Ford Motor Company (F): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, actionable breakdown of the forces shaping Ford Motor Company (F) right now, and a PESTLE analysis is defintely the right tool. Here's the quick math: Political incentives (IRA) and technological shifts (EVs) are the biggest drivers, but higher interest rates are a near-term headwind on sales. As a seasoned analyst, I see Ford navigating a complex pivot. They must balance the high-margin, traditional business-think the F-Series trucks-with the massive capital expenditure needed for the electric future, targeting a global run rate of 600,000 EV units in 2025, all while aiming for a full-year 2025 Revenue of around $180 billion. It's a tightrope walk, but the company's strong brand equity still helps.

Ford Motor Company (F) - PESTLE Analysis: Political factors

Inflation Reduction Act (IRA) tax credits heavily influence US battery sourcing and manufacturing decisions.

The Inflation Reduction Act (IRA) of 2022 remains the single biggest political lever on Ford's electrification strategy, forcing a domestic supply chain shift. The core issue for Ford in 2025 was the geopolitical risk associated with its \$2.5 billion BlueOval Battery Park in Marshall, Michigan. This plant is set to use lithium iron phosphate (LFP) battery technology licensed from China's Contemporary Amperex Technology Co. Limited (CATL).

To be fair, this reliance on Chinese technology became a major political flashpoint, threatening the plant's eligibility for federal incentives. However, revised legislative language in mid-2025 preserved the critical Section 45X Advanced Manufacturing Production Credit. This credit provides a direct subsidy of \$35 per kWh for battery cells and \$10 per kWh for modules manufactured in the US, making the domestic production economically viable for Ford.

This political decision saved Ford's project, but the pressure is still on to localize the supply chain. Ford must comply with the IRA's increasing domestic content requirements, which mandate that EV batteries contain 60% US content in 2026, rising to 85% in 2030, to qualify for the full consumer tax credit.

US-China trade policy still creates volatility for critical raw material supply chains, especially for EV batteries.

The ongoing US-China trade policy friction creates significant cost volatility and supply chain fragmentation, directly impacting Ford's financial outlook for 2025. China's dominance in the midstream processing of critical minerals is the problem; they control over 75% of key raw materials and refined minerals for EV batteries globally.

In July 2025, the US Commerce Department imposed steep tariffs of 93.5% on refined graphite imported from China, an essential ingredient for battery anodes. This move immediately raises production costs for all US automakers. Here's the quick math on the tariff impact on Ford's 2025 adjusted earnings before interest and taxes (EBIT):

The tariff headwind alone is expected to be a \$2 billion drag on 2025 adjusted EBIT, forcing Ford to lower its full-year guidance. That's a huge cost that needs to be absorbed or passed on.

Government fleet procurement contracts remain a significant revenue stream for police and commercial vehicles.

Ford Pro, the company's dedicated commercial and government fleet division, continues to be a profit engine, providing a stable revenue base shielded from consumer market volatility. Government procurement contracts for vehicles like the Police Interceptor Utility and various commercial vans (Transit) are a core part of this division's success.

The financial performance of Ford Pro in the first half of 2025 shows how crucial this segment is:

• Q2 2025 Revenue: \$18.8 billion, an increase of 10.6% year-over-year.
• Q2 2025 EBIT: \$2.3 billion, with a strong margin of 12.3%.
• Software and Physical Services Contribution: 17% of Ford Pro's EBIT (trailing 12 months).

This segment's high profitability and consistent demand from federal, state, and local agencies-plus the shift toward connected vehicle services-offers a durable, high-margin counterweight to the losses in the Model e (EV) division. Ford Pro's EBIT margin of 12.3% is defintely a bright spot in the overall business.

Stricter US regulatory scrutiny on vehicle safety and autonomous driving software development.

Regulatory scrutiny from the National Highway Traffic Safety Administration (NHTSA) is intensifying across the entire industry, especially for advanced driver-assistance systems (ADAS) and autonomous vehicles (AVs). In April 2025, NHTSA rolled out an updated regulatory framework for automated driving systems (ADS) from SAE Level 2 through Level 5, effective June 16, 2025. This new framework reshapes how companies like Ford must handle crash reporting, proprietary data, and testing exemptions.

Ford is directly affected because its hands-free highway driving system, BlueCruise (a Level 2 system), is in millions of vehicles. NHTSA has opened investigations into all major AV companies, signaling a clear shift away from the previous hands-off approach. Ford's own CEO, Jim Farley, has publicly advocated for federal regulation to set clear standards, recognizing that a patchwork of state laws creates an unsustainable development and deployment environment. The lack of a single, clear Federal Motor Vehicle Safety Standard (FMVSS) for autonomous systems remains a major headwind for large-scale, safe deployment.

