FORD MOTOR COMPANY BUSINESS PLAN

SUBMITTED TO THE

HOUSE FINANCIAL SERVICES COMMITTEE

December 2, 20081

INTRODUCTION

Ford Motor Company welcomes the opportunity to sub mit our Plan to the House Financial Services Committee, and appreciates the t ime and attention Congress is devoting to the critical issues that confront the d omestic automotive industry in the

current economic environment.

In this submission, we first provide an overview o f the current business environment, then discuss our Plan for viability, a nd conclude by answering the specific questions posed in the correspondence received from Speaker of the House Nancy Pelosi and Senate Majority Leader Harry Reid.

We all have a shared interest in protecting America n jobs, a vital American industry and American innovation. As the Committee knows so well, the ongoing economic and credit crisis has affected many Americ ans – from losing their jobs to losing their homes. The recession also has had ver y negative ramifications for the U.S. auto industry, which supports five million jobs in all 50 states and spends $12 billion annually on research and development in the U.S. – more than any other industry.

We fully appreciate that the industry needs to tran sform itself to better compete by developing safer, greener and even better qualit y vehicles. We recognize Congress’ important role as guardian of the American taxpayer s, and we hope in our submission that we address your valid concerns about our poten tial for future viability and restore your confidence in our commitment to bring change a nd accountability.

As a company and as an industry, we readily admit

that we have made our share of mistakes and miscalculations in the past. We would ask Congress to recognize, however, that Ford did not wait until the current crisis to begin our restruct uring efforts, and that much of what we describe below

are actions we have taken and decisions we have made about the future that have already put us on a path to long-term viability. During the past sever al years, Ford has begun a fundamental restructuring in the way we do business – a restructuring that, a s described more fully below, affects every part of o ur business, including product innovation, fuel efficiency, labor relations, suppliers, and dealers . In short, Ford recognized that our business model need ed to change, and we are changing it. We share Congress’ concern that our i ndustry needs an aggressive restructuring, and we at Ford already have undertak en many of the decisive actions that we believe are necessary to ensure our future succe ss. While we have much more work ahead of us, Ford did

not wait until the current crisis to begin our restructuring efforts, but has already begun a fundamental restructuring in the way we do business. Our early efforts showed promise before the credit

and economic crises hit

earlier this year.2

In fact, Ford was profitable in the first quarter o f 2008 before the credit and broader economic crisis rapidly and dramatically sh runk demand for automobiles to a 25 year low. That’s why we respectfully ask Congress to work with us to provide temporary access to loans that, if needed, will help us conti nue to restructure in this difficult economic period.

We note that Ford is in a different situation from our competitors, in that we believe our Company has the necessary liquidity to weather this current economic downturn – assuming that it is of limited duration. If the downturn is longer and deeper than we now anticipate, however, access to governme nt financing would be important to help us be able to continue to implement our Plan a nd benefit when the economic recovery inevitably arrives. While we hope we do n ot have to access the loans, we believe it is critically important that loans are a vailable to us and the domestic auto industry.

In addition, the credit markets currently remain f rozen and are not available to finance the industry’s cyclical needs. This means that our liquidity through 2009 could come under increasing pressure if a significant ind ustry event, such as a bankruptcy of one of our competitors, causes a disruption to our supply base, dealers and creditors.

We are acutely aware that our domestic competitors are, by their own reporting, at risk of running out of cash in a matter of weeks or months. Our industry is an interdependent one. We have 80 percent overlap in supplier networks. Nearly 25 percent of Ford’s top dealers also own GM and Chrys ler franchises. That is why the collapse of one or both of our domestic competitors would also threaten Ford.

For Ford, the availability of a government line of credit would serve as a critical backstop or safeguard against these conditions as w e drive transformational change in our Company. Accordingly, given the significant ec onomic and market risks that exist, Ford respectfully requests that government funding be made available to us, in the form of a “stand-by” line of credit, in the amount of up to $9 billion. This line of credit would be a back-stop to be used only if conditions worsen further and only to the extent

needed.

Our recommended terms of the loan would be: (i) at government borrowing rates; (ii) a revolving credit line with a ten year durati on; and (iii) with additional conditions consistent with the TARP legislation.



### Ford’s Request:
A “stand-by” line of credit in the amount of up to $9 billion at Government borrowing rates, for a 10 year term, with TARP conditions, to support our restructuring, including the accele ration of products

that consumers want and value.3

THE CURRENT BUSINESS ENVIRONMENT

The United States economy is in a recession. The financial crisis, the worst in several decades, has exacerbated the downturn and d iminished economic growth prospects in the months ahead.

The auto sector is one of the first to suffer from bad economic conditions – indeed, spending on new vehicles historically repre sents about 4% of GDP and therefore is closely tied to economic conditions. As the financial crisis persists, both credit availability and consumers’ weakened confide nce have contributed to a drastic

decline in vehicle sales. There has been a broad-b ased tightening of origination and underwriting standards for automotive financing, sp reading beyond the sub-prime arena to affect many prime borrowers as well. The Federa l Reserve Senior Loan Officers’ survey shows that banks’ willingness to extend cons umer installment loans has only been weaker at one time in the past 30 years, and t hat was in June of 1980. Over 60% of banks have tightened standards for consumer cred it.

The forward economic outlook is also negative, wit h a wide range of possible

outcomes due to the uncertain financial market envi ronment. Real GDP is projected to decline significantly in the current quarter, as mu ch as 4% or more as compared to the prior quarter (at an annualized rate). Consumer co nfidence is the weakest since the early 1980s, with nearly three in four consumers ex pecting the recession to deepen in the months ahead, according to the recent Survey of Consumers report released by Reuters/University of Michigan.

The economy is projected to contract through the f irst half of 2009, with a peakto-trough decline in real GDP in the 2.0% to 2.5% r ange. The housing sector decline, as measured by housing starts and sales, is expecte d to weaken somewhat from already low levels.

Spending by consumers has already fallen at an ann ual rate of nearly 4% in the third quarter (as compared to the second quarter). A further contraction in consumer spending is underway in the current quarter, with a n additional step down likely in the first quarter of 2009. Consumers are weighing like ly further employment declines and responding by increasing their saving rates and pul ling back on purchases, especially of durable goods such as automobiles.

