the most fit repair and fleet management capability for new fleets, all fleets.

Speaker #4: Number one. And number two, because of our pro business, we have the most fit repair and fleet management capability for new fleets, all fleets.

Speaker #2: And that capability can be applied to all sorts of different fleets. That's how we think about the market as emerges. And I think that's all we're trying to say at this point.

Speaker #4: And that capability can be applied to all sorts of different fleets. That's how we think about the market as emerges. And I think that's all we're prepared to say at this point.

Jim Farley: I would say yes, not just over the last 3 or 4 months. It's something we've been frankly watching carefully as it evolves because we were involved in Argo and are very well aware of both managing the fleet and the SDS system itself and the progress. We kind of knew from Argo what to look for as robotaxis became, you know, the SDS itself became more proficient, and we're starting to see that now. I think how you should think about Ford's approach is that we are completely focused on having the most efficient EV and the lowest cost of ownership in North America, number one. Number two, because of our Ford Pro business, we have the most fit repair and fleet management capability for new fleets, all fleets. That capability can be applied to all sorts of different fleets.

Speaker #6: Thank you.

Speaker #1: Your next question will come from Ryan Brinkman with JPMorgan. Ryan, your line is now open. Feel free to unmute.

Speaker #5: Oh, thank you so much. Thanks for taking the question. Is there an update you might be able to provide on the relatively recently announced Ford Energy business?

Speaker #5: Has there been maybe proactive outreach to Ford from companies you have existing B2B relationships with on the pro side of the business? How would you characterize that interest in maybe just on potential time?

Speaker #5: Has there been maybe proactive outreach to Ford from companies that you have existing B2B relationships with on the pro side of the business? How would you characterize that interest in maybe just remind on potential timing there?

Speaker #6: Thank you, Ryan. Well, as you know, we are committed to over 20 gigawatt-hours of capacity starting in the fourth quarter next year. That'll be mostly Kentucky, and a little bit of Marshall.

Speaker #6: Thank you, Ryan. Well, as you know, we are committed to over 20 gigawatt-hours of capacity starting in the fourth quarter of next year. That'll be mostly Kentucky One, and a little bit of Marshall.

Jim Farley: That's how we think about the market as it emerges. You know, I think that's all we're prepared to say at this point.

Speaker #6: Marshall will be really focused on UEV, but has some capacity for energy business. So that's the timing starting fourth quarter next year. The plants are coming online.

Edison Yu: Thank you.

Speaker #6: Marshall will be really focused on UEV but has some capacity for energy business. So that's the timing starting fourth quarter next year. The plants are coming online.

Operator: Your next question will come from Ryan Brinkman with JPMorgan. Ryan, your line is now open. Feel free to unmute.

Speaker #6: We are on track in the industrial manufacturing capability of doing DC block. It's not just the batteries themselves—it's the containers. It's the management of the battery.

Speaker #6: We are on track in the industrial manufacturing capability of doing DC block. It's not just the batteries themselves. It's the containers. It's the management of the battery.

Ryan Brinkman: Oh, thank you so much. Thanks for taking the question. Is there an update you might be able to provide on the relatively recently announced Ford Energy business? Has there been maybe proactive outreach to Ford from companies that you have existing B2B relationships with on the Ford Pro side of the business? You know, how would you characterize that interest and maybe just remind on potential timing there?

Speaker #6: That's coming together as we expected. We are very active in contracting customers as we speak. We've had a lot of inbounds and a lot of interest in Ford because they understand that we have the best tech, we have a lot of advantages financially, and we have a great service and sales capability.

Speaker #6: That's all coming together as we expected. We are very active in contracting customers as we speak. We've had a lot of inbounds and a lot of interest in Ford because they understand that we have the best tech, we have a lot of advantages financially, and we have a great service and sales capability.

Speaker #6: And of course, the company has deep relationships with a lot of these as vehicle customers. So they know us. They know through Pro that we're a reliable company.

Jim Farley: Thank you, Ryan. Well, as you know, we are committed to over 20 gigawatt-hours of capacity starting in Q4 of 2025. That will be mostly Kentucky One and a little bit of Marshall. Marshall will be really focused on UEV, but has some capacity for our Ford Energy business. That is the timing, starting Q4 2025. The plants are coming online. We are on track in the industrial manufacturing capability of doing DC block. It is not just the batteries and cells, it is the containers, it is the management of the battery. That is all coming together as we expected. We are very active in contracting customers as we speak.

