This analysis is based on Ford Motor Company's Form 10-Q for the quarterly period ended June 30, 2026, filed with the U.S. Securities and Exchange Commission on July 29, 2026 (accession 0000037996-26-000156). All figures are consolidated and presented under US GAAP unless otherwise noted.
Ford reported a second-quarter net loss attributable to Ford of $1,327 million, but the loss says almost nothing about how the core business is running. Every dollar of it — and then some — came from the cost of dismantling BlueOval SK, the EV battery joint venture Ford built with Korea's SK On, which produced $3.6 billion of charges in the quarter (Notes 12 and 16). Strip that out and the operating picture is the strongest it has been in three years: first-half operating income more than tripled to $2,967 million from $830 million, and the first-half operating margin of 3.2% now sits above the full-year margins Ford ran in fiscal 2023 and 2024, before the fiscal 2025 collapse. The tension in this filing is that Ford bought its way out of an expensive EV commitment at the exact moment its combustion and commercial franchises are firing — and paid for it by turning an automotive net cash position into net debt.
1. Consolidated Balance Sheet
1-1. Principal asset movements
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 23,356 | 18,603 | -20.3% |
| Marketable securities | 15,131 | 12,731 | -15.9% |
| Trade and other receivables | 15,398 | 17,880 | +16.1% |
| Inventories | 15,285 | 16,946 | +10.9% |
| Net property | 37,288 | 39,958 | +7.2% |
| Equity in net assets of affiliated companies | 2,753 | 2,758 | +0.2% |
| Deferred income taxes | 21,953 | 23,107 | +5.3% |
| Total assets | 289,160 | 285,531 | -1.3% |
The asset side tells the BlueOval SK story in reverse. Net property rose $2,670 million, driven mainly by capital spending that itself rose 21.8% to $4,758 million in the half, plus the assets acquired from BlueOval SK — the filing puts the fair value of everything Ford took over, including the two Kentucky plants and related fixed assets, at $0.9 billion, and records the acquisition and the related debt assumption as non-cash investing and financing activities (Note 16).
Meanwhile, the carrying value of equity in net assets of affiliated companies barely moved — $2,753 million to $2,758 million — despite a $2,603 million equity-method loss booked in the first half. That is not a contradiction, and it is worth being precise about why: BlueOval SK's carrying amount had already been ground down to near zero by prior-period losses and by $3.1 billion of returns of capital that the JV distributed to Ford after drawing on its DOE loan ($1.7 billion of that in the first half of 2025 alone). The $2.9 billion charge Ford booked this quarter is therefore not the write-off of a carrying value at all — the filing describes it as the amount by which the value of the liabilities assumed exceeded the value of the assets acquired in exchange for the redemption of Ford's interest.
Inventories deserve attention. The $1,661 million build was disproportionately in finished goods, which rose 13.2% to $10,488 million against a 7.3% increase in raw materials, work-in-process and supplies to $6,458 million. Finished vehicles accumulating faster than input inventory is the classic early signal that wholesale shipments are running ahead of retail sell-through, and it is worth watching against the 4.4% decline in Company excluding Ford Credit revenue this quarter. Trade receivables rising 16.1% while revenue fell compounds the caution.
Cash and marketable securities together fell $7,153 million to $31,334 million (Company excluding Ford Credit cash and securities: $28.7 billion to $22.3 billion), and section 3 traces where it went.
