CREATING TOMORROW, TOGETHER FORD MOTOR COMPANY - 2018 ANNUAL REPORT on the Cover FINANCIAL HIGHLIGHTS Freedom of Movement Is Fundamental to Human Progress
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WINNING PORTFOLIO PROPULSION CHOICES AUTONOMOUS TECHNOLOGY MOBILITY EXPERIENCES CREATING TOMORROW, TOGETHER FORD MOTOR COMPANY - 2018 ANNUAL REPORT On the Cover FINANCIAL HIGHLIGHTS Freedom of movement is fundamental to human progress. That’s been Ford Motor Company’s (in billions, except for percentages and per share amounts) 2017 2018 North Star since the beginning. Today, we are designing and building smartvehiclesforasmartworldto Revenue $ 156.8 $ 160.3 reinvent our mission to create a very different future. NetincomeattributabletoFordMotorCompany $ 7.7 $ 3.7 Smart vehicles for a smart world putspeopleatthecenterof Company adjusted EBIT (a) $ 9.6 $ 7.0 everything we do. We’re designing increasingly intelligent vehicles and CompanyadjustedEBITmargin(a) 6.1% 4.4% connecting them to each other and the world around them to Companyadjustedoperatingcashflow(a) $ 4.2 $ 2.8 make people’s lives better – creating what people may not yet Adjusted earnings per share (a) $ 1.78 $ 1.30 realize they need, but soon will not be able to live without. Our smart vehicles for a smart world plan focuses on four pillars – (a)Seepages27,74and75fordefinitionsandreconciliationstoGAAP. a winning portfolio, new propulsion options, a high-value autonomous businessbuiltonthemosttrusted self-driving systems, and cloud- based mobility experiences that deliver recurring revenue. Smart vehicles for a smart world is the engine of our future. All Ford employees and partners have a role in this mission to revolutionize everyareaofourbusinesstobest CREATING TOMORROW, TOGETHER serve our customers, stakeholders and the world. We’re building a smarter Ford Motor Our Freedom of movement drives human progress. Company.Doingthatwilltakeallof Belief us Creating Tomorrow, Together. Our To become the world’s most trusted company, Photos top to bottom Aspiration designingsmartvehiclesforasmartworld. Featuring the Ford Mustang, all-new Ford Explorer, all-new Ford Ranger, PASSION FOR PRODUCT & DEEP CUSTOMER INSIGHT FordTransit,upcomingall-new Mustang-inspired fully-electric Winning Propulsion Autonomous Mobility Portfolio Choices Technology Experiences performance utility, Ford Fusion Hybrid Autonomous Development Our Plan for Value Vehicles, mobility experiences FITNESS METRICS Creation including FordPass Connect and Operating Leverage Growth SPIN micro-mobility platforms to Build, Partner, Buy EBIT Margin reinventourmissiontocreatea Capital Efficiency ROIC very different future. Strong Balance Sheet Cash Flow Our People CULTURE & VALUES Our Annual Report is available online at annualreport.ford.com To help us achieve our vision for the future of transportation, in 2018 we acquired the iconic Michigan Central Station in Detroit’s historic Corktown neighborhood. We plan to transform this former railroad station into the centerpiece of a vibrant new campus where Ford and its partners will work on autonomous and electric vehicle businesses, and design solutions for a transportation operating system that makes mobility convenient and accessible. More than just a collection of buildings, Corktown will serve as a magnet for talent and a catalyst for change. The future we are building at our new mobility campus is rooted in our past. More than 115 years ago we began building cars in a small factory in Detroit. From those humble beginnings we went on to revolutionize mass production, build the first affordable car and put the world on wheels. Our mission then was to make people’s lives better by making mobility accessible and affordable. That remains our mission today. Aswemovethroughthe21stcenturywearereimaginingwhatmobility will look like beyond the privately owned internal combustion engine automobile. That means not just smart cars, but also smart roads, LETTER FROM OUR smart parking, smart public transit systems, and ways for them all EXECUTIVE CHAIRMAN to talk to one another. It means rethinking cities so that even as millions more people call them home, the air is cleaner, the streets less congested, and everyone has access to efficient, affordable and In2018wetookaggressivestepstoimprovetheefficiencyandfocusof sustainable mobility. ourtraditionalautomotivebusiness.Atthesametimeweaccelerated oureffortstobealeaderinthemobilityservicesoftomorrow. To make this vision a reality we are working with and investing in all kinds of new businesses, from radar and mapping technologies to artificial As we reinvent our business for the future we remain committed to intelligence platforms. We have a strategic alliance with Mahindra in India achieving strong results in the present. While 2018 was challenging, that includes powertrain sharing and connected vehicle solutions. we