Speaker #6: And of course, the company has deep relationships with a lot of these as vehicle customers. So they know us. They know through pro that we're a reliable company.

Speaker #6: And all I would say, Ryan, is that the energy business is a key element of our bridge to 8% margin.

Speaker #6: And all I would say, Ryan, is that the energy business is the key element of our bridge to 8% margin.

Speaker #5: Great. Thanks for the follow-up. Around the same time that Ford Energy was announced, you also broke news of the new strategic partnership with Renault.

Speaker #5: Great. Thanks. And then just as my follow-up, around the same time that Ford Energy was announced, you also broke news of the new strategic partnership with Renault.

Speaker #5: So I was just wondering if there might be an update you can provide there too, given that the first vehicles that were announced were electric vehicles.

Speaker #5: So I was just wondering if there might be any kind of update you can provide there too, given that the first vehicles that were announced were electric vehicles.

Speaker #5: And I think that's an important piece of solving the puzzle in Russia. The contractor is super energized about Renault on the commercial vehicle side in Europe.

Speaker #5: And I think that's an important piece of solving the puzzle in Europe. But I met with Hans Schepp during the quarter. He's super energized about Renault on the commercial vehicle side in Europe.

Jim Farley: We've had a lot of inbounds and a lot of interest in Ford because they understand that we have the best tech, we have a lot of advantages financially, and we have a great service and sales capability. Of course, the company has deep relationships with a lot of these as vehicle customers. They know us, they know through Pro that we're a reliable company. All I would say, Ryan, is that the energy business is the key element of our bridge to 8% margin.

Speaker #5: What do you think the broader potential collaboration there might be?

Speaker #6: Thank you, Ryan, for your question. It's very pertinent. At this point, all we would say is that we believe that on the passenger car side, Renault has fully cost-competitive platforms.

Speaker #5: What do you think the broader potential for collaboration there might be?

Speaker #6: Thank you, Ryan, for your question. It's very pertinent. At this point, all we would say is that we believe that on the pasture car side, Renault has fully cost-competitive platforms.

Speaker #6: And we tend to take advantage of that as Europe continues to electrify amidst the Chinese competition. On passenger cars—on commercial, we have a very successful relationship, as you know, with Volkswagen.

Speaker #6: And we intend to take advantage of that as Europe continues to electrify amidst the Chinese competition on pasture cars. On commercial, we have a very successful relationship, as you know, with Volkswagen.

Ryan Brinkman: Great. Thanks. Then just as my follow-up, you know, around the same time that Ford Energy was announced, you also broke news of the new strategic partnership with Renault. I was just wondering if there might be any kind of update you can provide there too, given that the first vehicles that were announced were electric vehicles, and I think that's an important, you know, piece of solving the puzzle in Europe. I met with Hans Schep during the quarter. He's super energized about, you know, Renault on the commercial vehicle side in Europe. What do you think the broader potential for collaboration there might be?

Speaker #6: Both on the pickup and the van side. And we have nothing to announce today, but certainly John and myself and the whole team are very focused on taking advantage of the Renault relationship across all of our businesses.

Speaker #6: Both on the pickup and the van side. And we have nothing to announce today, but certainly John, myself, and the whole team are very focused on taking advantage of the Renault relationship across all of our businesses.

Speaker #6: And our commercial business at this point is still very profitable in Europe. We see it as the core of our profitability in the future on the vehicle side.

Speaker #6: And so we will do everything we need to. To maximize our scale, and our cost advantage on commercial. In Europe.

Speaker #6: And so we will do everything we need to to maximize our scale and our cost advantage on commercial. In Europe.

Jim Farley: Thank you, Ryan, for your question. It's very pertinent. At this point, all we would say is that we believe that on the passenger car side, Renault has fully cost-competitive platforms, and we intend to take advantage of that as Europe continues to electrify amidst the Chinese competition on passenger cars. On commercial, we have a very successful relationship, as you know, with Volkswagen, both on the pickup and the van side. you know, we have nothing to announce today, but certainly, John, myself, and the whole team are very focused on taking advantage of the Renault relationship across all of our businesses. you know, our commercial business at this point is still very profitable in Europe. We see it as the core of our profitability in the future on the vehicle side.