Ford Motor Company (F) - PESTLE Analysis: Economic factors

Elevated interest rates increase the average cost of new vehicle financing, dampening overall consumer demand.

The biggest near-term headwind for Ford Motor Company is simple affordability, and that comes down to interest rates. You're seeing a significant portion of the buying public priced out of the new vehicle market because of elevated financing costs. The average Annual Percentage Rate (APR) on a new car loan in 2025 is a staggering 7.2%, which is more than double the 3.5% average we saw back in 2021.

Here's the quick math: With the average new vehicle price hovering around $50,080 in 2025, that 7.2% APR translates directly into higher monthly payments, forcing many customers to hold onto their current vehicles longer. This is defintely a challenge for Ford Blue's retail sales volume, though the commercial Ford Pro segment, which has stronger pricing power, helps to offset some of the pain.

Full-year 2025 Revenue is projected to be around $180 billion, showing modest growth over 2024.

The full-year 2025 revenue outlook remains under pressure, but the core business is proving resilient. The analyst consensus for Ford's 2025 sales is approximately $171.14 billion, a slight contraction from the $185 billion global revenue reported for 2024, reflecting the cautious macroeconomic environment.

What this estimate hides is the strength of the Ford Pro commercial division, which continues to be the primary profit driver, generating a significant portion of the total adjusted EBIT guidance of $6.0 billion to $6.5 billion for the year. The losses in the Model e electric vehicle division are a drag, but the commercial segment is carrying the weight.

Labor costs are higher following the 2023 UAW contract, impacting North American manufacturing margins.

The new United Auto Workers (UAW) contract, ratified in late 2023, represents a clear and concrete increase in Ford's structural operating costs. The full cost of the agreement is estimated at $8.8 billion over the four-and-a-half-year duration, which expires in April 2028. This is not a one-time hit; it's a permanent reset of the labor cost structure.

Specifically, the contract is projected to add approximately $900 in labor costs to each vehicle Ford produces by the end of the contract term in 2028. This cost pressure directly impacts the North American manufacturing margins for both Ford Blue and Ford Pro, forcing management to aggressively pursue productivity and efficiency gains to compensate. Analysts like JPMorgan estimate the annual cost increase to be around $1.5 billion.

Strong US dollar still makes international sales less profitable when repatriated.

While currency fluctuations are an ongoing concern, the most immediate and quantifiable drag on Ford's international profitability in 2025 comes from trade policy. The strength of the US dollar inherently makes sales in foreign markets less valuable when those profits are converted back to USD (repatriated). Plus, new trade actions, such as tariffs on imported vehicles and parts, have created a significant headwind.

Ford is actively working to mitigate this, but the net impact of tariffs on adjusted operating earnings for 2025 is still projected to be a substantial $2 billion net cost. This figure is after the company's own mitigation efforts, which have included supply chain adjustments and shifting vehicle shipments. This tariff-related cost, compounded by any underlying currency strength, acts as a direct tax on international sales profitability.

• Tariff net cost to 2025 adjusted EBIT: $2 billion.
• Mitigation efforts reduced the gross tariff impact by $1 billion.
• International sales are less profitable due to currency conversion and trade friction.

Finance: draft 13-week cash view by Friday, incorporating the UAW cost increase into Q1 2026 projections.

Ford Motor Company (F) - PESTLE Analysis: Social factors

You are seeing a fascinating tug-of-war in the U.S. auto market right now, and for Ford Motor Company, the social factors boil down to a conflict between a deep-seated American love for big, powerful vehicles and a rapidly emerging, cost-conscious, and green-aware consumer base. Your strategy must acknowledge that the high-margin truck business is still the cash engine, but the long-term growth is tethered to the electric and hybrid shift.

Persistent strong consumer demand for high-margin, full-size trucks like the F-Series and large SUVs.

The core of Ford's profitability, the F-Series, remains a cultural and commercial powerhouse. Honestly, people still want a big truck. Through the third quarter of 2025, F-Series sales hit a staggering 620,580 units year-to-date, marking a 12.7% increase over the previous year. That's a huge number, and it outsold the nearest competitor by an estimated 170,000 trucks. This segment is crucial because full-size pickups offer greater margins for the company and its dealer network.