1-2. Debt structure — financial vs. operating liabilities
Ford reports debt in two books, and they must be read separately. Ford Credit's borrowings fund an earning-asset portfolio and are not a solvency claim on the automotive business.
| Item | Dec 31, 2025 ($M) | Jun 30, 2026 ($M) | Change % |
|---|---|---|---|
| Company excluding Ford Credit — total debt | 21,919 | 23,619 | +7.8% |
| Ford Credit — total debt | 141,417 | 137,348 | -2.9% |
| Payables (operating) | 25,809 | 27,012 | +4.7% |
| Other liabilities and deferred revenue (current + non-current) | 62,681 | 60,149 | -4.0% |
The $1,700 million rise in automotive debt is dominated by two offsetting movements (the residual is ordinary issuance, repayment and fair-value movement across the rest of the book). Ford assumed a $3,805 million promissory note payable to the U.S. Department of Energy — the obligation BlueOval SK had drawn against for one of the Kentucky plants — while $2,300 million of convertible notes came off the books entirely. The DOE loan carries a 4.814% coupon with quarterly interest-only payments through January 15, 2030, quarterly principal and interest from April 15, 2030, and final maturity on July 15, 2040. Both Kentucky plants remain subject to existing liens in favor of the DOE.
That is unusually long-dated and cheap paper for an issuer that sits right on the investment-grade boundary. Per the ratings disclosed in Ford Credit's own filings, Ford is BBB- at S&P (negative outlook) and BBB- at Fitch, BBB (low) at DBRS, and Ba1 at Moody's — investment grade at three agencies and one notch below it at Moody's, a genuinely split-rated profile rather than a comfortable one. And the "no principal due for nearly four years" comfort applies to this DOE note specifically, not to Ford's automotive maturity profile as a whole, which continues to amortize on its own schedule.
The condition attached matters more than the coupon. The Ford DOE Loan Agreement carries covenants substantially similar to those in Ford's existing credit agreement, including a liquidity covenant requiring Ford not to permit Available Liquidity to fall below $4.0 billion. Ford has ample headroom today, but this is a hard floor that did not exist on the balance sheet six months ago, and it constrains how far the company can draw down cash in a downturn.
What the exit removed is as important as what it added: on closing, Ford's obligation to make further capital contributions to BlueOval SK was terminated and Ford was released from its 50% guarantee of the JV's payment obligations under the $9.6 billion BOSK DOE loan facility. Maximum exposure to loss on the related VIE obligations fell from $4.9 billion at December 31, 2025 to zero. Ford took $3.8 billion of debt onto its own balance sheet to walk away from a larger, less controllable contingent claim.
1-3. Capital structure
Total equity attributable to Ford slipped from $35,952 million to $35,719 million. The composition of that small net change is more revealing than the number. Retained earnings finished the half at $22,508 million — identical to the opening balance, to the dollar-million. Ford earned $1,221 million attributable to shareholders and declared $1,221 million in dividends ($0.15 per share in each quarter: $611 million in Q1, $610 million in Q2), producing an exact wash. Capital in excess of par rose modestly to $23,979 million, treasury stock deepened by $229 million to $3,039 million, and accumulated other comprehensive loss widened slightly to $7,772 million.
The treasury movement should not be read as a capital-return program restarting. The filing ties the shares to settlement of the conversion premium on the convertible notes, subsequently repurchased under Ford's anti-dilutive share repurchase program — it is share-count housekeeping around the convertible retirement, not buyback capacity being deployed.
The quality of that equity base warrants context. Retained earnings stood at $33,740 million at December 31, 2024. Fiscal 2025 drained $11,232 million of it — an $8,182 million net loss plus roughly $3.0 billion of dividends declared. Ford is not rebuilding book value yet — it is holding the line while paying out everything it earns.
2. Consolidated Income Statement
2-1. Multi-year context — a cyclical business at a turning point
Autos are cyclical, and a single quarter judged in isolation would mislead badly here. Fiscal 2025 was an outlier trough driven by charges, not a normal operating year.
| Item | FY2023 ($M) | FY2024 ($M) | FY2025 ($M) | 2Y CAGR |
|---|---|---|---|---|
| Total revenues | 176,191 | 184,992 | 187,267 | +3.1% |
| Operating income/(loss) | 5,458 | 5,219 | (9,169) | n/m |
| Operating margin (%) | 3.1% | 2.8% | (4.9%) | — |
| Net income/(loss) attributable to Ford | 4,347 | 5,879 | (8,182) | n/m |
| Diluted EPS ($) | 1.08 | 1.46 | (2.06) | n/m |
Revenue has grown steadily and unremarkably through the cycle. Profitability has not. The fiscal 2025 operating loss of $9,169 million and equity-method loss of $3,153 million reflect the first tranche of the BlueOval SK unwind plus restructuring, not a demand collapse.