Speaker #5: Great to hear. Thank you.

Speaker #1: Next question will come from Colin Langen with Wells Fargo.

Speaker #5: Great to hear. Thank you.

Speaker #7: Oh, great. Thanks for taking my questions. Just if I'm looking at slide 10, there's a 900 million of other kind of unusual to have such a large item.

Speaker #1: Our next question will come from Colin Langen with Wells Fargo.

Speaker #7: Oh, great. Thanks for taking my questions. If I'm looking at slide 10, there's a 900 million of other kind of unusual to have such a large item.

Speaker #7: Any color on what that is? And then also looking at slide cost is only 700 positive and includes the IEPA. I think the target is that you're supposed to get a billion of cost benefit for the year, which underlying cost is actually worse every year in Q1.

Speaker #7: Any color on what that is? And then also looking on that slide, cost is only 700 positive and includes the IEPA. I think the target is that you're supposed to get a billion of cost benefit for the year, which would mean underlying cost is actually worse year over year in Q1.

Speaker #7: So what is driving the weaker Q1 cost?

Speaker #8: First off, let me just hit on your question on other that's really related to services, both physical and software so that's where that's showing up.

Speaker #7: So what is driving the weaker Q1 cost?

Speaker #8: Well, first off, let me just hit on your question on other that's really related to services, both physical and software. So that's where that's showing up.

Jim Farley: We will do everything we need to to maximize our scale and our cost advantage on commercial in Europe.

Speaker #7: So you had $900 million of

Speaker #8: Well, we also had compliance benefits versus physical and software credit as well.

Ryan Brinkman: Great to hear. Thank you.

Speaker #7: So you had 900 million of software? EBIT?

Operator: Our next question will come from Colin Langan with Wells Fargo.

Speaker #8: Well, we also had compliance benefits. Services, physical, and software credit as well.

Speaker #7: Okay. And then the cost piece, is that just the cost savings pickup on the second half of the year?

Colin Langan: Oh, great. Thanks for taking my questions. Just if I'm looking at slide 10, there's a $900 million of other. Kind of unusual to have such a large item. Any color on what that is? Also looking on that slide, cost is only +$700, and it includes the IEEPA. I think the target is that you're supposed to get $1 billion of cost benefit for the year, which would mean underlying costs is actually worse year-over-year in Q1. What is driving the weaker Q1 cost?

Speaker #7: Okay. And then the cost piece, is that just the cost savings pickup on the second half of the year?

Speaker #8: This cost savings if you're on slide 10 was related to the Q1 bridge going from 1.3 billion in Ford Pro to the 1.7?

Speaker #8: This cost savings, if you're on slide 10, was related to the you're talking about the Q1 bridge going from 1.3 billion in Ford Pro to the 1.7?

Speaker #7: Yeah, I'm just saying, in the bridge, $700 million positive, but that includes $1.3 billion of IEPA.

Speaker #8: It doesn't include the IEPA.

Speaker #7: Target for the year. So that would mean ex-IEPA, it would be negative. So 25 is negative if the target for the year is a billion.

Speaker #7: Yeah. Well, I was just saying in the bridge, it's 700 million positive, but that includes 1.3 billion of IEPA.

Sherry House: Well, first off, let me just hit on your question on other. That's really related to services, both physical and software. That's where that's showing up.

Speaker #7: Positive cost.

Speaker #8: Well, you have Novelis in there as well.

Speaker #8: But that's included IEPA for the year. That's right.

Speaker #7: So that would mean ex-IEPA. It was negative. So I'm just wondering why it's negative if the target for the year is a billion. Positive cost.

Speaker #7: Okay, and then just lastly, if I could go to slide 18—and I add up all the items—it does seem like it's a little short of some good news.

Speaker #8: Well, you have Novellis in there as well.

Colin Langan: You had $900 million of software, right, EBIT? Pardon me.

Speaker #7: Okay. And then just lastly, if I go to slide 18 and I add up all the items, it does seem like it's a little short of some good news.

