Year in Review

William Clay Ford, Jr.

“By taking a long-term view, and working to add value for all of our stakeholders, current and future, we have been successful in extremely difficult conditions. What we have learned and achieved has given us confidence as we look ahead.”

As we build on three years of improved operating profits, it is clear we have emerged stronger than ever from one of the most challenging periods in the history of Ford Motor Company. Even during the most difficult economic times, we continued to invest in making vehicles that are higher in quality, safer, more fuel efficient and technologically advanced. Our unwavering commitment to improving our products throughout the recession is proof that sustainability is fully integrated into our business strategy.

In this report you will read about our ONE Ford plan, which has helped us return to profitability while transforming our Company in some very fundamental ways. We are not slowing the pace of this progress. In fact, we’re accelerating ahead.

Ford is a different company than we were a few years ago. We now operate as a single global organization, drawing on the talents of our employees around the world to design and build vehicles that are truly global, and expanding our presence in rapidly growing markets. By mid-decade, five vehicle architectures will comprise about 75 percent of Ford sales worldwide. Already today, the Fiesta, Focus, the all-new Fusion, the Escape SUV and the compact Transit Connect van are global Ford models, sold in multiple regions with only minor variations tailored to specific local markets.

This approach provides unprecedented economies of scale and an opportunity to offer customers worldwide new technologies and product features that were historically reserved for premium vehicles. The global approach is also behind the rapid transformation of our vehicle fleet into a leader in fuel economy and other attributes our customers value. And it’s helping keep us on track to meet our goal to reduce carbon dioxide (CO₂) emissions from our vehicles in every region in order to address the climate change issue. For example, through the use of our EcoBoost® turbocharged, direct-injection gas engines and other features spelled out in our Sustainable Technologies and Alternative Fuels plan, we have improved the fuel economy of our U.S. vehicles by nearly 17 percent since 2006.

Global platforms are also behind the launch of the Ford Focus all-electric vehicle in early 2012 in the U.S. and late 2012 in Europe. By the end of 2012 we will introduce the C-MAX Hybrid and C-MAX Energi plug-in hybrid in the U.S., followed by the Fusion Energi in 2013. By 2013, we will triple our production capacity for electrified vehicles in North America compared to 2011. This includes hybrids, plug-in hybrids and pure battery electric vehicles, with most sales coming from hybrid-electric vehicles.

With our unprecedented launch of new electrified vehicles, nearly one-third of Ford’s vehicle lines in the U.S. will feature a model with 40 mpg or more in 2012 – a claim no other full-line automaker can match. This is part of Ford’s strategy to offer customers a number of powertrain options – both conventional gasoline technologies and electrified options – within existing vehicle lines. We call this the “Power of Choice,” and it’s an important part of our vision to further evolve our fleet and our company.

We’ve also made considerable progress in our manufacturing operations. Between 2000 and 2010, for example, our manufacturing facilities worldwide reduced overall energy use by more than 40 percent, decreased CO₂ emissions by 48 percent and cut water use by 60 percent. These more-efficient facilities have saved us money and helped us further strengthen our balance sheet.

In 2012, we were recognized by the U.S. Environmental Protection Agency for our efforts to reduce CO₂ at our manufacturing facilities. Our plan sets us on a course to reduce greenhouse gas emissions by 30 percent per vehicle manufactured between 2010 and 2025 – on top of the more than 30 percent reduction we achieved from 2000 to 2010.

Even as we find ways to address longstanding sustainability issues, new challenges have emerged. I have often stated that our goal is to make mobility affordable in every sense of the word – economically, environmentally and socially. But several global trends threaten this vision.

Right now, there are about 1 billion vehicles on the road worldwide. With more people and greater prosperity, that number could grow to 4 billion by mid-century. If we don’t change the current transportation model, the increase in these vehicles could present a serious sustainability challenge and could undermine attempts to ensure access to mobility for all those who need it.

To address this issue, we will once again need new technologies, as well as new ways of looking at the world. To begin with, we need to view the automobile as one element of a much broader transportation ecosystem, and look for new ways to optimize the entire system. We need vehicles that can communicate with each other, and with the world around them, to make driving safer and more efficient. In today’s increasingly mobile society, developing ways to safely integrate communications technology into the driving experience has become a top priority.

Ford entered the wireless communications arena in 2007 with our SYNC® system, which was developed in partnership with Microsoft. Our Ford Evos Concept vehicle, which we introduced last year, explores the next level of connection. It uses Internet cloud technology to help provide drivers with a more personalized and seamless connection to the outside world.

Looking even further into the future, we have outlined our Blueprint for Mobility. This plan, which we announced in early 2012, is our vision of what sustainable transportation will look like in 2025 and beyond, as well as the near-, mid- and long-term steps we must take to get there. We believe a truly sustainable long-term solution will require a global transportation network that enables wireless communication among vehicles and infrastructure. This system would use real-time data to enhance personal mobility on a massive scale, bringing all modes of travel into a single network that links together public and personal transportation. Pedestrian walkways, bicycles, buses, airplanes, trains, automobiles – in our vision of the future everything would be fully integrated to save time, conserve resources and lower emissions.

The mobility challenge is not the only one that lies ahead for our Company and our industry. Global economic conditions remain volatile. Energy and commodity costs are rising once again. The world is looking for business leadership and accountability on issues ranging from the availability of water to human rights and corporate governance, and we are actively involved in all of these areas.

Whatever challenges we face in the future, sustainability will remain a central element of our business strategy. By taking a long-term view, and working to add value for all of our stakeholders, current and future, we have been successful in extremely difficult conditions. What we have learned and achieved has given us confidence as we look ahead. Building on the solid foundation we have established, Ford Motor Company will go further, continuing to deliver Great Products, a Strong Business and a Better World.