2-2. Current period results
| Item | Q2 2025 ($M) | Q2 2026 ($M) | Change % | H1 2025 ($M) | H1 2026 ($M) | Change % |
|---|---|---|---|---|---|---|
| Total revenues | 50,184 | 48,296 | -3.8% | 90,843 | 91,549 | +0.8% |
| — Company excluding Ford Credit | 46,943 | 44,891 | -4.4% | 84,365 | 84,710 | +0.4% |
| — Ford Credit | 3,241 | 3,405 | +5.1% | 6,478 | 6,839 | +5.6% |
| Cost of sales (consolidated) | 44,245 | 42,216 | -4.6% | 79,433 | 77,527 | -2.4% |
| Selling, administrative and other | 2,706 | 2,684 | -0.8% | 5,137 | 5,491 | +6.9% |
| Operating income | 511 | 638 | +24.9% | 830 | 2,967 | +257.5% |
| Operating margin (%) | 1.0% | 1.3% | — | 0.9% | 3.2% | — |
| Equity in net income/(loss) of affiliates | (250) | (2,763) | n/m | (156) | (2,603) | n/m |
| Income/(loss) before taxes | 541 | (2,033) | n/m | 1,162 | 879 | -24.4% |
| Net income/(loss) (total) | (29) | (1,322) | n/m | 444 | 1,229 | +176.8% |
| Net income/(loss) attributable to Ford | (36) | (1,327) | n/m | 435 | 1,221 | +180.7% |
| Diluted EPS ($) | (0.01) | (0.33) | n/m | 0.11 | 0.30 | +172.7% |
The mechanics are clean once separated. Operating income rose 24.9% in the quarter on 3.8% lower revenue — the reverse of normal operating leverage, and proof that the improvement is coming from cost and mix rather than volume. Consolidated cost of sales fell 4.6% while Company excluding Ford Credit revenue fell 4.4%, and that comparison is understated because cost of sales absorbed $0.7 billion of BlueOval SK charges. Excluding those, gross margin on the Company excluding Ford Credit revenue base was roughly 7.5% versus 5.8% a year earlier — an improvement of about 175 basis points on genuinely lower unit throughput. That is pricing and mix discipline, not a volume story.
Everything below the operating line is the joint venture. The equity-method line swung to a $2,763 million loss in the quarter because BlueOval SK alone contributed a $2.9 billion charge, partly offset by roughly $0.14 billion of income from Ford's other affiliates; it converted $638 million of operating income into a $2,033 million pre-tax loss.
One item flatters the half-year: Ford recorded a $350 million tax benefit on $879 million of pre-tax income, so total net income of $1,229 million exceeded pre-tax income (of which $1,221 million is attributable to Ford and $8 million to noncontrolling interests — the two figures are not interchangeable). Deferred tax assets rose to $23,107 million. The benefit is driven by discrete items — a $273 million U.S. Qualified Opportunity Zone tax incentive recognized in the quarter and a U.K. tax law change — not by the BlueOval SK loss, and none of it is repeatable. The reported first-half EPS growth of 172.7% should be read with that in mind.
2-3. Fixed cost leverage
The clearest read on operating leverage comes from the segment note, where first-half Ford Blue revenue rose 6.7% to $49,926 million while segment EBIT rose 306.5% to $3,077 million. The arithmetic ratio of those two (roughly 45x) is not a meaningful multiplier — it is what any percentage change looks like off a depressed base — but the direction is real. Depreciation and tooling amortization was essentially flat across the company at $3,748 million for the half versus $3,747 million, so the entire earnings swing came through on an unchanged fixed asset cost base. That is the signature of a business absorbing volume against already-paid-for capacity.