Speaker #7: 900 million short of all the items listed on the slide. What is that? Is that volume? You did mention regulatory savings. Just other cost savings?

Sherry House: Well, we also had, compliance benefits, services, physical and software credit as well.

Speaker #7: Seems like I'm about 900 million short of all the items listed on that slide. What is that? Is that volume? You did mention regulatory savings.

Colin Langan: Okay. The cost piece, is that just the cost savings pickup in H2 of the year?

Speaker #7: We're kind of missing in the long run.

Speaker #8: I would say, yeah, it's a variety of other savings throughout the company as well. So we felt that, really, cost is fairly flat on a year-over-year basis.

Speaker #7: Just other cost savings? That were kind of missing in the walk?

Sherry House: This cost savings, if you're on slide 10, was related to the, you're talking about the Q1 bridge going from $1.3 billion in Ford Pro to the $1.7 billion?

Speaker #8: I would say, yeah, it's a variety of other savings. Throughout the company, as well. So we thought that really it's cost is fairly flat on a year-over-year basis.

Speaker #8: We're really presenting very close to what we presented in the past. The big changes we've gone into this guide is we had the 1.3 billion resulting from the IEPA Supreme Court ruling.

Colin Langan: Yeah. Well, I was just saying in the bridge it's $+700 million, but that includes $1.3 billion of IEEPA.

Speaker #8: We're really presenting very close to what we presented in the past. The big changes as we've gone into this guide, as we had the 1.3 billion resulting from the IEPA Supreme Court ruling, then we had the increase in the commodities, which is offsetting.

Speaker #8: Then we had the increase in the commodities, which is offsetting. When you look at all that together, you're really looking at a pretty flat picture year-over-year because we already had a number of items that were offsetting.

Sherry House: It does include the IEEPA, that's right.

Colin Langan: I thought your target for the year-

Sherry House: That's right.

Colin Langan: That would mean ex IEEPA it was negative. I'm just wondering why it's negative if the target for the year is $1 billion positive cost.

Sherry House: Well, you have Novelis in there as well.

Speaker #8: So when you look at all of that together, you're really looking at a pretty flat picture year over year because we already had a number of items that were offsetting.

Speaker #7: All right. Thanks for taking my questions.

Colin Langan: Okay. Just lastly, if I go to slide 18 and I add up all the items, it does seem like it’s a little short of some good news. Seems like about $900 million short of all the items listed on that slide. What is that? Is that volume? You did mention regulatory savings. Just other cost savings that were kind of missing in the walk?

Speaker #8: Of course.

Speaker #1: Your next question will come from James Picariello with BNP Paribas. It appears you're on a phone, James. Star 6 will allow you to unmute.

Speaker #7: Got it. All right. Thanks for taking my questions.

Speaker #8: Of course.

Speaker #1: Your next question will come from James Picariello with BNP Paribas. It appears you're on a phone, James. Star 6 will allow you to unmute.

Speaker #9: Thanks. Okay, so I just—thanks. So I first want to ask about what's the level of confidence behind the 150,000 Novelis recovery units, based on what you've seen in your own production through the first quarter?

Sherry House: I would say, yeah, it's a variety of other savings, you know, throughout the company as well. We thought that, you know, really it's cost is fairly flat on a year-over-year basis, where we're really presenting very close to what we presented in the past. The big changes as we've gone into this guide is we had the $1.3 billion resulting from the IEEPA Supreme Court ruling, we had the increase in the commodities, which is offsetting. When you look at all of that together, you're really looking at a pretty flat picture year-over-year because we already had a number of items that were offsetting.

Speaker #9: Thanks. Okay. So I just thanks. So I first want to ask about what's the level of confidence behind the 150,000 Novellis recovery units based on what you've seen in your own production through the first quarter, just where are we at on that?

Speaker #9: Just where are we at on that? And then as we think about the raw materials, right, the 2 billion now in core commodities plus 1.75 billion in alternative aluminum sourcing, what was captured in the first quarter on that combined bucket for raw metals and just how should we think about the cadencing for the rest of the year?

Speaker #9: And then as we think about the raw materials, right, the 2 billion now in core commodities plus the 1.75 billion in alternative aluminum sourcing, what was captured in the first quarter on that combined bucket for raw maps and just how should we think about the cadencing for the rest of the year?

