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    F
    Earnings call· Sep 2025(Q3 FY25)

    FORD MOTOR CO F

    Oct 23, 2025 Source

    Executive summary

    Ford Motor Company Q3 FY25 — Strong Underlying Performance Despite Novelis Fire Headwind

    Ford delivered a strong third quarter, exceeding expectations with record revenue and solid adjusted EBIT, driven by consistent execution of its Ford+ plan and significant cost and quality improvements. Despite a substantial near-term headwind from the Novelis fire and ongoing tariff impacts, the company's underlying business is performing at the high end of its original full-year guidance. Ford is strategically pivoting towards hybrids and affordable EVs, while also benefiting from favorable tariff policy changes and anticipated reductions in federal emissions requirements.

    Highlights

    5

    • Achieved record revenue of $50.5 billion, growing over 9% globally, 1.5x faster than wholesale growth.

    • Delivered adjusted EBIT of $2.6 billion, flat year-over-year despite absorbing a $700 million net tariff headwind.

    • Underlying business is tracking at the high end of the original full-year 2025 adjusted EBIT guidance range of $7 billion to $8.5 billion.

    • Ford Pro paid subscriptions grew 8% to 818,000, with service parts capture rate up to 20 points higher for fleet software subscribers.

    • Q3 warranty costs were down $450 million year-over-year, contributing to a net $1 billion cost improvement for FY25 (excluding tariffs).

    Concerns

    5

    • Novelis fire is expected to result in a $1.5 billion to $2 billion adjusted EBIT headwind and a $2 billion to $3 billion adjusted free cash flow headwind in Q4 FY25.

    • Model e EBIT losses increased due to lower net pricing and increased spending on next-generation vehicles, with year-to-date losses at $3.6 billion.

    • Ongoing tariff impacts are expected to be a $1 billion net headwind for FY25, despite recent policy changes.

    • Potential Q4 production losses for the entire industry due to the Nexperia chip impact, requiring a quick breakthrough.

    • Adverse exchange rates, driven by a weaker U.S. dollar against the euro and Thai baht, acted as a headwind for Ford Blue.

    Guidance & targets

    16
    CategoryTargetConfidence
    Full-year 2025 Adjusted EBIT
    $6B-$6.5B
    high materiality
    High
    Full-year 2025 Adjusted Free Cash Flow
    $2B-$3B
    high materiality
    High
    Full-year 2025 Net Cost Improvement (excluding tariffs)
    $1B
    medium materiality
    High
    Full-year 2025 Capital Expenditures
    $9B
    medium materiality
    High
    Full-year 2025 Net Tariff Headwind
    $1B
    high materiality
    High
    2026 Novelis Recovery (EBIT)
    at least $1B
    high materiality
    Medium
    2026 Net Tariff Impact
    similar to 2025
    high materiality
    Medium
    2026 Cost Improvements
    another $1B
    medium materiality
    High
    Near-term EV Adoption (U.S. market)
    about 5%
    medium materiality
    Medium
    Universal EV Platform (UEV) Launch
    2027
    high materiality
    High
    LFP Cells Production at Marshall Plant
    start production
    medium materiality
    High
    Equipment Installation for UEV in Louisville
    begin installing equipment
    medium materiality
    High
    Retail Stock Levels
    55 to 59-day supply
    low materiality
    High
    Gross Stock Units
    about 520,000 units
    low materiality
    High
    U.S. Industry SAAR
    about 16.8 million units
    medium materiality
    High
    U.S. Industry Pricing
    about 0.5%
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Ford Pro
    Delivered a robust double-digit margin. Growth in EBIT was driven by volume and continued improvement in warranty and material cost, partially offset by tariff impacts and pricing normalization in Europe and North America. Diversified revenue streams across large corporations, SMBs, and government/rental fleets.
    Volume growth: 9%Paid subscriptions: 818,000 (up 8%)Service parts capture rate (fleet software subscribers): up to 20 points higher
    		$17.4B11%—$2B
    Ford Model e
    Delivered both revenue and volume growth, driven by new product introductions in Europe. EBIT losses increased due to lower net pricing and an increase in spending on next-generation vehicles. Proactively reduced planned battery capacity by 35% over two years ago and canceled a 3-row program.
    Year-to-date loss: $3.6BGen 1 products loss: $3B
    		growth——increased losses
    Ford Blue
    Higher costs were driven by tariffs, which muted progress in warranty. Adverse exchange was also a headwind driven by a weaker U.S. dollar against the euro and Thai baht.
    		growth exceeding wholesale unit growth——$1.5B
    Ford Credit
    Reflecting improved financing margin. Continues to originate a high-quality book with FICO scores exceeding 750 for the quarter.
    Distribution: $350MU.S. retail and lease FICO scores: exceeding 750
    		—16%—$600M EBT

    Operational metrics

    17
    Cash Balance
    nearly $33B
    Q3 FY25

    Cash balance at the end of the quarter.

