Ford targets 8% adjusted EBIT margins by 2029 as it raises 2026 adjusted EBIT outlook to $10.5B-$11B

• “Ford delivered another strong quarter,” and “in the third quarter… we generated $2.7 billion in adjusted EBIT,” while “raising our low end of our previous full year adjusted EBIT guidance and now expect to earn between $10.5 billion and $11 billion.” (President, CEO & Director James Farley)
• “Our strategy is clear” across “a whole new generation of vehicles,” expanding “software, services and parts,” and “diversifying with Ford Energy,” with an objective of “8% adjusted EBIT margins by 2029.” (President, CEO & Director Farley)
• “Next year, we will be launching our affordable midsize pickup for international markets,” and “the base material costs for this truck [are] 20% lower than today’s Ranger,” while the Louisville launch of “Fathom” remains “on track for fourth quarter next year,” with “the MSRP under $30,000.” (President, CEO & Director Farley)
• “Both software services and parts businesses achieved record revenue in the third quarter at highly accretive margins,” and Ford Credit and Ford Pro launched “Ford Pro Leasing” as Ford expects its “Pro digital fleet management portfolio… over 100,000 units by year-end.” (President, CEO & Director Farley)
• “Executed contracts and late-stage negotiations together already currently account for more than 80% of Ford Energy’s 2028 capacity,” and Ford said it “remain[s] on track to bring 20 gigawatt hours of annual capacity online by the end of next year.” (President, CEO & Director Farley)
• “Sequentially, revenue at $49.5 billion and adjusted EBIT at $2.7 billion were both higher,” Ford generated “$4.7 billion in company adjusted free cash flow,” and ended Q3 with “$25.3 billion in cash and $46.4 billion in total liquidity,” while announcing “a fourth quarter regular dividend of $0.15 per share.” (Chief Financial Officer Sherry House)

Outlook

• “We are confident in our full year trajectory… and now expect full year adjusted EBIT between $10.5 billion to $11 billion,” with “adjusted free cash flow… unchanged at $6 billion to $7 billion and capital expenditures… $9.5 billion to $10.5 billion.” (CFO House)
• Segment guideposts were stated as “Ford Blue EBIT of about $5.5 billion,” “Ford Pro EBIT of about $7 billion,” “Model e losses… about $4 billion,” and “Ford Credit EBT… about $2.8 billion.” (CFO House)
• Key planning assumptions included “a U.S. SAAR of 16.5 million units,” “commodity headwinds approaching $2.5 billion year-over-year,” and “full year U.S. industry pricing… about 100 basis points higher year-over-year.” (CFO House)
• For 2027, “we’re targeting profitability next year to be roughly in line with this year,” while expecting “commodities, memory and logistics costs” to be “a year-over-year headwind of about $2 billion at Ford,” alongside planned “production downtime” for the new F-150 and continued investment in “the Universal Electric Vehicle platform” and Ford Energy capacity. (President, CEO & Director Farley)

Financial Results

• The company reported Q3 “revenue at $49.5 billion,” “adjusted EBIT at $2.7 billion,” and “company adjusted free cash flow” of “$4.7 billion,” while CFO Sherry House said results were achieved “despite being impacted by a short-term supplier disruption late in the quarter.” (CFO House)
• Ford Blue delivered “$27.1 billion of revenue and $1.4 billion in EBIT,” while Model e reported “an EBIT loss of $1.1 billion on revenue of $1.2 billion,” Ford Pro delivered “$17.8 billion of revenue” and “Pro EBIT… $1.7 billion,” and Ford Credit posted “EBT of $803 million.” (CFO House)
• “We have incurred about $1 billion in Novelis-related temporary costs year-to-date with some more to go in Q4,” while remaining “tracking to a net tailwind of about $1 billion in 2026.” (CFO House)