Speaker #9: Thank you.

Colin Langan: Got it. All right. Thanks for taking my questions.

Speaker #6: So on the Novelis recovery and the rebuild of the mill, I would say the confidence is high. As Jim and I stated earlier, the restart date is on track.

Sherry House: Of course.

Operator: Your next question will come from James Picariello with BNP Paribas. It appears you are on a phone, James. Star six will allow you to unmute.

Speaker #9: Thank you.

Speaker #6: So on the Novellis recovery and the rebuild of the mill, I would say the confidence is high. As Jim and I stated earlier, the restart date is on track.

Speaker #6: All the enablers for the ramp-up are on track. And belt and suspenders, if anything does go off, we have an emergency plan, which means we have additional aluminum supply to ensure production.

James Picariello: Thanks. Okay.

Operator: We can hear you. Please go ahead.

James Picariello: thanks. I first wanna ask about, you know, what's the level of confidence behind the 150,000 Novelis recovery units? You know, based on what you've, you know, seen in your own production through Q1, just, you know, where are we at on that? Then as we think about the raw materials, right at the $2 billion now in core commodities plus. The $1.75 billion in alternative aluminum sourcing. What was captured in Q1 on that combined bucket for raw materials? Just how should we think about the cadencing for the rest of the year? Thank you.

Speaker #6: So we feel good about the second half aluminum supply. And now they are slide perspective, but also as Andrew said, and in the speech, we have a we're in a really good stock situation too.

Speaker #6: All the enablers for the ramp-up are on track. And Belt and suspenders, if anything does go off, we have contingency plans, which means we have additional aluminum supply to ensure production.

Speaker #6: So we feel good about the second half aluminum supply. And not only our supply perspective, but also as Andrew said, and in the speech, we have a we're in a really good stock situation too.

Speaker #6: So we're very confident we're going to need those units.

Speaker #10: And I can just comment as well from a pro perspective. We still have very strong '26 model year orders. I just opened up '27.

James Picariello: The $1.75 billion in alternative aluminum sourcing. What was captured in Q1 on that combined bucket for raw materials? Just how should we think about the cadencing for the rest of the year? Thank you.

Speaker #6: So we're very confident we're going to need those units.

Speaker #10: So we're seeing positive indicators. And when you think about the Novelis impacts, we really postponed fleet orders, and they're going to be required and needed in the second half.

Speaker #8: Yeah. And I can just comment as well from a pro perspective. We still have very strong 26 model year orders. We just opened up 27.

Speaker #10: And we have lost some customers, so we are very confident in the demand in the second half of the year.

Speaker #8: Those are we're seeing positive indicators. And when you think about the Novellis impacts, we really postponed fleet orders, and they're going to be required and needed in the second half.

Kumar Galhotra: On the Novelis recovery and the rebuild of the mill, I would say the confidence is high. As Jim and I stated earlier, the restart date is on track. All the enablers for the ramp-up are on track. Belts and suspenders, if anything does go off, we have contingency plans, which means we have additional aluminum supply to ensure production. We feel good about the H2 aluminum supply.

Speaker #8: And again, I would just say that.

Speaker #9: On the cost side?

Speaker #8: And we haven't lost the customer. So we are very confident in the demand. In the second half of the year.

Speaker #8: Yeah. We continue with respect to Novelis, expected total cost between one and a half to two billion, tracking on target with respect to that.

Speaker #5: Yeah. And I guess I would just say that.

Speaker #8: I think you had a specific question in Q1 related to temporary cost to source aluminum. It's about 300 million. So that would include tariffs, expedited freight, and warehousing as well.

Speaker #9: On the cost side?

Speaker #5: Yeah. We continue with respect to Novellis to expect a total cost of between 1 and a half to 2 billion. We're tracking on target with respect to that.

Jim Farley: Not only our supply perspective, but also, as Andrew said in the speech, we're in a really good stock situation too. We're very confident we're gonna need those units.

Speaker #8: These things aren't a straight line, and there are just a lot of factors that are involved.

Speaker #5: I think you had a specific question in Q1 related to temporary cost to source aluminum. It's about 300 million. So that would include tariffs, expedited freight, and warehousing as well.