The financial crisis, now 16 months old, persists. Despite the actions taken by the Federal Government and the Federal Reserve (and other governmental institutions around the world), there is no near-term end in sig ht. Government actions to encourage consumer lending and open capital markets have, in our view, been of limited effectiveness to date, as banks have retained gover nment support to improve their financial leverage and shore up their own financial health rather than using it to make

resources available to businesses and consumers. T he present credit environment has4

severely limited consumer and commercial access to financing and negatively impacted both consumer confidence and spending.

The impact of the credit crisis has been acutely fe lt in the domestic automotive industry. October 2008 U.S. industry sales volumes were at the lowest annualized level in 25 years, and down 34% from 2007, and November sales are tracking at similar low rates. Compared with the first quarter of 2008

, the industry annual running rate in October has fallen by 31%, which roughly equates to an annual industry selling decrease of almost five million un its. Moreover, this sales decline occurred over a short period of time, making it vir tually impossible for manufacturers to reduce their costs to match the precipitous revenue decline. Ford has responded aggressively by reducing production to meet demand, but this responsible action puts additional pressure on our business by decreasing o ur cash reserves as payables

continue to come due while revenues decline.

In addition, we now believe that the global economi c and industry downturn will be broader, deeper and longer than previously expec ted, with industry volumes in 2009 expected to decline from the low levels of 2008. O ur suppliers and dealers, already stressed, will be under increasing pressure. Moreo ver, continuing turbulence in the U.S. and worldwide economies and tight credit markets wi ll continue to undermine consumer confidence and impact our business.

The present credit environment also has severely limited the ability of the automotive finance companies like Ford Motor Credit Company to access the public debt and securitization markets, and is significantly impairing our ability to suppo rt dealer and consumer financing needs. Banks and investors are exhibiting an aversion to risk and a willingness to invest in only the highest-quality financing instruments, and preferably in government instruments or governmentguaranteed debt. This risk aversion has expanded t o a level where it is challenging to find financial counterparties to transact even simp le interest rate and currency swaps, further contributing to a significant slowing of U. S. economic activity. These issues

have further constrained the cash available from Fo rd’s normally profitable automotive finance company to support our automotive business.

It is in the face of the deepening economic and cr edit crisis that Ford is asking

the Government to make assistance available to the domestic automotive industry even though we have a Plan for our future which, with ex ception to Department of Energy funding under Section 136, does not assume governme nt assistance. We do so for at

least four reasons. The recession and

financial crisis has

resulted in automotive industry sales volumes at

the lowest annualized level in 25 years.

The credit environment has severely limited the ability of Ford Motor Credit Company to support

dealer and consumer financing needs.5

First, we are acutely aware that our supply base, our labor structure, and our dealer network, among other factors, are sized for an industry and a market share that the domestic companies can no longer support. The current crisis has generated considerable debate about the perceived need to res tructure our industry in the national interest. As the nation’s oldest automotive compan y, Ford Motor Company is a vital participant in that debate.

Second, we are aware that our domestic competitors are, by their own reporting, at risk of running out of

cash in a matter of weeks or months. Because our industry is an interdependent one, with broad overl ap in supplier and dealer networks, the collapse of on e or both of our domestic competitors would threaten Ford as well. It is in our own self-interest, as w ell as the nation’s, to seek support for the industry at a time of great peril to this important manufacturing sect or of our economy.

Third, we hope that demonstrating our Plan to Congress will hasten approval of our application wi th the FDIC to establish an Industrial Loan Company as part of our finance arm, Ford Motor Credit Company. Having an Industrial Loan Company will place us on a more equal footing with our major competitors who already have such banks. More importantly, it will benefit consumers by providing us another resource for reasonably priced capital, thus helping us provide credit to our customers and deal ers.

Finally, the industry cannot use the current finan cial markets to finance its cyclical needs, as these markets are presently froz en, and any one of the following items could put severe pressure on our short-term a nd long-term liquidity:

• A significant industry event, such as a bankruptcy of one of our competitors, causes a disruption to our supply base, dealers and creditors;

• The economic decline is greater than present forec asts and industry volumes decline to per capita levels not seen since the gre at depression era; or

• There is a global economic collapse, creating addi tional cash demands.

In addition to making financing available to the au tomotive industry, there are other important policies that will help enhance the indus try’s global competitiveness. First, Ford was proud to support stronger CAFE standards, and we are absolutely committed to meeting them. However, we urge Congress to main tain one economy-wide set of national standards on fuel economy. A patchwork of standards would place enormous financial and engineering burdens on manufacturers and have the effect of reducing

consumer choice -- all for little or no environment al benefit. Second, in developing a stimulus bill to drive our country’s economic recov ery, we ask Congress to consider Ford is supporting the request for help from the Federal government

• To be part of the

national debate

• Because of the threat to Ford from a significant event involving one of our competitors

• In the hopes of hastening approval of our ILC application

• Because frozen credit markets might threaten liquidity under certain

scenarios.6

incentives for consumers to trade in older vehicles and move to more fuel-efficient

vehicles. We also ask that continued R&D incentive s be considered: the automobile industry spends $12 billion annually on research and development – more than any other industry. Th ird, we look forward to working with Congress on comprehens ive health care reform that will improve patient care, bring greater transparency, utilize new health information techno logies and drive down costs. Fourth, currency is the medium in which trade occurs – it can be as important a determinant of trade flows as the goods themselves. Currency values mus t be fairly determined – through an open market – not pr edetermined by governments to support their domestic industries. Finally, we support free trade, but it needs to befair trade. Agreements such as the recent US-Korea trade pact hurt domestic man ufacturers because they maintain non-tariff barriers to U.S.-produced goods and prev ent a level playing field.

THE FORD MOTOR COMPANY VIABILITY PLAN

Our Transformation to Date

When Ford embarked on our transformational Plan it was with clear recognition that Ford’s business model needed to change dramati cally, and quickly, if we were going to succeed. Our Board of Directors and Compa ny management knew that

“business as usual” would deliver “results as usual ” -- a steady decline in performance

and a failure to earn returns that would cover our cost of capital much less create positive shareholder value.

Historically, Ford has operated as four largely se parate automotive companies around the globe: (i) a North American company; (ii ) a South American company; (iii) a European company; and (iv) an Asia Pacific company. Each of these separate companies had its own product development systems, manufacturing processes, suppliers, and other duplicative structures. While this structure may have made sense when the automotive industry was in its infancy and communications, transportation,

and other infrastructures made economies around the world more isolated, the separation of our operations has in more recent yea rs led to unnecessary and inefficient duplication, waste and a failure to realize the sub stantial benefits of scale available to a global enterprise such as Ford.