still achieved our ninth consecutive year of solid earnings and More recently we announced an alliance with Volkswagen that will positive operating-related cash flow. These profits enabled us to begin with developing midsize pickup trucks for global markets distribute $3.1 billion to our shareholders last year, for a total of starting by 2022, followed by commercial vans. This alliance will drive $18.4 billion since 2012. scale and efficiencies and enable us to share investments in vehicle architectures that deliver distinct capabilities and technologies. Looking ahead, to improve returns in the nearer term we are reducing costs, improving operating efficiencies and focusing our resources on The greatest competitive advantage we have going forward is the vehicles that better meet our customers’ needs. This includes shifting trust we have earned by providing mobility to people around the world 90 percent of our North American vehicle lineup volume to sport for more than a century. utility vehicles, crossovers, trucks and commercial vehicles between 2018 and the end of 2020. We plan to refresh 75 percent of our lineup SincethedaysoftheModelTpeoplehavetrustedustogetthemwhere in the United States by the end of 2020, including the introduction of theywanttogo,dowhatisrightforthem,andmaketheirlivesbetter. all-new Ford Ranger, Escape and Explorer vehicles this year. Whatever form mobility takes in the future, our board of directors, leadership team and extended family of employees are determined to As we strengthen our product portfolio, we are committed to reducing continueearningthattrustaswestrivetobecometheworld’smost vehicle emissions by delivering CO reductions consistent with the 2 trusted company designing smart vehicles for a smart world. Paris Accord. We are investing $11 billion in electrification, and plan to electrify our most popular nameplates including an all-electric Thank you for your support of our efforts. Mustang-inspired performance utility and Ford F-150. Looking farther into the future, the actions we are taking to improve efficiencies are freeing up capital to invest in emerging businesses. We expect to invest $4 billion in our autonomous vehicle efforts through William Clay Ford, Jr. 2023, including our $1 billion investment in Argo AI. Executive Chairman March 15, 2019 LETTER FROM OUR PRESIDENT AND CEO Thisyear’slettertoyoucomesatanimportantandexcitingtimefor Giventhis,Ford’sfoundingmissionofadvancinghumanprogressby our company and, indeed, the transportation sector overall. providingfreedomofmovementisasvital,ifnotmoreso,asithas everbeen.Wehavealwaysbuiltgreatvehiclesthatallowpeopleto Globalvehiclesalesreachednearrecordlevelsin2018andthecars, movefreelyandnow,withamoreintelligentworld,wecandomore utilitiesandtruckscustomerspurchasedwerecleaner,saferand to support human progress than ever before. offeredmoretechnologythaneverbefore.Atthesametime,theauto industry is in the midst of profound change, unlike anything we’ve seen Our aspiration is to become the world’s most trusted company, inthe115-yearhistoryofourcompany. designingsmartvehiclesforasmartworld.Indoingso,wenot onlyhavetheopportunitytocreatesignificantvalueforallofour Two forces are driving this disruption: rapidly advancing technology and stakeholders, but also to design and build a better transportation innovation that offer the promise of increasingly intelligent vehicles system that improves lives. and a deep need for a smarter transportation system – one that is cleaner,saferandlesscongested.Itisthepairingofthetwothatwill revolutionize the industry. “Two forces are driving this disruption: rapidly advancing technology and innovation that offer the promise of increasingly intelligent vehicles and a deep need for a smarter transportation system – one that is cleaner, safer and less congested. It is the pairing of the two that will revolutionize the industry.” 2020 Ford Explorer STRATEGIC HIGHLIGHTS Ourplantogrowourcompanyisbuiltonfourstrategicchoices–ones thatarerootedinourpassionforproductsanddeepcustomerinsight: 1.Creatingafresher,moretargetedvehicleportfoliothatcancompete andwininallmarketswherewehaveapresence. Bytheendof2020,wewillhavereplaced75percentofourcurrent productlineupintheUnitedStates.Wejustkickedthisoffwithour all-new Ford Ranger, and already, customer interest is very strong. In Europe, we are expanding our profitable Ford Transit commercial Ford Smart Mobility LLC acquires SPIN, a vehicle franchise with new services and revenue streams. We also San Francisco-based electric scooter-sharing company that provides customers an alternative launchedourall-newFordFocusandEscortinChina–thefirstof for first-and last-mile transportation. many new vehicles we are building for our Chinese customers. 2. Executing a compelling plan for vehicle propulsion that delights our Achievingourmissionstartsbybuildingandsustainingahealthybusiness.