Alicia Boler Davis: I think just to comment as well from a Pro perspective, we still have very strong 2026 model year orders. We just opened up 2027. We're seeing positive indicators. When you think about the Novelis impact, we've really postponed fleet orders, and they're gonna be required and needed in the H2, and we haven't lost a customer. We are very confident in the demand in the H2 of the year.

Speaker #9: Got it. That's helpful. Thank you. And then just as we think about the 1 billion in UED, in the UED platform and the commercial plant, is that more second half weighted or investment in that still tracking towards the 1 billion, right?

Speaker #5: These things aren't straight line and there's just a lot of factors that are involved.

Speaker #9: Got it. Well, that's helpful. Thank you. And then just as we think about the 1 billion in UEV in the UEV platform and the Marshall plant, is that more second half weighted or pretty rideable through the year in terms of just the investment?

Speaker #8: So, it's going to be the UED investments—we're already making some of those, continuing to make them coming through Q2, Q3, and Q4. They will go up a bit as you get to Q3 and Q4.

Sherry House: Yeah, I guess I would just say.

James Picariello: Just on the cost side.

Speaker #9: And that's still tracking towards the 1 billion, right?

Sherry House: We continue, you know, with respect to Novelis, to expect a total cost of between $1.5 to 2 billion. We're tracking on target, you know, with respect to that. I think you had a specific question in Q1 related to temporary cost to source aluminum. It's about $300 million. That would include tariffs, expedited freight, and warehousing as well. You know, these things aren't straight line, and there's just a lot of factors that are involved.

Speaker #8: And then we also, as I said, we've got Best in there as well. And we also have the Oak Sale launch during that period of time, also.

Speaker #8: So it's going to be the UEV investments, we're already making some of those. We're going to continue to make them through Q2, Q3, and Q4.

Speaker #8: So three major items that are increasing in terms of investment.

Speaker #8: They will go up a bit as you get to Q3 and Q4. And then we also, as I said, we've got BETS in there as well.

Speaker #9: Thank you.

Speaker #8: And we also have the Oakville launch. During that period of time. Also. So three major items that are increasing in terms of investment.

Speaker #1: Your next question comes from Pat McElly with TD10.

Speaker #9: Great. Thanks. Hi, everybody. Just a couple of questions on the UEV platform. I'm just curious sort of what left to do here in prepare for next year's launch.

James Picariello: All right. No, that's helpful. Thank you. Then just as we think about the $1 billion in UEV platform and the Marshall plant, is that more H2-weighted or pretty ratable through the year in terms of just the investment? That's still tracking towards the $1 billion, right?

Speaker #9: Thank you.

Speaker #1: Your next question will come from Itay McAuley with TD Cohen.

Speaker #9: And maybe thinking even out to 2029 toward your break-even or profitability objective for Model E, how should we think about the number of top hats that you're planning to launch on that platform?

Speaker #10: Great. Thanks. Hi, everybody. Just a couple of questions on the UEV platform. I'm just curious, sort of what's left to do here as you prepare for next year's launch.

Speaker #9: And maybe just lastly, if I can sneak it in—in the past, you've mentioned using some new suppliers. Any more updates you can share on how that's going?

Speaker #10: And maybe thinking even out to 2029 toward your break-even or profitability objective for Model E, how should we think about roughly the number of top hats that you're planning to launch on that platform?

Speaker #9: Thank you.

Sherry House: It's gonna be the UEV investments we're already making some of those. We're gonna continue to make them through Q2, Q3, and Q4. They will go up a bit as you get to Q3 and Q4. We also, as I said, we've got that in there as well, and we also have the Oakville launch, you know, during that period of time also. Three major items that are increasing in terms of investment.

Speaker #6: So hey, Ty, this is Kumar answering your first question. On the, let's say, the industrial launch of the product, there are four major pieces to it.

Speaker #10: And maybe just lastly, if I can sneak it in, in the past, you've mentioned using some new suppliers for UEV. Any more updates you can share on how that's going?

Speaker #6: There's the hardware part. Megacastings. UEV has its own software platform. So development and testing of that platform. Excuse me. Third is the readiness of our suppliers with all the parts that are coming from suppliers.

Speaker #10: Thank you.