In recent decades, moreover, Ford expanded into ot her businesses. At the beginning of this decade, our brand portfolio inclu ded Aston Martin, Jaguar, Land Rover, and Volvo, and we also owned adjacent businesses su ch as Hertz and the Kwik-Fit aftermarket parts business in Europe. As we attemp ted to manage these and other businesses, our global enterprise became more diffi cult to manage and we neglected to

ensure that the Ford “Blue Oval” brand retained its luster in all segments and its Ford supports other government policy initiatives

to enhance the

automotive industry’s global competitiveness.7

historical preeminence in all of our markets as a s ymbol that Ford Motor Company was there to provide reliable and affordable transporta tion for all.

The situation was especially acute in the United S tates. Throughout the 1990s and into this decade, we became increasingly depend ent in the U.S. market on trucks and large SUVs, which were in heavy demand by consu mers and generated large profits. Many of our competitors, both foreign and domestic, likewise followed market demand and added more truck and SUV products to the ir lineups. Our focus on these vehicles, however, left us exposed in the event of a market shift to smaller, more fuelefficient vehicles. In anticipation of such a shif t, and inspired by the compelling vision outlined by our Executive Chairman, Bill Ford, we b egan to refocus our portfolio earlier in this decade, introducing a new line of mid-size cars (the Fusion, Milan, and MKZ) as well as the first hybrid sport utility (the Ford Es cape -- still the most fuel efficient sport utility available with an EPA city mileage rating o f 34 miles per gallon). When fuel prices shot up rapidly earlier this year, the shift occurr ed much more quickly and was much more pronounced than we or anyone else in the indus try anticipated.

In addition, we had, over a period of many years, created a labor structure that was uncompetitive with the foreign-owned transplant operations that had been established in the United States. And, we made sma ll cars in the United States largely because of a requirement to meet federal Corporate Average Fuel Economy standards.

Fortunately, within the global Ford enterprise we h ad models of success on which to pattern a North American transformation. Both our European and South American operations had substantially completed transformational plans that had returned those operations to profitability from years of los ses. Our European and South American operations had developed attractive new products, matched capacity to demand and implemented progressive agreements with labor. Moreover, these markets, with historically high fuel prices, were primarily small vehicle markets, so we knew that, as a Company, we could make attractive small vehicles that could deliver profits, particularly i n a high fuel price environment.

It was with the knowledge of our success in Europe and South America that we developed a new plan for our Company. Our Plan is summarized as “ One Ford – One

Team • One Plan • One Goal .” One Ford has firmly established the principle of one global company, with One Team , working together as a lean, global enterprise for automotive leadership, as measured by our customer, employee, dealer, investor, supplier, union, and community satisfaction.

As part of the One Team approach, we have implemented and continue to implement a disciplined business plan process to re gularly review our business environment, risks and opportunities, our strategy, our Plan, identify areas of our Plan Ford recognizes the

factors that caused our current situation, and began to address those factors aggressively based

on successful turnarounds in our European and South

American businesses.8

that need special attention and pursue opportunitie s to improve our Plan. Everyone is included, openness is encouraged, our leaders are r esponsible and accountable, facts and data drive our decisions, high-performance team work is a performance criteria and we follow this process every week, every month, and every quarter, driving continuous improvement.

Our One Team is unified in pursuing the four elements of our One Plan :

• Aggressively restructure to operate profitably at the current demand and changing model mix;

• Accelerate development of new products our custome rs want and value;

• Finance our plan and improve our balance sheet; an d

• Work together effectively as one team, leveraging our global assets.

Our One Team and our One Plan are laser-focused on delivering our One Goal : An exciting viable Ford Motor Company delivering profitable growth for all.

As business conditions continue to change quickly, we are responding with decisive action:

• We are implementing our strategy to focus on One Ford and simplify our brand structure. As a result, we sold Aston Martin, Jagu ar and Land Rover and the majority of our ownership of Mazda, and we have announced that we are exploring strategic alternatives for Volvo, inc luding divestiture. We have

divested additional other non-core assets. These s ales have also helped our overall liquidity.

• We have improved our Ford Blue Oval brand favorabi lity with consumers by reestablishing the brand’s historical association wit h affordable, safe, and sustainable transportation for all, offering the be st automotive value.

• We obtained financing for our Plan by going to the more receptive capital markets in December 2006 to raise $23.5 billion in liquidity, consisting of $18.5

billion of senior secured debt and credit facilitie s, secured by substantially all of our domestic assets, and $5 billion of unsecured co nvertible debt.

• Faced with a possible financial crisis at our form er in-house parts supplier in late 2005, we took back 17 North American plants from Vi steon and formed Automotive Components Holdings, LLC (ACH). We have worked with the UAW

to restructure each business and either sell or clo se the facilities. In doing so, we have reduced the costs to Ford, eliminated the r isk of disruptions to our business, and treated the affected employees in a r esponsible way. By year end, we will have returned two plants to Ford, closed fo ur plants and sold five plants.

We also have announced the future closure of two mo re plants, and have four plants left for which we are currently exploring th e options to sell or close.

• Together with the United Auto Workers (UAW), we ne gotiated a transformational labor agreement in 2007, with a lower wage structur e for new employees and flexible work rules, and we continue to implement o ur Voluntary Employee Ford is executing decisive

actions to achieve our ONE FORD plan, aligned

around ONE GOAL: Profitable growth for all.9

Beneficiary Association (VEBA) plan to transfer lon g-term responsibility for

retiree health care to the UAW.

• We are cutting operating costs in North America, r educing by $5 billion cumulatively our annual operating costs (which we m easure at constant volume, mix and exchange, excluding special items) by year- end 2008 as compared with 2005, and we continue to implement additional cost reduction actions in North

America and around the world.

• We continue to improve our vehicles to achieve lea dership in quality and fuel economy and to maintain our leadership in safety an d interior comfort and convenience technology – further enhancing the Ford brand.

• We are positioned through our focus on the Ford br and to leverage our global assets and scale to manufacturer smaller, fuel-effi cient vehicles in North America and the rest of the world, including our gl obal Ford Fiesta and Focus in

2010.

• We have taken painful but necessary downsizing act ions to match capacity to real demand, including closing 17 plants over the p ast five years and downsizing by 12,000 salaried employees and 45,000 hourly empl oyees in North America in the past three years.

Our Ford Credit automotive financial services busi ness, with assets of $130 billion as of September 30, 2008, provides wholesal e financing for about 80% of the Ford, Lincoln and Mercury dealerships in the U.S. It also provides retail and lease financing for four million U.S. consumers.