The large SUV segment is also surging, reflecting a consumer preference for utility and space. For instance, the Ford Expedition saw sales jump 43.9% in the second quarter of 2025 to 31,298 units, its best second quarter in 20 years. Lincoln Navigator, a key luxury profit driver, soared 115% in the same quarter. This is pure profit momentum.

Here's the quick math: while the overall Ford Motor Company net margin was 4.84% in Q3 2025, the truck and large SUV division, Ford Blue, drives a disproportionately high share of the operating profit (EBIT), making this social trend a near-term financial necessity.

Growing public awareness and preference for sustainable and electric vehicle options in urban centers.

The social shift toward sustainability is not a monolithic move to pure electric vehicles (BEVs) yet; it's a strong pivot to electrified options, which includes hybrids. Ford's total electrified vehicle sales (hybrid, plug-in hybrid, and BEV) reached 85,789 units in Q3 2025, a 19.8% year-over-year jump, representing 15.7% of the total sales mix. This is where the nuance is, and it's where Ford is winning right now.

Hybrids are the immediate social sweet spot. The F-150 Hybrid sold 22,212 units in Q3 2025, up 10.3%, and the compact Maverick Hybrid is a runaway success with 63,516 units sold year-to-date. To be fair, the pure EV market is struggling with adoption pace; some reports showed pure EV sales declined 31.4% year-over-year earlier in 2025. Still, the F-150 Lightning, a key EV offering, is gaining traction with 23,034 units sold year-to-date through Q3, up 40% in that quarter alone.

This is a clear signal: consumers want fuel efficiency and lower emissions, but they want it in the body styles they already love-trucks and SUVs-and they are prioritizing hybrids for their lower cost and lack of charging anxiety.

Labor relations remain a focus following the high-profile 2023 UAW strike, affecting employee morale and public image.

The 2023 United Auto Workers (UAW) strike was a watershed social moment, fundamentally changing the cost structure and labor expectations for Ford. The new contract delivered a 25% hourly wage increase over the 4.5-year term, with an immediate 11% pay boost upon ratification. This was a massive win for the UAW, and it defintely boosted employee morale, particularly for the lowest-paid members (temporary workers' base wages are set to rise from $16.67 to over $40 per hour by 2028).

However, the cost is real and ongoing. Ford lost an estimated $1.7 billion in profit in 2023 due to the strike. Furthermore, labor relations remain a continuous risk, as evidenced by a threatened strike at the River Rouge tool and die unit in September 2024 over local contract issues. CEO Jim Farley's comments that the company must 'think carefully about our (manufacturing) footprint' for the EV transition signal that labor costs are now a major strategic constraint, creating a public image of an ongoing, high-stakes negotiation rather than a settled partnership.

Shifting work-from-home trends reduce daily commuting mileage, potentially slowing replacement cycles for some vehicles.

The persistence of remote work is a long-term headwind for the entire auto industry, rooted in reduced Vehicle Miles Traveled (VMT). Research indicates that a 1% decrease in onsite workers is associated with a roughly 0.99% reduction in state-level VMT. This trend is estimated to reduce total U.S. VMT by 140 billion to 270 billion miles per year. Fewer miles driven means slower wear and tear, which in turn stretches the average vehicle replacement cycle. This is a clear risk to new vehicle sales volume over the next five years.

What this estimate hides is the shift in type of driving. While commuting is down, other data suggests VMT per capita actually jumped 12% between May 2019 and May 2024, indicating people are driving more for non-work-related trips. This shift favors Ford's high-margin, utility-focused products like the Bronco and Expedition, which are better suited for family road trips and recreational use than for daily urban commutes. The risk is concentrated in smaller, commuter-focused vehicles, which Ford has largely de-emphasized in the U.S. anyway.

The next step is clear: Product Development: Prioritize hybrid powertrain options for all high-margin truck and SUV refreshes to capture both the utility and efficiency social trends.

Ford Motor Company (F) - PESTLE Analysis: Technological factors

You're looking at Ford Motor Company (F) and trying to map their technological bets against the market reality of 2025, and honestly, it's a high-stakes, two-front war: one for electric volume and one for software-driven revenue. They are pouring capital into both, but the immediate financial return is still elusive.

The core of their technology strategy is a rapid pivot to a software-defined electric vehicle (EV) architecture, aiming to make their vehicles a platform that improves over time, not just a depreciating asset. This shift is critical to competing with Tesla and other agile EV players.