Speaker #6: So Itay, this is Kumar. Answering your first question, on the let's say the industrial launch of the product, there are four major pieces to it.

James Picariello: Thank you.

Speaker #6: There's the hardware of key new parts. Like mega castings. UEV has its own software platform. So development and testing of that platform. Excuse me.

Operator: Your next question will come from Itay Michaeli with TD Cowen.

Speaker #6: And lastly, number four is equipment installation at our plant. We're in the middle of all four of these right now. And all enablers and all early indicators of these four extremes are on track.

Itay Michaeli: Great. Thanks. Hi, everybody. Just two questions on the UEV platform. I'm just curious, sort of what's left to do here as you prepare for next year's launch. Maybe thinking even out to 2029 towards your break-even or profitability objective for Ford Model e. How should we think about roughly the number of top hats that you're planning to launch on that platform? Maybe just lastly, if I can sneak it in the past you've mentioned using some new suppliers for UEV. Any more updates you can share on how that's going? Thank you.

Speaker #6: Third is the readiness of our suppliers with all the parts that are coming from suppliers. And lastly, number four is equipment installation at our plant.

Speaker #6: So we feel good about it. Your second piece of question, number of top hats. As we've mentioned, is the platform. We plan to have high volume at Louisville.

Speaker #6: We're in the middle of all four of these right now. And all enablers and all indicators early indicators of these four work streams are on track.

Speaker #6: But I think if we want to give away our competition by talking about how many top hats or which top hats, it would be too early to do that.

Speaker #6: So feel good about it. Your second piece of question, number of top hats. As we've mentioned, it is a platform. We plan to have high volume at Louisville.

Kumar Galhotra: Itay, this is Kumar. Answering your first question on the, let's say, the industrial launch of the product, there are 4 major pieces to it. There's the hardware of key new parts, like mega castings. You know, UEV has its own software platform, so development and testing of that platform. Excuse me. 3rd is the readiness of our suppliers with all the parts that are coming from suppliers. Lastly, 4 is equipment installation at our plant. We're in the middle of all 4 of these right now, and all enablers and all indicators, early indicators of these 4 work streams are on track, so we feel good about it. Your 2nd piece of question, number of top hats. As we've mentioned, it is a platform.

Speaker #6: Okay.

Speaker #9: Got it. Well, how about the launch to demand?

Speaker #6: But I think it's we don't want to give away our plan to competition by talking about how many top hats or which top hats it would be too early to do that.

Speaker #6: The launch is bigger than the industrial launch. So we want to give you a little bit of insight into the demand creation. That's critical for us.

Speaker #9: Yeah, this is Andrew. We're confident in our launch plan. In fact, we're right on track to share our plans with dealers and take customer orders later this year.

Speaker #6: Okay.

Speaker #10: Got it. How about under the launch of the demand?

Speaker #9: And what we're really excited about is some of the EV market trends that we're seeing. The EV volume is really heading towards the affordable space, which really favors this affordable UEV platform, positioning us right in the heart of the market.

Speaker #6: The launch is bigger than the industrial launch. So we want to give you a little bit of insight into the demand creation because that's critical for us.

Speaker #9: Yeah. This is Andrew. We're confident on our launch plan. In fact, we're right on track to share our plans with dealers and take customer orders later this year.

Speaker #9: So we're really pleased with that. The market is already predisposed to this price point. And now, it feels like in the U.S., the EV market is moving even closer to the EV platform.

Speaker #9: And what we're really excited about is some of the EV market trends that we're seeing. And the EV volume really heading towards the affordable space, which really favors this affordable UEV platform positioning us right in the heart of the market.

Speaker #9: And there's really not much choice on a fully-specced, highly capable technological vehicle platform that's really affordable. There's not a lot of choice for customers.

Kumar Galhotra: We plan to have high volume at Louisville, but I think it's we don't wanna give away our plan to competition by talking about how many top hats or which top hats. It would be too early to do that. Okay.

Speaker #9: So we're really pleased with that.

Speaker #10: I think the market is already predisposed to this price point. But now it feels like in the US, the EV market is moving even closer to the UEV platform.

Speaker #9: A lot of compliance vehicles. But this is a real legitimate fully capable product for customers. So we think the market is really moving. And we understand that.