Ford Credit has taken similarly significant action s, including:

• Refocusing its financing business on our Ford, Lin coln and Mercury brands, and achieving a globally competitive cost structure.

• Exiting several Asia Pacific markets and forming i nternational business partnerships to facilitate the repatriation of capi tal to support the U.S. business.

• Restructuring its U.S. operations and transitionin g from a 160-branch network to six regional business centers.

Implementing our One Ford Plan resulted in a profi t for the first quarter of 2008 before the full impact of the credit and economic c rises was felt.10

Our Plan for North America

I. Aggressively restructure to operate profitably at t he current demand and changing model mix

We continue to restructure our North American oper ations aggressively to be able to operate profitability at the current demand and vehicle mix. This restructuring is taking place across all of our operations, in the a reas of manufacturing, supplier relationships, dealer relationships, dealer and con sumer credit operations and personnel.

Manufacturing . We have a strong U.S. manufacturing presence, wi th 10 vehicle assembly plants and 26 powertrain, stamping and com ponents plants across the U.S. We are converting three truck assembly plants to sm all car production, to support what we believe is a permanent shift to smaller more fue l-efficient vehicles. To this end, approximately 50% of future U.S. capacity will be

allocated to small and medium-size vehicles. In addition, nearly all of our U.S. assembly plants wi ll have flexible body shops by 2012 to enable quick response to changing consumer demands and nearly half of our transmission and engine plants will be flexible, capable of manufacturing various combinations of transmission and engine fam ilies. We have announced four additional plant closures between 2009 and 2011 and we have announced our intent to close or sell our four remaining ACH plants. We wi ll continue to aggressively match our manufacturing capacity to real demand.

Suppliers . We have been working extremely hard to strengthe n our U.S. located supply base, which represents 80% of our North Amer ican purchases. We have instituted a number of business practices with thes e suppliers designed to increase collaboration, provide for data transparency and expand the volume of business with select suppliers

, while building a more sustainable business model.

We have also been able to reduce the total number of production suppliers eligible for major sourcing from Ford from 3,300 in 2004 to approximately 1,600 suppliers today, with a further reduction to 750 suppliers planned. We have paid s pecific attention to strengthening our minority and women suppliers – which currently account for about $4 billion of our annual $35 billion of purchases from U.S. supplier locations. Our consolidation efforts have resulted, and will result, in more business fo r our major suppliers which will increase their financial strength.

Moreover, as we move aggressively to global vehicl e platforms, sourcing to common suppliers for the total global volume of a v ehicle’s components is dramatically increasing, meaning that a smaller number of suppli ers will receive a greater volume of the purchases made by Ford to support our global ve hicle platform. This again results Aligning Manufacturing capacity to meet real

demand

Strengthening our U.S. supply base11

in stronger suppliers achieving (and Ford realizing ) greater economies of scale as their components are sourced across global platforms for the life of that platform.

Dealers . Our dealers are a source of strength, especially our rural/small town dealers, who represent the face of Ford in communit ies across the U.S. and provide employment, tax support, community leadership and c ustomer service. At our current and expected future market share, we clearly have too many dealers and therefore have made it increasingly difficult to sustain a healthy and profitable dealer network. To address this overcapacity, we are partnering with our dealers an d are downsizing and restructuring the Ford, Lincoln and Mercury network in our larges t 130 metropolitan market areas to provide targeted average-year sales for Ford dealer s at 1,500+ units and Lincoln Mercury dealers at 600+ units, resulting in sustain able profits in both good and bad years. We are doing this while maintaining custome r convenience factors such as driving distance, location, and appealing facilitie s. We have joined with our dealers to fund these consolidation actions jointly to protect our representation in the marketplace.

At year-end 2005, we had 4,396 Ford, Lincoln, Merc ury dealers, with 2,242 of those dealers in our largest 130 markets. By year- end 2008, we estimate that we will have 3,790 dealers, with 1,875 dealers in our large st 130 markets, a reduction of 606 dealers overall (14%), 367 of which were in our lar gest markets (a reduction of 16%). We will continue to work collaboratively with our d ealers to reduce our dealer network to match our sales, market share and dealer sales obje ctives.

Credit Operations . We also continue to support our dealers through our whollyowned subsidiary, Ford Motor Credit Company – espec ially important during this time of tight consumer and commercial access to credit. Fo rd Credit provides wholesale, retail and lease financing programs, together with capital and facility loan programs.

Ford Credit is further consolidating its operations and improving its cost structure to reflect lower finan cing volumes resulting from the sale of the Jaguar and Land Rover brands, our reduced ownership in Mazda and lower automotive industry sales volumes. These actions include forming new strategic alliances and partnerships and reducing capital needs in international markets, and continuing to r estructure its operations globally. Supporting our dealer

network

Focusing Ford Motor Credit Company to support U.S. dealers and

consumers12

Salaried Personnel. In the area of salaried personnel, we are engagin g in aggressive restructuring to fit our business to the current demand and to set the stage for growth. We will have reduced salaried personne l costs by 40% over the past three years, including a 10% reduction effective February 2009. In addition, since 2005, we have reduced the number of corporate vice president s in North America by 35%.

To further reduce costs, we recently made several significant changes to our Compensation and Benefit plans, including: (i) eliminating merit increases and bonu ses due to be paid in 2009; (ii) suspending the Company’s 4 01(k) matching contribution, and Company-paid tuition ass istance and dependent scholarships; (iii) capping retiree life insurance at $25,000; and (iv) improving the costeffectiveness of benefit programs through more effi cient plan offerings and increased employee cost sharing. (See Appendix, Slide 1.)

Hourly Personnel . With respect to the hourly work force in the Uni ted States, we and the UAW agreed to a transformational labor agre ement in 2007, the benefits of which are only beginning to be realized. Under thi s agreement, our hourly labor cost disadvantage compared to the transplants will be su bstantially reduced, although not completely eliminated. These labor costs savings s hould begin to materialize as we have the opportunity to bring workers into the work force at the new wage levels. (See Appendix, Slide 2.)

The 2007 UAW/Ford Negotiations resulted in significant progress being made in reducing the Company’s total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, Ford is presently engaged in discussions with the UAW with the objective to furt her reduce our cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.

