What’s your credit card limit? $5,000? $10,000? $50,000? Ford Motor Company’s is a bit higher. The automaker just opened a new line of credit–up to $3 billion. Here’s how that works, and why it might not be a bad thing.
Essentially, Ford Motor Company reached out to mega bank JP Morgan Chase to apply for a line of credit. Just like when you try to open a new card. Only much bigger. The lender approved Ford for up to $3 billion.
If Ford does need all that cash, it will actually come from multiple investors, but be administered by JP Morgan Chase. What’s the expiration date on Ford’s big “card?” July 28, 2026. And the collateral? Ford must keep a $4 billion cash reserve.
Ford is calling the loan “proactive.” It projects it will lose $1.5 billion while President Trump’s tariffs make building a car more expensive (every Ford vehicle uses some foreign components), and before Ford is able to increase prices enough to offset the cost. In the meantime, Ford must ensure cashflow so it can build and advertise its cars.
The automaker famously didn’t take a government bailout after the 2008 financial crisis. But in August 2023, Ford used a similar strategy and secured a $4 billion line of credit. Why? In 2023, Ford said it needed “additional working capital flexibility on top of our already strong liquidity position to manage through a variety of uncertainties in the present environment.” The first sign of trouble after President Trump’s tariffs was when Ford suspended its longterm business plan (called a “full-year guidance”) to react in realtime.