Scaling up electric vehicle production, targeting a global run rate of 600,000 EV units in 2025

Ford is aggressively pushing for scale to drive down unit costs, even as the Model e segment faces significant headwinds. The company is on track to achieve a global EV production run rate of 600,000 units annually, a target initially set for late 2023, and is working toward a much larger goal of over 2 million units by the end of 2026. This production ramp-up is essential, but it is not cheap.

For the 2025 fiscal year, Ford's Model e segment is expected to post a significant operating loss, projected between $5 billion and $5.5 billion, which is comparable to the 2024 loss of $5.1 billion. This loss is a direct result of heavy investment in new platforms, battery facilities, and intense industry pricing pressure. The good news is that volume is spiking; EV sales in the first six months of 2025 saw a remarkable 324% increase compared to the same period in 2024, driven by new models like the Ford Puma Gen-E in Europe and continued demand for the Mustang Mach-E and F-150 Lightning. Here's the quick math on their initial run-rate breakdown:

Continued significant investment in the BlueCruise hands-free highway driving technology rollout

The company is making its hands-free highway driving system, BlueCruise (a Level 2 autonomous driving system), a core feature across its lineup. The 2025 model year sees the rollout of BlueCruise 1.3 and the introduction of BlueCruise 1.5, which adds automatic lane-changing assistance and improves in-lane stability and cornering behavior. This is a crucial differentiator against competitors' systems.

The investment is reflected in accessibility and feature expansion, not just R&D spend. For 2025 models, Ford simplified the subscription model: a one-year subscription is priced at $495 (a reduction from the previous $700 price point), or you can opt for a one-time purchase of $2,495 for long-term guaranteed service. This lower entry price is a clear strategic move to increase adoption and data collection. The system is now available on a wide range of 2025 models including the Explorer, Expedition, F-150, F-150 Lightning, and Mustang Mach-E, covering over 130,000 miles of pre-mapped North American highways (Blue Zones). The next big step, BlueCruise 2.0 with city driving capabilities, is expected by 2026. This expansion is defintely a key strategic lever for future service revenue.

Developing next-generation battery chemistries to reduce cost per kilowatt-hour (kWh) and increase range

Battery technology is the single largest cost variable in an EV, and Ford is aggressively diversifying its chemistry portfolio to reduce the cost per kilowatt-hour (kWh) and improve vehicle range. The shift to Lithium Iron Phosphate (LFP) batteries, alongside the existing Nickel Cobalt Manganese (NCM) chemistry, is a major component of this cost-reduction strategy. Globally, LFP batteries are approximately 30% cheaper per kWh than NCM batteries. For Ford specifically, LFP is expected to deliver a 10 to 15 percent bill of material savings compared to NCM batteries at current costs. They are already securing the supply chain to support this.

Looking ahead, Ford is developing Lithium Manganese Rich (LMR) chemistry at its Ion Park battery center. LMR is touted as a breakthrough that offers enhanced safety and stability comparable to LFP, but with a higher energy density than even high-nickel batteries, which translates directly to longer range for a given battery size. The goal is clear: achieve cost parity with gasoline vehicles. The company's focus on smaller, high-efficiency batteries is evident in its next-generation EV platform, which is expected to support a midsize pickup truck with a battery pack around 51 kWh.

Increased reliance on over-the-air (OTA) software updates for vehicle features and maintenance

Ford's commitment to the software-defined vehicle is most visible in its 'Power-Up' over-the-air (OTA) software updates. This capability is not just for EVs; Ford is a leader in delivering bumper-to-bumper OTA updates to nearly all vehicle computer modules, including those in conventional gas-engine vehicles. This is a huge competitive edge for quality and customer experience.

The company aims to have 33 million vehicles with OTA technology by 2028. What makes their approach unique is the use of A/B partitioning, which allows updates to be installed silently on an inactive partition while the current software continues to run, eliminating service downtime. This means your vehicle can be upgraded while you sleep. The early 2025 updates, for instance, focused on the Ford Pro Telematics platform, providing fleet managers with new data-driven insights:

• Seatbelt Alerts: Added to Ford Pro Telematics for both drivers and passengers.
• API Endpoints: New endpoints for historical vehicle status and metadata, helping fleet managers integrate data into their own systems.
• E-Switch Assist: Enhanced tools to help fleet managers determine if their gas-powered vehicles are suitable for an EV transition based on real-world data like cargo load and climate.

This software capability is essential for generating future recurring revenue streams and reducing warranty costs by fixing issues remotely, which changes the entire financial model of the dealership service department.