As the Committees are aware, Ford is a significant provider of health care coverage in the United States, providing expansive health care benefits to nearly 500,000 current and retired employees, including th eir dependents. In our 2007 agreement with the UAW, we agreed to help ensure th e coverage for current and future UAW retirees by paying $13.2 billion in the form of cash and notes into a Voluntary Employee Beneficiary Association trust (“VEBA”) to settle the Company’s obligation, effective at year-end 2009. We intend to fully mee t the terms of our agreement with the UAW to transfer the assets and the notes by Decembe r 31, 2009.

In the area of health care for salaried employees, our obligation at year-end 2007 was $2 billion. We have implemented cost caps on t hese benefits beginning in 2007, which will limit our exposure to future cost increa ses. In addition, we continue to drive efficiencies for all participants through wellness education programs and competitive benefit sourcing. Reducing salaried personnel costs

Working with the UAW to transform our hourly personnel cost structure13

As a result of the above actions, we will realize a total of $5.5 billion in annualized operating cost reductions from 2005 thro ugh 2008. We continue to pursue

additional cost reductions at all levels for 2009 a nd future years, and we expect an additional $1 billion in operating cost reductions in 2009.

II. Accelerate development of new products our customer s want

and value

Success in the automotive business is based on product. No element of our Plan is more important than accelerating the development of

new vehicles our customers want and value. We will achieve this through:

• A balanced and complete portfolio of small, medium and large vehicles in the car, utility and truck segments facilitated by using For d’s world class vehicles available in all of our regions;

• Product excellence through leadership in fuel econ omy, innovation, quality, safety, and leading edge “comfort and convenience” technology;

• Substantial and continuous improvement in engineer ing and investment efficiency facilitated by leveraging the global ass ets of “One Ford” and a reduction in the number of vehicle platforms, engin es, transmissions, and customer offered complexity; and

• Significant improvement in the profitability of sm all cars.

Balanced Portfolio . We are leveraging our global product strengths t o deliver six

new world-class small and medium sized vehicles to the United States over the next four years. This will enable our car and crossover product segment mix to increase from 48% to 60% and result in volume and share grow th. (See Appendix, Slide 3.) We are targeting sales leadership in “people movers” a nd crossovers through addition of new vehicles (such as the Ford Flex) and redefining existing vehicles (such as the Ford Explorer). We will have significantly reduced truck, van, & sport utility vehicle (SUV) product mix from 52% to 40% in only three years. In order to realize a balanced portfolio, we are increasing our investment allocation in cars and

crossovers from 59% to 82% of our total

investment.

Although we believe that the shift to smaller, mor e fuel-efficient vehicles is permanent, trucks, vans and SUVs will continue to b e an important part of the North

American market. We intend to maintain our leaders hip position in these segments by focusing our investment on new fuel-efficient vehic les, such as the new Ford Transit, and all new powertrains with advanced technology. No element of our One Ford Plan is more important than accelerating the development

of new vehicles our customers

want and value.

Ford is recognizing and adapting to the shift to smaller vehicles while maintaining leadership in our areas of traditional strength.14

Product Excellence and Innovation . Ford Motor Company understands the importance of fuel economy to both our customers an d the Nation and we are committed to deliver the best or among the best fue l economy with every new vehicle. In fact, half of our Ford, Lincoln and Mercury light duty nameplates qualify by 2010 as “Advanced Technology Vehicles” under the Energy Independence and Security Act– increasing to 75 percent in 2011 and more than 90 percent in 2014. As part of our commitment to be America’s fuel-economy leader, we will:

• Improve Ford’s U.S. light-duty vehicle fleet fuel economy from the 2005 model year baseline every year. From Ford’s largest ligh t duty trucks to our smallest cars, we will improve the fuel economy of our fleet by 14% in 2009, 26% in 2012, and 36% in 2015. We fully intend to meet or exceed the fuel efficiency requirements set forth in the Energy Independence a nd Security Act of 2007.

• Deploy affordable fuel economy technologies in hig h volume for all customers, including :

 EcoBoost Engines (turbo-charging plus direct injec tion combined with downsizing – with up to a 20% improvement in fuel economy) – f ollowing introduction in 2009, application of this technolog y will increase to more than 85% of Ford/Lincoln/Mercury nameplates by 2012 and 95% by 2015

 Electric Power Assisted Steering – will be availab le on 90% of Ford/Lincoln/Mercury nameplates by 2012 and 100% by 2014. Electric steering improves fuel economy by 3%, and is just o ne example of the attention-to-detail necessary to deliver fuel econo my leadership

 6-Speed Transmissions – currently offered in more volume than any other manufacturer. 6-speed transmissions will be in 100 % of Ford/Lincoln/Mercury nameplates by 2012

• Support bio-fuels such as ethanol as an important long term solution to our energy needs, especially as second generation fuels become available. Ford has committed to doubling the production of flexibl e fuel vehicles by 2010 and to producing 50% of our products capable of running on E85 by 2012. In addition, we are operating demonstration fleets of hybrid and plug-in hybrid vehicles capable of running on E85.

• Continue to develop and deploy hybrids while reduc ing cost for expanded market applications. Ford was the first U.S. company to i ntroduce a hybrid with the introduction of the Ford Escape Hybrid in 2004 and the Escape and Mariner Hybrids remain the fuel-economy leaders among all s port utilities. Full HEV nameplate offerings and volume will double in 2009 with introduction of Ford Fusion and Mercury Milan Hybrids, which best the To yota Camry hybrid by at least six mpg. Ford is delivering dramatic improvements in fuel economy, and investing $14 billion in the U.S. on advanced technologies.15

• Achieve annual fuel savings of 2.5 billion gallons by 2012 model year and 3.1 billion gallons by 2015 model year from new fuel ef ficient vehicles including:

 2009 Ford Escape with better highway fuel economy than Toyota RAV4

and Honda CRV.

 2009 Ford F-150 with class-leading fuel economy be tter than Toyota

Tundra and Nissan Titan.

 2010 Ford Fusion HEV with better fuel economy than Toyota Camry HEV by at least 6 mpg.

 2010 Ford Fusion with better highway fuel economy than Toyota Camry

and Honda Accord.

 2011 Ford Explorer with better highway fuel econom y than Toyota Highlander HEV.

 2011 Ford Fiesta with better highway fuel economy than Toyota Yaris and

Nissan Versa.

• Achieve cumulative gasoline fuel savings from Ford ’s advanced technology vehicles of 16 billion gallons from 2005-2015.

Our Plan calls for an investment of roughly $14 bi llion in the U.S. on advance technologies to improve fuel efficiency by over 25% . We have submitted these projects to DOE under Section 136 of the Energy Independence and Security Act, and expect to receive $5 billion in direct loans by 2011 to inves t in these technologies.