    Liquidity
    $54B
    Q3 FY25

    Total liquidity at the end of the quarter.

    Dividend
    $0.15 per share
    Q4 FY25

    Declaration of the fourth quarter regular dividend.

    Total Company EBIT from software and physical services growth
    over 20%
    past 3 years

    Growth in EBIT from software and physical services, strengthening business durability.

    Net Cost Improvement (excluding tariffs)
    $1Byear-over-year
    FY25

    On track for net cost improvement this year, excluding the impact of tariffs.

    F-Series Production Jobs Added
    up to 1,000
    current

    Adding new jobs to increase F-Series production to recover lost volume and fulfill strong customer demand.

    Mobile Service Vans Added
    500
    past year

    Number of mobile service vans added by the specialized dealer network.

    Service Bays Added
    1,700
    past year

    Number of service bays added by the specialized dealer network.

    Ford Pro EBIT as % of Total EBIT
    well on our way to hit 20%from around 13% a couple of years ago
    current

    Increasing contribution of Ford Pro to overall company EBIT.

    Ford Pro Channel Mix
    1/3 large corporations, 1/3 SMBs, 1/3 government and daily rental
    current

    Well-balanced and diversified channel mix for Ford Pro.

    U.S. Market Share
    12.8%growth outpacing the industry
    Q3 FY25

    Total U.S. market share growth driven by key products.

    Hybrid Truck Market Share
    about 70%
    Q3 FY25

    Continued leadership in the hybrid truck market.

    Planned Battery Capacity Reduction
    35%
    over 2 years ago

    Proactive reduction in planned battery capacity for Model e.

    Compliance Purchase Obligations
    $2.5B40% lower from where we started the year
    original

    Original purchase obligations for compliance, now significantly reduced due to ZEV-related credit changes.

    F-Series Units Lost (Novelis)
    90,000 to 100,000 units
    Q4 FY25

    Expected F-Series units lost in Q4 due to the Novelis fire.

    F-Series Units Recovered (Novelis)
    roughly 50,000 units
    2026

    Expected recovery of F-Series units in 2026 following the Novelis fire.

    Ford Credit High-Risk Portfolio Mix
    3%very small
    current

    Ford Credit's high-risk portfolio mix, which has been very sustainable.

    Industry KPIs

    3
    MetricValueDetails
    Warranty recall costsdown $450MUSD
    Average transaction pricestrong
    Dealer inventory days of supply88-day supplydays

    Product announcements

    2
    ProductTypeDetails
    Universal EV Platform (UEV)roadmap
    Extended Range Hybrid Optionsroadmap

    Deals & partnerships

    1
    ServiceTitanStrategic partnership to embed Ford Pro's real-time vehicle data directly into ServiceTitan's workflow.

    ServiceTitan is the largest software provider to the trades. This partnership aims to enhance fleet management capabilities for customers.

    Risks & headwinds

    5
    Novelis Fire ImpactQ4 FY25

    $1.5B-$2B adjusted EBIT headwind in Q4 FY25; $2B-$3B adjusted free cash flow headwind in Q4 FY25; 90,000-100,000 F-Series units lost in Q4 FY25

    Mitigation: Mobilized dedicated crisis team, secured alternative aluminum sources, accelerated plant recovery, adding 1,000 new jobs to increase F-Series production, expect to mitigate at least $1B in 2026.

    EV Overcapacity and Global Pressurescurrent industry trends

    Lower returns due to EV overcapacity

    Mitigation: Reduced planned battery capacity by 35% over two years ago, canceled 3-row program, adapting to evolving customer and market realities for EVs.

    Tariff HeadwindQ3 FY25, FY25

    $700M net headwind in Q3 FY25; $1B net headwind for 2025 (down from $2B)

    Mitigation: Favorable tariff policy developments (President Trump) allowing offset of imported auto parts tariffs, leveraging large U.S. manufacturing volume.

    Nexperia Chip ImpactQ4 FY25

    Potential fourth quarter production losses for the entire industry

    Mitigation: Working with U.S. and Chinese administrations, maximizing component purchases. A quick breakthrough is necessary to avoid production losses.