Ford Motor Company (F) - PESTLE Analysis: Legal factors

Ongoing compliance with new, stricter Environmental Protection Agency (EPA) emission standards for internal combustion engines (ICE)

The regulatory landscape for internal combustion engines (ICE) is tightening signficantly, forcing Ford Motor Company to commit substantial capital to compliance. The EPA's new 'Multi-Pollutant Emissions Standards for Model Years 2027 and Later' were finalized in March 2024, and while they phase in starting in Model Year (MY) 2027, the planning and investment are a critical 2025 legal challenge. The rule requires the industry-wide average for light-duty vehicle greenhouse gas (GHG) emissions to be reduced by nearly 50 percent from MY 2026 levels by MY 2032. This is a massive shift.

For the current 2025 fiscal year, Ford is still navigating the tail end of the previous standards (MY 2017-2025), which are projected to add, on average, about $1,800 to the cost of a new MY 2025 vehicle for compliance technology alone. Also, the cost of past non-compliance remains a stark reminder: in July 2025, Ford finalized a Clean Air Act settlement with the EPA for a total of $7.8 million, which included civil penalties, emissions credits, and projects to reduce future pollutants. You defintely have to invest now to avoid massive costs later.

Here is a quick look at the near-term regulatory shift:

• Current Focus (MY 2025): Meeting the existing GHG and fuel economy standards while integrating new, costly technology.
• Future Mandate (MY 2027-2032): Achieving a fleet-average GHG emission reduction of nearly 50% by MY 2032.
• Risk: Potential for hefty fines or loss of emissions credits if the transition from ICE to electric vehicles (EVs) does not accelerate as planned.

Increased litigation risk related to autonomous driving features and software liability

The liability for advanced driver-assistance systems (ADAS) like Ford's BlueCruise is the single biggest emerging legal risk in 2025. When the car is driving itself, the manufacturer, not the driver, becomes the primary target for litigation. The National Highway Traffic Safety Administration (NHTSA) escalated its investigation into the BlueCruise system to an 'Engineering Analysis' in January 2025, which is the final step before a potential recall. This is a serious situation.

The investigation covers approximately 129,222 vehicles from the 2021-2024 model years, including the Mustang Mach-E. The probe was prompted by two fatal crashes in early 2024 where the BlueCruise system was engaged. Investigators found a critical potential flaw: the system's Adaptive Cruise Control (ACC) is programmed to ignore stationary objects at speeds above 62 mph to prevent false detections, but this programming failed to prevent collisions with stopped vehicles in the fatal incidents. The financial and reputational fallout from a mandatory recall and subsequent product liability lawsuits could be substantial.

Adherence to global data privacy regulations (like GDPR) for connected vehicle data collection and usage

Connected vehicles generate massive amounts of data-location, driving behavior, diagnostics-and the legal framework for this is a minefield. Ford is actively managing compliance with both the European Union's General Data Protection Regulation (GDPR) and evolving US state-level privacy laws, such as the US Privacy Notice effective September 30, 2025. The company has taken a strong public stance to mitigate risk and build customer trust.

The Chief Privacy Officer confirmed in 2025 that Ford does not sell connected vehicle data, period. This is a key differentiator against competitors facing intense scrutiny for sharing driver behavior data with third parties. For European operations, Ford Motor Company Limited is designated as the controller for data received from connected vehicles, which is the legal entity responsible for ensuring that all data processing meets the strict requirements of European data protection law.

The core legal challenge is managing the sheer volume of data categories collected:

• Vehicle Data: Core performance, system status, battery levels, and mileage.
• Location Data: Necessary for services like navigation and emergency assistance.
• Personal Data: Information from the FordPass app, including contact and payment details.

Navigating complex international trade laws for vehicle and component exports and imports

Trade policy volatility continues to be a major headwind, directly impacting Ford's bottom line in the 2025 fiscal year. The uncertainty from ongoing tariffs forced Ford Motor Company to suspend its full-year financial guidance in May 2025. This move was directly tied to an anticipated net adverse adjusted Earnings Before Interest and Taxes (EBIT) impact of about $1.5 billion for the full year.

The gross impact from tariffs, primarily on imported components and vehicles, was projected at $3 billion, but Ford expects to offset $1 billion through mitigation strategies like sourcing more domestic parts and shifting manufacturing. This trade uncertainty directly led to a downward revision of the company's financial forecast. The revised full-year 2025 adjusted EBIT outlook was lowered to between $6.5 billion and $7.5 billion, down from the original range of $7 billion to $8.5 billion, highlighting the tangible cost of trade friction.