In addition to fuel economy leadership, we intend to achieve leadership in quality and maintain leadership in public domain safety tes ting and interior comfort and convenience technology, and we are well on our way.

The 2008 model year marked Ford’s fourth consecutive year of improved vehicle quality:

• Customer concerns at both high and low times in se rvice dropped by 50% in the last four years; contributing more than $1 billion in warranty savings to date. Plans are in place to achieve another 30% improveme nt by 2011.

• Ford led the domestic manufacturers in the 2008 Co nsumer Reports Reliability Survey, with the most reliable gas family cars bein g the Ford Fusion and Mercury

Milan.

• Ford and Mercury are among top four non-luxury bra nds with Toyota and Honda
at 3 Years in Service in the 2008 RDA Global Qualit y Research Survey (GQRS), a respected third party assessment of industry qual ity.

• Ford, Lincoln and Mercury tied the best Japanese b rands in the 2008 RDA GQRS survey at 3 months in service.

• Ford and Mercury are among the top four non-luxury brands with Toyota and Honda in JD Power & Associates Initial Quality Stud y (IQS).

• We have increased Consumer Reports “Recommended Buys” from 11 in 2005 to 16 in 2008, and we have plans in place for all Ford vehicles to achieve Recommended Buys by 2011. Ford is leading in quality, safety, and technology.16

Ford continues as a leader in safety performance. We recently achieved the highest number of “Top Safety Picks” from the U.S. Insurance Institute for Highway Safety (IIHS), we were awarded the most U.S. govern ment 5-star safety ratings in the automotive industry, and we have introduced product innovations that improve safety including: (i) Forward Collision Warning with Brake Support; (ii) Blind Spot Information System with Cross Traffic Alert; (iii) Roll Stabili ty Control; (iv) MyKey © configurable driving mode to encourage safer driving behaviors; and (v) Integrated Spotter Mirror. We also continue to lead on technologies that enhan ce comfort and convenience, including SYNC for hands-free media and phone, Easy Fuel capless fuel filler and our coming innovation in next generation display and in formation systems.

Sustainability and Electrification Strategy . Ford’s sustainability plan will achieve continuous and substantial improvement in fuel econ omy and a corresponding reduction in CO2 through affordable technology in high volume . Ford’s plan is to make affordable fuel efficiency available to millions of consumers.

Our three-phased approach – with near-term, medium-term and long-term advanced technologies and products – begins now with advanced internal combustion engine and transmission technologies, such as our EcoBoost engines going into production on several vehicles in 2009. The next major step in Ford’s plan is to increase over time the volume of electrified vehicles, as battery costs improve and as the transition from Hybrids to Plug-in Hybrids to Battery Electric Vehicles occurs. (See A ppendix, Slide 4.)

Next month at the North American International Auto Show in Detroit, we will

discuss in detail Ford’s accelerated vehicle electr ification plan, which includes bringing to market by 2012 a family of hybrids, plug-in hybr ids and battery electric vehicles. Our work will include partnering with battery and power train systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type v ehicle for commercial fleet use in 2010 and a BEV sedan in 2011. We will develop these veh icles in a manner that enables us to reduce costs and ultimately makes battery electr ic powered vehicles more affordable

for consumers.

Our plan also includes building on our competence i n hybrid vehicles, as demonstrated by the industry-leading fuel economy o f the Ford Escape and Ford Fusion hybrids. We are now developing our next generation full hybrid technology, which includes plug-in capability, for vehicles in 2012 a nd beyond. We are targeting a substantial increase in hybrid volume through a gre ater than 30% reduction in cost, installation of hybrid capability in global platfor ms and hybrid vehicles that are uniquely styled. Ford’s three-phased approach to sustainability provides immediate and significant improvements on a wide scale and accelerated electrification, including next generation hybrids and all-electric

vehicles.17

We cannot, however, accomplish significant electri fication by ourselves. The 2007 Energy Independence and Security Act requires American-developed breakthroughs in high-power energy batteries (e.g. lithium ion). In order to make significant progres s in electrification, Ford supports establishing a U.S. public/private partnership to accelerate the development of this capability, including supportin g infrastructure, within the United States.

Engineering and Investment Efficiency . As part of our Plan, we are providing more new or significantly changed vehicles for our customers with less investment. Between 2005 and 2008, we improved our engineering costs and facilities and tooling costs for a new vehicle by 60% and 40%, respectivel y. Continuation of these rates of improvement is included in our business plan. Majo r enablers to these improvements

include:

• A new Product Development process learned from our partner, Mazda, that reduces the time to develop a new vehicle by 8 to 1 4 months

• Continuing focus on simplification, for example, t he reduction of vehicle platforms (the underpinnings of a vehicle) from 25 in 2005 to 9 by 2012, equal to the best competitor.

Small Car Profitability . As part of our Plan, we will reverse the decades -long trend of losing money on the production of small ca rs in the United States. In order to accomplish this improvement in profitability, and secure our ability to continue to produce all types of vehicles in the U.S., we are taking the following actions:

• Increase global platform volume of Focus sized veh icles to over 2 million units

per year;

• Increase volume of Ford Focus cars to over 1 milli on units per year;

• Improve margins by:

 improving revenues by making vehicles that are exc iting in design, both exterior and interior, with class-leading fuel econ omy, safety performance, craftsmanship, and technology. The improvements ac ross all Ford vehicles are improving customer perception of the F ord brand;

 improving costs to competitive levels through redu ced complexity and global purchasing scale; and

• Improve fixed costs through increased manufacturin g and supply base capacity utilization and sharing of engineering and tooling costs globally. Ford is taking action to make production of small cars profitable in the U.S. Ford supports a public/private partnership to develop next generation battery technology18

III. Finance our plan and improve our balance sheet

The third pillar of our Plan is to finance the Pla n and improve our balance sheet. As noted, we worked to obtain financing for our Pla n by going to the markets in December 2006 to raise $23.5 billion in liquidity, consisting of $18.5 billion of senior secured debt and credit facilities, secured by subs tantially all of our domestic assets, and $5 billion of convertible debt.

In addition, in 2006, we eliminated common stock d ividends and in 2007 and 2008 we issued more than $3 billion in new equity ( debt exchanges and direct issuances), sold Aston Martin, Jaguar, Land Rover a nd the majority of our investment in

Mazda.

