v3.25.4
LEASE COMMITMENTS
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
LEASE COMMITMENTS LEASE COMMITMENTS
We lease land, dealership facilities, offices, distribution centers, warehouses, and equipment under agreements with contractual periods ranging from less than one year to 40 years. Many of our leases contain one or more options to extend. In certain dealership lease agreements, we are the tenant and we sublease the site to a dealer. In the event the sublease is terminated, we have the option to terminate the head lease. We include options that we are reasonably certain to exercise in our evaluation of the lease term after considering all relevant economic and financial factors.

Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased (“right-of-use”) assets in finance lease arrangements are reported in Net property on our consolidated balance sheets. Otherwise, the leases are classified as operating leases and reported in Other assets in the non-current assets section of our consolidated balance sheets. We also recognize in Net property “build-to-suit” arrangements during the construction period where we are involved in the construction or design of the asset and are considered the accounting owner. We do not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less. These lease payments are amortized to expense on a straight-line basis over the lease term. We have also entered into manufacturing contracts where Ford’s portion of the output is expected to be significant. As a result, there are embedded leases, and related liabilities, that are reported as part of our financial statements, typically upon commencement of production.

For the majority of our leases, we do not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they relate. Instead, non-lease components are included in the measurement of the lease liabilities. However, we do separate lease and non-lease components for contracts containing a significant service component (e.g., energy performance contracts). We calculate the initial lease liability as the present value of fixed payments not yet paid and variable payments that are based on a market rate or an index (e.g., CPI), measured at commencement. The majority of our leases are discounted using our incremental borrowing rate because the rate implicit in the lease is not readily determinable. All other variable payments are expensed as incurred.
NOTE 17. LEASE COMMITMENTS (Continued)

Lease right-of-use assets and liabilities at December 31 were as follows (in millions):
20242025
Operating leases
Other assets, non-current$2,308 $2,389 
Other liabilities and deferred revenue, current$558 $567 
Other liabilities and deferred revenue, non-current1,782 1,835 
Total operating lease liabilities$2,340 $2,402 
Finance leases
Property and equipment, gross$1,150 $1,304 
Accumulated depreciation(162)(298)
Property and equipment, net$988 $1,006 
Company excluding Ford Credit debt payable within one year$94 $136 
Company excluding Ford Credit long-term debt711 754 
Total finance lease liabilities$805 $890 

The amounts contractually due on our lease liabilities as of December 31, 2025 were as follows (in millions):
Operating Leases (a)Finance
Leases
2026$666 $180 
2027548 177 
2028414 119 
2029305 101 
2030202 96 
Thereafter644 455 
Total2,779 1,128 
Less: Present value discount377 238 
Total lease liabilities$2,402 $890 
__________
(a)    Excludes approximately $1,141 million in future lease payments for various leases commencing in future periods.
NOTE 17. LEASE COMMITMENTS (Continued)

Supplemental cash flow information related to leases for the years ended December 31 was as follows (in millions):
202320242025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$581 $663 $751 
Operating cash flows from finance leases32 39 46 
Financing cash flows from finance leases91 110 135 
Right-of-use assets obtained in exchange for lease liabilities
Operating leases$889 $1,051 $723 
Finance leases165 286 185 

The components of lease expense for the years ended December 31 were as follows (in millions):
202320242025
Operating lease expense$580 $650 $744 
Variable lease expense109 167 159 
Sublease income(18)(18)(16)
Finance lease expense
Amortization of right-of-use assets (a)64 80 166 
Interest on lease liabilities32 39 46 
Total lease expense$767 $918 $1,099 
__________
(a)    Included in 2025 is our impairment of finance lease assets. See Note 13 for additional information.