Ford Motor Company (F) - PESTLE Analysis: Environmental factors

Commitment to Achieving Carbon Neutrality by 2050

Ford Motor Company's pledge to achieve carbon neutrality across its global facilities, logistics, and vehicles by 2050 is a non-negotiable strategic pillar. This isn't just a distant goal; it drives near-term capital expenditure (CapEx) decisions. The company has made concrete progress, having already achieved a 49% reduction in absolute global operations greenhouse gas (GHG) emissions since 2017. That's a significant cut in Scope 1 and 2 emissions (direct operations and purchased energy).

The transition is heavily reliant on renewable energy sourcing. As of 2025, 70.5% of Ford's global manufacturing operations are already powered by carbon-free electricity. The next major milestone is sourcing 100% carbon-free electricity for all global manufacturing efforts by 2035. This is a massive undertaking, but it's the only way to meet the 2050 target without relying on carbon offsets, which investors are increasingly wary of.

Here's the quick math: Ford's EV segment is still losing money per unit, but the IRA incentives and the high-margin F-150 sales are subsidizing the transition. What this estimate hides is the true cost of scaling the battery supply chain globally. That's the real capital drain.

Significant Capital Expenditure Allocated to EV Battery Recycling

The pivot to electric vehicles means moving from a fuel-based economy to a materials-based one, and that requires a circular economy strategy. Ford is actively building out its battery recycling infrastructure to secure critical raw materials like lithium, nickel, and cobalt domestically. This is a direct response to geopolitical supply chain risks, plus it helps qualify for Inflation Reduction Act (IRA) benefits.

Ford has a massive multi-year investment plan, committing to spend more than $22 billion through 2025 on engineering and introducing connected, electric vehicles, including battery development. A key action here was the $50 million investment in Redwood Materials Inc., a Nevada-based battery recycling company, to establish a closed-loop supply chain. This partnership is designed to recover up to 95% of precious metals from used EV batteries, which is defintely a game-changer for long-term cost control.

The company's forecasted total capital spending for the 2025 fiscal year is between $8.0 billion and $9.0 billion, with a significant portion dedicated to battery facilities and next-generation EV products. This is a necessary, front-loaded investment to drive down the cost of its battery cells, which CEO Jim Farley correctly calls the starting point for an affordable EV.

Pressure to Reduce Water Usage and Waste in Manufacturing

Investors and activist groups are increasing pressure on water stewardship, especially in water-stressed regions. Ford has set an ambitious goal to reduce freshwater use by 15% by 2025 across its global operations, relative to a 2018 baseline. They've already made headway, reducing overall water use by 10% across global manufacturing plants since 2018, which translates to saving approximately 3 million gallons of water annually.

Waste management is also a critical focus area, with a target of zero waste to landfill across all manufacturing facilities by the end of 2025. This circular economy approach is evident in the manufacturing process, where they recycled 2 billion pounds of aluminum over the past decade during the production of the all-aluminum-body F-Series models. The long-term ambition is to achieve zero drinkable water use in manufacturing, which is a tough but necessary target for operations in arid areas.

• Reduce freshwater use by 15% by 2025.
• Target zero waste to landfill by 2025.
• Recycled 2 billion pounds of aluminum in F-Series production.

Increased Reporting Requirements on Scope 3 Emissions

The regulatory and investor landscape is demanding greater transparency on Scope 3 emissions (indirect emissions from the value chain, like the supply chain and product use). This is where the majority of Ford's carbon footprint lies, and it's also the hardest to control. The company's 2025 Integrated Sustainability and Financial Report is a sign of this increased rigor, adhering to the European Union's Corporate Sustainability Reporting Directive (CSRD) and receiving a Limited Assurance opinion from PwC.

Ford faces a significant challenge in getting its suppliers on board. In 2024, the company received GHG emissions data from 377 suppliers, which was a 20% increase over 2022. However, a shareholder proposal from Green Century Capital Management in April 2025 pushed for more detailed disclosure on how Ford's supply chain emission reduction efforts, particularly around low-carbon steel, align with its net-zero goals. This pressure highlights the market's focus on the Scope 3 target: a 50% reduction in GHGs from the use of its products by 2035, relative to a 2019 baseline.

Next step: Finance: Draft a sensitivity analysis on 2026 projected sales based on a 100-basis-point interest rate fluctuation by next Thursday.