Q&A

• Rajat Gupta, JPMorgan Chase & Co.: asked how much of the 2027 “offset stack” is “within your control”; CFO House said controllable levers include “revenue optimization,” “continued software and parts growth,” and “continued savings,” adding, “we have transformed our sales and operating plan and are now leveraging AI tools.” (CFO House)
• Rajat Gupta, JPMorgan Chase & Co.: asked what remains to be de-risked ahead of Fathom’s launch; COO A. Kumar Galhotra said “90% of the validation testing has been completed,” but remaining risk is “primarily in the supply base,” while Andrew Frick emphasized affordability dynamics and said Fathom’s “starting MSRP is at $28,350” and Ford will launch a “preorder program in the first quarter.” (Chief Operating Officer Galhotra; President of Ford Blue, Ford Model e & Lincoln Frick)
• Emmanuel Rosner, Wolfe Research: asked whether Ford expects Model e improvement in 2027; CFO House said “the progress isn’t going to be linear,” with “higher expenses in 2027,” and expects a “step-function change” in “the first half of 2028 as UEV and Ford Energy both ramp.” (CFO House)
• Gautam Narayan, RBC Capital Markets: asked whether Europe actions are enough amid Chinese exports; CEO Farley said partnerships with Renault and Geely are “very low capital investments,” aimed to “replace unprofitable EVs,” while noting ongoing work across “Valencia, in Romania and Turkey.” (President, CEO & Director Farley)
• Joseph Spak, UBS: pressed on F-150 inventory normalization; Andrew Frick said Ford was at “49 days” exiting September and “do not expect to see our stocks building to a much higher level,” while CEO Farley contrasted historical “80 to 100 days supply” with a “50, low 60-day supply” target. (President Frick; President, CEO & Director Farley)
• Andrew Percoco, Morgan Stanley: sought detail on Ford Energy contracting and China impacts; Ford Energy President David Carroll said Ford is “not talking about backlog today” and will “start disclosing that next year,” while CEO Farley said the “most intense” China competition is in “LATAM and Southeast Asia” and that “the issue for us in the short term is really Europe.” (President of Ford Energy David Carroll; President, CEO & Director Farley)
• John Saager, Evercore ISI: asked what would trigger Ford Energy expansion and the earnings cadence during ramp; Carroll said Ford is “already evaluating scenarios” but “we don’t have anything to announce today,” and CFO House added, “we had talked about around $2 billion of investment… about 1/3… this year and about 2/3 next year.” (President Carroll; CFO House)
• Dan Levy, Barclays: asked what Ford hopes to learn from Geely and how it ties to Fathom profitability; COO Galhotra cited learning on “lower cost landed in Europe” and “a few months faster,” while CEO Farley highlighted UEV cost levers including “2 large unicastings,” and said Ford’s “motors, gearbox and inverters… about 30% more efficient than theirs.” (COO Galhotra; President, CEO & Director Farley)

Sentiment Analysis

• Analyst sentiment was slightly negative to pressing on execution and visibility, with repeated probing on 2027 offsets, EV launch de-risking, F-150 inventory, and Ford Energy contracting transparency (e.g., “I want to be clear on this” on inventory and “one more shot at BESS” on energy storage). (Joseph Spak, UBS; John Saager, Evercore ISI)
• Management sentiment in prepared remarks was positive and expansion-focused, emphasizing raised guidance, product cadence, and Ford Energy customer traction (e.g., “we’re raising our low end” and “we expect our 2028 capacity to be fully committed by Q1 of next year”). (President, CEO & Director Farley)
• In Q&A, management tone was controlled and occasionally cautious on disclosure timing and nonlinearity (e.g., “we’re actually not talking about backlog today” and “the progress isn’t going to be linear”), while reinforcing confidence in execution areas such as validation progress and pricing/mix discipline. (President Carroll; CFO House)
• Compared with Q2, Q3 carried more direct 2027 framing (“profitability next year… roughly in line with this year”) and more pointed follow-ups from analysts on specific operational mechanics (inventory normalization, contracting definitions), while Q2 commentary on 2027 had been characterized as “a little bit early to talk about it in detail.” (President, CEO & Director Farley; CFO House)

Quarter-over-Quarter Comparison

• Guidance language shifted from Q2’s “between $10 billion and $11 billion” to Q3’s “between $10.5 billion and $11 billion,” described as “raising our low end.” (President, CEO & Director Farley)
• Ford Energy commentary advanced from Q2’s “first or second inning” and “third inning” framing toward Q3’s statement that contracted and late-stage discussions “already currently account for more than 80%” of 2028 capacity and an expectation that 2028 capacity will be “fully committed by Q1 of next year.” (President, CEO & Director Farley)
• Model e quarterly loss widened from Q2’s “EBIT loss of $919 million” to Q3’s “EBIT loss of $1.1 billion,” while management reiterated the same longer-term goal: “still targeting breakeven by 2029,” with Q3 adding clearer timing on a profitability “step-function” expected in 2028. (CFO House)
• Analysts stayed focused on energy storage contracting and China/Europe competitive pressure in both quarters, while Q3 added sharper questioning on inventory math and the practical controllability of 2027 offsets. (Andrew Percoco, Morgan Stanley; Gautam Narayan, RBC; Joseph Spak, UBS; Rajat Gupta, JPMorgan)

Risks and Concerns

• CFO House said guidance “does not include potential impacts of a significant escalation in the Middle East or a material downturn in the U.S. economy,” and also flagged “commodity headwinds approaching $2.5 billion year-over-year” and “higher fuel prices” impacting “freight and energy costs.” (CFO House)
• On the UEV/Fathom launch, COO Galhotra said the primary remaining risk to mitigate is “in the supply base,” specifically ensuring suppliers “can run at rate with high-quality parts.” (Chief Operating Officer Galhotra)
• CEO Farley highlighted pressure in Europe tied to “EV mandates by the EU” and “overcapacity,” describing Europe as “the real pressure on our business with the Chinese.” (President, CEO & Director Farley)

Final Takeaway

Ford’s Q3 message centered on higher full-year 2026 adjusted EBIT guidance ($10.5B-$11B), disciplined truck economics through tighter inventory targets, and scaling higher-margin “auto adjacencies” alongside a bigger strategic pivot toward Ford Energy. Management positioned 2027 as roughly flat profitability amid about $2B of external cost headwinds, with execution risk concentrated in UEV/Fathom supply-base readiness and Europe’s competitive and regulatory backdrop, while Ford Energy visibility improved to “more than 80%” of 2028 capacity covered by executed contracts and late-stage negotiations, with fuller backlog disclosure deferred until next year.

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