Speaker #10: And there's really not much choice on a fully specced, highly capable technological vehicle platform that's really affordable. There's not a lot of choice for customers.

Itay Michaeli: Got it. That's very helpful. How about on the launch.

Jim Farley: On the launch demand. The launch is a lot, bigger than the industrial launch, so we wanna give you a little bit insight into the demand creation 'cause that's critical for us.

Speaker #9: That's why we're working so hard on the demand creation. I think UEV is on. As far as the new suppliers, anything about the new suppliers tomorrow?

Andrew Frick: Yeah. This is Andrew. We're confident on our launch plan. In fact, we're right on track to share our plans with dealers and take customer orders later this year. What we're really excited about is some of the EV market trends that we're seeing and the EV volume really heading towards the affordable space, which really favors this affordable UEV platform, positioning us right in the heart of the market. We're really pleased with that.

Speaker #10: A lot of compliance vehicles. But this is a real legitimate fully capable product for customers. So we think the market is really moving. And we understand that.

Speaker #9: Yeah, I would say that the UEV team took a very interesting approach. They did the test at the most complex commodities. We designed them in-house.

Speaker #10: That's why we're working so hard on the demand creation. I think UEV is on. As far as the new suppliers, do you want to mention anything about the new suppliers, Kumar?

Speaker #9: This gives us a lot of control over those commodities, and it gives us the ability to source those commodities at the highest quality and the best cost price points from new suppliers.

Speaker #9: Yeah. I would say that the UEV team took a very interesting approach. We did the toughest and the most complex commodities. We designed them in-house.

Jim Farley: I think the market is already predisposed to this price point, and now it feels like it's in the US, the EV market is moving even closer to the UEV platform. There's really not much choice on a fully specced, highly capable technological vehicle platform that's really affordable. You know, there's not a lot of choice for customers. There's a lot of compliance vehicles, but this is a real legitimate, fully capable product for customers. We think the market is really moving, and we understand that. That's why we're working so hard on the demand creation. As far as the new suppliers, do you wanna mention anything about the new suppliers, Kumar?

Speaker #9: And these new suppliers have been great partners. And we are working towards using that capability, both the process as well as the new supply base in the rest of our portfolio.

Speaker #9: This gives us a lot of control over those commodities. And it gives us the ability to source those commodities at the highest quality and the best cost price points from new suppliers.

Speaker #6: What's exciting for me is to see the team's pollination of the UEV process—new suppliers, new ways of developing a vehicle, new IT tools that the development team uses. It's really starting to spread across the company.

Speaker #9: And these new suppliers have been great partners. And we are working towards using that capability, both the process as well as the new supply base, in the rest of our portfolio.

Speaker #9: What's exciting for me as to see the teams pollination of the UEV process, new suppliers, new way of developing a vehicle, new IT tools that the development team uses, it's really starting to spread across the company.

Speaker #6: And to me, that's very encouraging to see. Because the greatest gift for UEV will likely be what it gives our all of our other models.

Speaker #6: And our team as a whole.

Kumar Galhotra: Yeah. I would say that the UEV team took a very interesting approach. We did the toughest and the most complex commodities. We designed them in-house. This gives us a lot of control over those commodities, and it gives us the ability to source those commodities at the highest quality and the best cost price points from new suppliers. These new suppliers have been great partners, and we are working towards using that capability, both the process as well as the new supply base, in the rest of our portfolio.

Speaker #9: Absolutely. That's very helpful. Thank you.

Speaker #9: And to me, that's very encouraging to see. Because the greatest gift for UEV will likely be what it gives our all of our other models.

Speaker #9: And our team as a whole.

Speaker #10: Absolutely. That's very helpful. Thank you.

Jim Farley: What's exciting for me is to see the team's pollination of the UEV process, new suppliers, new way of developing a vehicle, new IT tools that the development team uses. It's really starting to spread across the company. To me, that's very encouraging to see because the greatest gift for UEV will likely be what it gives all of our other models and our team as a whole. Absolutely. That's very helpful. Thank you.

Operator: This concludes the Ford Motor Company Q1 2026 earnings conference call. Thank you for your participation. You may now disconnect.

Q1 2026 Ford Motor Co Earnings Call

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