The weighted average remaining lease term and weighted average discount rate at December 31 were as follows:
202320242025
Weighted average remaining lease term (in years)
Operating leases5.45.76.0
Finance leases11.910.89.2
Weighted average discount rate
Operating leases4.7 %4.5 %4.7 %
Finance leases5.3 4.8 4.9 
LEASE COMMITMENTS LEASE COMMITMENTS
We lease land, dealership facilities, offices, distribution centers, warehouses, and equipment under agreements with contractual periods ranging from less than one year to 40 years. Many of our leases contain one or more options to extend. In certain dealership lease agreements, we are the tenant and we sublease the site to a dealer. In the event the sublease is terminated, we have the option to terminate the head lease. We include options that we are reasonably certain to exercise in our evaluation of the lease term after considering all relevant economic and financial factors.

Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased (“right-of-use”) assets in finance lease arrangements are reported in Net property on our consolidated balance sheets. Otherwise, the leases are classified as operating leases and reported in Other assets in the non-current assets section of our consolidated balance sheets. We also recognize in Net property “build-to-suit” arrangements during the construction period where we are involved in the construction or design of the asset and are considered the accounting owner. We do not recognize right-of-use assets and lease liabilities for leases with a term of 12 months or less. These lease payments are amortized to expense on a straight-line basis over the lease term. We have also entered into manufacturing contracts where Ford’s portion of the output is expected to be significant. As a result, there are embedded leases, and related liabilities, that are reported as part of our financial statements, typically upon commencement of production.

For the majority of our leases, we do not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they relate. Instead, non-lease components are included in the measurement of the lease liabilities. However, we do separate lease and non-lease components for contracts containing a significant service component (e.g., energy performance contracts). We calculate the initial lease liability as the present value of fixed payments not yet paid and variable payments that are based on a market rate or an index (e.g., CPI), measured at commencement. The majority of our leases are discounted using our incremental borrowing rate because the rate implicit in the lease is not readily determinable. All other variable payments are expensed as incurred.
NOTE 17. LEASE COMMITMENTS (Continued)

Lease right-of-use assets and liabilities at December 31 were as follows (in millions):
20242025
Operating leases
Other assets, non-current$2,308 $2,389 
Other liabilities and deferred revenue, current$558 $567 
Other liabilities and deferred revenue, non-current1,782 1,835 
Total operating lease liabilities$2,340 $2,402 
Finance leases
Property and equipment, gross$1,150 $1,304 
Accumulated depreciation(162)(298)
Property and equipment, net$988 $1,006 
Company excluding Ford Credit debt payable within one year$94 $136 
Company excluding Ford Credit long-term debt711 754 
Total finance lease liabilities$805 $890 

The amounts contractually due on our lease liabilities as of December 31, 2025 were as follows (in millions):
Operating Leases (a)Finance
Leases
2026$666 $180 
2027548 177 
2028414 119 
2029305 101 
2030202 96 
Thereafter644 455 
Total2,779 1,128 
Less: Present value discount377 238 
Total lease liabilities$2,402 $890 
__________
(a)    Excludes approximately $1,141 million in future lease payments for various leases commencing in future periods.
NOTE 17. LEASE COMMITMENTS (Continued)

Supplemental cash flow information related to leases for the years ended December 31 was as follows (in millions):
202320242025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$581 $663 $751 
Operating cash flows from finance leases32 39 46 
Financing cash flows from finance leases91 110 135 
Right-of-use assets obtained in exchange for lease liabilities
Operating leases$889 $1,051 $723 
Finance leases165 286 185 

The components of lease expense for the years ended December 31 were as follows (in millions):
202320242025
Operating lease expense$580 $650 $744 
Variable lease expense109 167 159 
Sublease income(18)(18)(16)
Finance lease expense
Amortization of right-of-use assets (a)64 80 166 
Interest on lease liabilities32 39 46 
Total lease expense$767 $918 $1,099 
__________
(a)    Included in 2025 is our impairment of finance lease assets. See Note 13 for additional information.

The weighted average remaining lease term and weighted average discount rate at December 31 were as follows:
202320242025
Weighted average remaining lease term (in years)
Operating leases5.45.76.0
Finance leases11.910.89.2
Weighted average discount rate
Operating leases4.7 %4.5 %4.7 %
Finance leases5.3 4.8 4.9