At Ford Credit, and in light of the frozen capital markets, we have recently become more reliant on committed securitization cap acity from banks and have embarked upon aggressive plans to develop new fundi ng products. We are eligible for and are participating in funding programs from the European Central Bank and, more recently, the Federal Reserve’s Commercial Paper Fu nding Facility (CPFF). We have provided feedback to the Federal Reserve and Treasu ry on their newest program (Term Asset Backed Securities Loan Facility) in hopes tha t changes can be implemented that, in our view, will result in better financing suppor t for our U.S. customers and dealers. We also filed an Industrial Loan Company applicatio n with the FDIC earlier this year and we are hopeful that a favorable response will soon be forthcoming so we can diversify our funding capability and eliminate the competitiv e disadvantage created by certain competitors operating Industrial Loan Companies.

Looking forward to 2009 and beyond, we intend to e xplore strategic alternatives for our Volvo business, including divestiture. We also intend to raise further equity capital when markets re-open and our business begin s to improve, and we would explore balance sheet restructuring over time.

IV. Work together effectively as one team

As part of the One Team approach, we have implemented a disciplined busine ss plan process to regularly review our business envir onment, risks and opportunities, our strategy, our Plan, and identify areas of our Plan that need special attention and pursue opportunities to improve our Plan. Everyone is inc luded and contributes, openness is encouraged, our leaders are responsible and account able, we use facts and data to make our decisions, high performance teamwork is a performance criteria and we follow this process every week, every month, and every qua rter, driving continuous improvement. We believe this process gives us a cl ear picture of our business in real time and the ability to respond quickly to new issu es and changing conditions – as we have done in the face of rapid changes in the marke t and business environment in 2008.19

In addition, we are partnering with and enlisting all of our stakeholders to help us

execute our Plan to deal with our business realitie s and create an exciting viable Ford business going forward. We are reaching out and li stening to customers, dealers, employees, the UAW, suppliers, investors, communiti es, retirees, and federal, state and local governments. Each of these constituencies is a critical part of, and critical to, the success of our business going forward. Realizing o ur goal of profitable growth for all is as important to these stakeholders as it is to our shareholders.

Implementing the elements of our Plan in North Ame rica will deliver a viable and profitable business, poised for profitable growth f or all. Under our Plan we expect our profitability (operating profit before taxes – excl uding special items) to be at or above breakeven for both Corporate and North American Aut omotive in 2011 and our Corporate operating cash flow to be at or above bre akeven in 2011.

SUMMARY

Ford Motor Company has a comprehensive transforma tional Plan that will ensure our future viability – as evidence by our pr ofitability in the first quarter of 2008. Ford’s overseas operations are profitable, and we h ave put in place the same productled transformation plan and business model to ensur e our viability in the U.S. Ford has enough liquidity in the near-term and a plan to be profitable in the long-term based on our present assumptions, which we believe are firml y grounded in reality. We are poised for profitable growth for all of our stakeho lders – our employees, suppliers, dealers, shareholders and the communities across Am erica that benefit from our presence and our success.

Responses to specific questions in the letter from Speaker of the House Pelosi and Majority Leader Reid are on the pages that follow.20

RESPONSE TO SPECIFIC QUESTIONS

We have presented the key elements of Ford Motor C ompany’s Plan to achieve profitability, and will answer the specific questio ns in the letter from Speaker Pelosi and Majority Leader Reid. We believe that these respon ses should be the beginning of a partnership between the Federal Government and the industry as part of the provision of the proposed bridge loans to the industry.

We hope that the 111 th Congress and the incoming Obama Administration wil l establish a process to address in a comprehensive w ay the conditions that inhibit competitiveness of the domestic industry and that t he process will include all of the stakeholders – manufacturers, creditors, dealers, t he United Auto Workers, and suppliers, to enhance the long term strength of the industry.

Provide a forthright, documented assessment of the auto companies’ current operating cash position, short-term liquidi ty needs to continue operations as a going-concern, and how they will me et the financing needs associated with the plan to ensure the companies’ l ong-term viability as they retool for the future.

As of September 30, Ford had about $30 billion of l iquidity ($19 billion of cash and $11 billion of available automotive credit line s).

We also are implementing a series of operating and financing actions that are expected to improve Automotive cash by a total of $ 14 billion to $17 billion through 2010. These actions include:

• Reducing our 2009-2010 annual capital spending to between $5.0 and $5.5
billion;

• Achieving further salaried personnel-related cost reductions through personnel reductions and revisions to compensation;

• Reducing engineering and manufacturing costs throu gh improved efficiencies and alignment with volume assumptions;

• Reducing other structural costs through greater ef ficiencies in advertising, information technology, and other area s

• Reducing inventories globally and achieving other working capital improvements;

• Releasing capital consistent with Ford Credit’s sm aller balance sheet and focus on core Ford brands;

• Developing incremental sources of funding, includi ng sale of non-core assets;

and

• Implementing equity for debt swaps.

Because of these actions and our access to our revo lving credit lines, even if industry levels were somewhat worse than October 20 08 levels through the end21

of 2009, Ford would have adequate short-term liquid ity. Drawing the credit lines, however, would put significant financial pressure o n an already stressed banking sector. The revolver loan would be required to be paid back or refinanced, if markets permit, by year-end 2011.

Ford, therefore, is not facing a short-term liquidi ty issue but this could change if there is a significant industry event that causes a disruption to our supply base

and creditors

The continuing decline in the economic environment also has caused longer-term issues for our plan, which we address in the next s ection.22

Provide varying estimates of the terms of the loan requested with varying assumptions including that of automobile sales at c urrent rates, at slightly improved rates, and at worse rates.

We have set forth below our estimates of U.S. new v ehicle sales at slightly improved rates, at current rates, and at worst rate s. Our request for government funding in the form of a “stand-by” line of credit, in the amount of up to $9 billion, is based on our analysis of automobile sales at cur rent rates.

Automotive Industry Sales at “Slightly Improved Rat es”

These are the assumptions on which our Plan is base d and which are supported by modeling recoveries from past deep recessions.

2009 2010 2011

U.S. Total Vehicle Sales (mils.)* 12.5 14.5 15.5

*includes medium and heavy duty trucks

This forecast is based on an economic cycle similar to the early 1980’s with a peak-to-trough real GDP decline of 2 to 2.5%. Over all, our GDP assumptions are generally consistent with the ranges released by th e Federal Reserve on November 18, 2008. This vehicle sales forecast incl udes four years of consecutive declines in vehicle ownership (per driv ing age person), the longest

reversal of this trend. Total sales remain 10-15% b elow trend in 2010. We

believe that the enactment of a successful stimulus package has the potential to generate demand in excess of this forecast.