The offsetting pressure is in selling and administrative expense, which rose 6.9% to $5,491 million for the half against 0.8% revenue growth, lifting the ratio to 6.00% from 5.65% — a drift of about 35 basis points. On a $91.5 billion revenue base, that is not trivial.
3. Consolidated Cash Flow
| Item (First Half) | 2025 ($M) | 2026 ($M) | Change |
|---|---|---|---|
| Net cash from operating activities | 9,996 | 5,661 | -43.4% |
| Net cash from investing activities | (3,011) | (4,018) | outflow +33.4% |
| Net cash from financing activities | (7,408) | (6,370) | outflow -14.0% |
| Capital spending | (3,906) | (4,758) | outflow +21.8% |
| Free cash flow (Op. CF − CapEx) | 6,090 | 903 | -85.2% |
| Cash, equivalents and restricted cash, end of period | 23,250 | 18,896 | -18.7% |
Free cash flow of $903 million against $6,090 million a year earlier is the most uncomfortable number in this filing, and it is only partly a quality-of-earnings problem. Operating cash flow fell $4,335 million, but the dominant driver was working capital normalization rather than deteriorating profit: accounts payable and accrued liabilities contributed just $577 million this half versus $7,293 million in the prior-year period, a $6,716 million swing. Ford was running an unusually stretched payables position in early 2025 and has now unwound it.
Earnings quality remains adequate on the reported measure — operating cash flow covered net income 4.6 times in the half — but that ratio is inflated by a small net income denominator and by the $2,930 million non-cash BlueOval SK charge added back. The more useful observation is that most of the $3.6 billion of exit charges did not move cash this period: the $2.9 billion equity-method charge and the $0.2 billion fixed-asset write-down are non-cash, the plant acquisition and debt assumption are explicitly disclosed as non-cash investing and financing activities, and Ford received $0.1 billion of cash at closing. The genuinely cash-relevant piece is the $0.5 billion settlement of pre-existing claims. The larger cash consequence arrives later, as debt service on the assumed DOE note.
Capital spending rose 21.8% to $4,758 million, lifting capex intensity to 5.2% of revenue from 4.3%. That is the number to watch next quarter: Ford has just taken direct ownership of two Kentucky battery plants it previously funded through a 50/50 JV, and the spending required to bring them into Ford's own production plan now shows up inside Ford's capex line rather than inside an equity-method affiliate.
4. The Korean side of the ledger
For investors watching this from Seoul, Ford's $3.6 billion charge is one half of a two-sided transaction. Under the Joint Venture Disposition Agreement signed in December 2025 and closed in May 2026, the roughly $11.4 billion BlueOval SK partnership was split rather than liquidated: Ford took full ownership of the two Kentucky plants, while SK On took 100% of the Tennessee plant at BlueOval City through a newly established subsidiary, per Korean trade press coverage of the split. SK On has indicated it will run the Tennessee site on its own account — for EV cells and for energy storage systems, with production targeted from 2028 — and both companies have said the commercial supply relationship survives the corporate one.
Two implications follow for the Korean battery complex. First, this filing prices what a 50/50 US battery JV costs to exit when EV demand undershoots the original build plan — a reference point for the remaining Korean-OEM joint ventures. Second, the split converts a guaranteed, shared obligation into two separate single-owner risks: Ford's shows up here as $3.8 billion of DOE debt and a $4.0 billion liquidity covenant, while SK On's shows up on the Korean side as sole responsibility for filling a Tennessee plant whose anchor customer is now a contractual counterparty rather than a partner. Ford's numbers this quarter tell you what the American half of that trade cost. The Korean half is disclosed elsewhere.