    Adverse Exchange RateQ3 FY25

    Headwind

    Mitigation: Not explicitly stated, but Ford Blue's revenue growth exceeding wholesale unit growth helped offset some impact.

    What to watch in Q4 FY25

    5

    Novelis Fire Recovery

    2026
    Current90,000 to 100,000 F-Series units lost in Q4 FY25
    Targetrecover roughly 50,000 units in 2026; mitigate at least $1B EBIT impact in 2026

    Why it matters

    The pace of recovery from the Novelis fire will significantly impact Ford's production volumes and profitability in the coming year.

    For 2025, we expect an adjusted EBIT headwind of $1.5 billion to $2 billion in the fourth quarter for Novelis, and we currently have line of sight to mitigate at least $1 billion in 2026, and we are working to improve the situation further.

    Q&A highlights

    8

    Clarification on the $1 billion recovery from Novelis impact and alignment with recent news about the plant being back up by year-end.

    Kumar confirmed the hot mill will be operational in late November/early December, with a quick ramp-up. Ford expects to lose 90,000-100,000 units in Q4 but plans to recover roughly 50,000 units in 2026 through increased F-Series production. Jim added that makeup capacity next year depends on Ford's own upside, not just aluminum availability.

    “Between now and end of the year, we'll probably lose 90,000 to 100,000 units in fourth quarter. We announced today that we will add a third shift at Dearborn truck plant and higher line speed at Kentucky Truck. So through those actions, we expect to make up roughly 50,000 of those 100,000 units in 2026.”

    asked by Joseph Spak · answered by Kumar Galhotra

    2 min read5 chapters

    Detailed Narrative

    01

    Novelis Fire Response and Production Recovery

    Ford has responded swiftly and decisively to the Novelis fire in Oswego, New York, which is expected to cause a $1.5 billion to $2 billion adjusted EBIT headwind in Q4 FY25. The company mobilized a dedicated crisis team, secured alternative aluminum sources, and is accelerating the plant's recovery. To mitigate lost volume, Ford is adding up to 1,000 new jobs to increase F-Series production, with plans to recover approximately 50,000 units in 2026. The hot mill is expected to be operational in late November/early December, with a quick ramp-up through December.

    02

    Strategic Shifts and Market Trends

    Ford's strategy, under the Ford+ plan, is designed to win amidst four key market trends: increasing regionalization, customer fragmentation (retail vs. commercial), tougher competition from Chinese OEMs, and lower industry returns due to EV overcapacity. The company is prioritizing its iconic work vehicles, passion products like Mustang, and off-road franchises (Bronco, Raptor). A key focus is also on hybrids across the lineup, including extended-range options, and the Universal EV platform for affordable EVs starting around $30,000, with sourcing 95% complete and production on track for 2027.

    03

    Quality and Cost Improvement Initiatives

    Ford's industrial platform is delivering tangible progress in quality, cost, and modernization. The company has radically improved launch quality, with 6 nameplates achieving best-in-class performance and 3 in the top quartile according to J.D. Power Warranty Analytics Data. A new powertrain testing regimen, up to 7x longer, is helping to identify issues earlier. These efforts contributed to a $450 million year-over-year reduction in Q3 warranty costs and a projected net $1 billion cost improvement for FY25 (excluding tariffs). AI is also being deployed across the industrial system, including 900 AI-powered cameras in plants to detect quality issues.

    04

    Ford Pro's Diversified Growth and Competitive Advantage

    Ford Pro continues to thrive, driven by its diverse vehicle lineup, service parts penetration, and growth in integrated software and services. The specialized dealer network has expanded with 1,700 new service bays and 500 mobile service vans in the past year, making Ford the largest mobile fleet in the U.S. Revenue streams have been intentionally diversified across large corporations, small to medium businesses (SMBs), and government/rental fleets, with SMB strength offsetting softness in government sales. Paid subscriptions grew 8% to 818,000, and a new partnership with ServiceTitan aims to embed real-time vehicle data for enhanced fleet management.

    05

    Favorable Tariff Policy and Emissions Outlook

    Recent tariff policy developments are favorable to Ford, allowing the company to offset tariffs on imported auto parts due to its large U.S. manufacturing volume. This is expected to reduce the net tariff headwind🌐 for 2025 from $2 billion to $1 billion. Additionally, Ford anticipates a meaningful reduction in federal emissions requirements, potentially as soon as the end of this year, which is expected to eliminate 2026 compliance headwinds. This change will unlock opportunities to optimize the mix of ICE, hybrids, and EVs, reducing reliance on credits and allowing for more profitable product configurations.

    AI-generated summary of the company’s earnings call. Not investment advice.