Based on this forecast, we have sufficient resource s through the business plan period to fund our substantial investment in produc t and fuel economy improvement plans and maintain our VEBA funding pla ns. The recent declines in the stock market, however, have reduced our U.S. pe nsion funding levels. Based on the average rate of return that we expect to rea lize longer term as opposed to returns that have historically been realized coming out of a recession, this would require additional contributions of $3-$4 billion s tarting in 2010. In addition, the continuing uncertainty in the credit markets jeopar dizes our funding plans for our credit company; requiring up to $4 billion of incre mental capital to replace debt that we presently can not raise. Further, given the increasing uncertainty of the economic environment, we believe it would be pruden t to plan for an additional $2-$3 billion for balance sheet restructuring or fo r further industry declines (equal to a decline in industry volumes by about 2-3 milli on units over the 2009-2011 planning period -- the sensitivity of our cash to c hanges in industry volume is about $1 billion per 1 million change in unit volum e).

Based on the substantial fuel economy investments i ncluded in our plan, we expect to receive up to $5 billion of DoE funds thr ough 2011 based on the full amount requested as part of our November 11, 2008 s ubmission. Assuming this23

level of DoE funding, availability of incremental f unds of up to $4-$6 billion through 2011 would be required to provide protectio n against the above issues.

If our Plan were to materialize, we believe we woul d only need a government credit line of $6 billion, again only to be accesse d if and to the extent needed.

Automotive Industry Sales at “Current Rates”

2009 2010 2011

U.S. Total Vehicle Sales (mils.) 11.0 12.5 14.0

This forecast is based on an economic cycle worse t han the early 1980’s and a recession that persists through all of 2009. The pe ak-to-trough real GDP decline would be about 3%. In this scenario, the median ag e of cars would rise to well above 10 years (up from only 8 years earlier this d ecade) as consumers stop replacing vehicles. The cumulative reduction of 5 million industry units from our Plan levels would increase our funding needs to up to $9 billion.

Automotive Industry Sales at “Worse Rates”

2009 2010 2011

U.S. Total Vehicle Sales (mils.) 10.5 11.0 12.0

This forecast is based on prolonged economic slump that persists into 2010. In this case, significant monetary and fiscal policy e asing does not provide any stimulus to consumer and business spending. The do wnturn would be the worst on record in the post depression period. The cumul ative reduction of 9 million industry units would increase our funding needs to up to $13 billion.

The incremental funding under these scenarios would cover working capital requirements and additional restructuring actions ( including personnel layoffs and plant closings).24

Provide for specific measures designed to ensure tr ansparency and accountability, including regular reporting to, and information-sharing with, any federal government oversight mechanisms establi shed to safeguard taxpayer investments.

Ford hopes it will not need to utilize these loans, but if we do we would provide significant information regarding our business to a ny Oversight Board that Congress might establish.

Ford regularly provides financial and other informa tion in publicly-filed reports to SEC, NHTSA, EPA, and PBGC. In addition to our publ icly-filed reports, we would submit periodically to any Oversight Board informat ion on:

• our progress, and projected future progress, in me eting the performance goals and milestones of our plan;

• our progress in improving our capacity to pursue t he timely and aggressive production of energy-efficient advanced technology vehicles and in meeting federal fuel efficiency requirements;

• our executive compensation plans (to demonstrate c ompliance with the provisions of the legislation);

• our progress in preserving and promoting U.S. auto jobs, [consistent with our plan for financial viability];

• funding of retirement and health care benefits for our retirees and their dependents; and

• our efforts to strengthen our balance sheet over t ime to reduce our debt and repay any government loans

In order to allow these reports to be as inclusive as possible, we strongly recommend that Congress afford the opportunity wher e appropriate for information submitted to the Oversight Board to be protected fr om public disclosure as

confidential business information.25

Protect taxpayers by granting the most senior statu s for any government loans provided, ensuring that taxpayers get paid ba ck first.

We recognize the importance of the federal governme nt protecting the taxpayers’ interests in connection with any loans made to the automakers. Senior status of government loans could, however, exacerbate our cha llenges and the problems in the financial system by causing certain existing de bt to be in default. Ford has $17.5 billion of senior secured debt, including $10.2 bil lion of available credit facilities, secured by substantially all of our domestic assets . It is this liquidity that we believe may permit us to make it through this difficult per iod without needing to avail ourselves of government financial assistance. Ford also has outstanding $17.1 billion of publicly-issued unsecured debt securitie s that by their terms rank as senior

unsecured debt.

A condition of senior status for any government loa n could cause lenders or holders of our debt to allege a debt default, which could r esult in an acceleration of indebtedness and lead to the very result the legisl ation was designed to prevent, namely, a liquidity crises.

Any legislation, therefore, should be structured to provide that any government loans would be given priority over “unsecured obligations and indebtedness of the borrower, except to the extent that creating such p riority would cause those obligations or indebtedness to be in default.” We would be pleased to discuss this matter further with the Committees should that prov e helpful to a better understanding of the difficulties presented by the proposal to grant taxpayers the

“most senior status.”26

Assure that taxpayers benefit as corporate conditio ns improve and shareholder value increases through the provision o f warrants or

other mechanisms.

Ford supports the need for taxpayer protections. Should business conditions worsen and we need to use the loans, Ford will work with the Federal Government to implement reasonable provisions of warrants or o ther forms of support.

We respectfully recommend that a reasonable coverag e ratio for warrants would be 15%, the level applied to TARP participants, with t he strike price and numbers of shares of common stock determined by reference to t he market price of Ford stock at the time of drawing on the bridge loan. Existi ng Ford shareholders, of course,

would be diluted.

In order to protect valuable tax losses, it is impo rtant that the equity interests provided to the Federal Government not contribute t o an ownership change under Internal Revenue Code section 382. The necessary p rovisions would be similar to the section 382 protections provided to banks by IR S Notice 2008-100 with respect to the equity interests provided to the Federal Gov ernment under the Capital Purchase Program of the Emergency Economic Stabilization Act of 2008, P.L. 110-

343.27

Bar the payment of dividends and excessive executiv e compensation, including bonuses and golden parachutes by companie s receiving taxpayer assistance.

Ford is taking aggressive actions to limit dividend s and executive compensation during this difficult period. Ford eliminated divi dends to shareholders in 2006. In the event Ford receives help under this legislation being contemplated by Congress, we would not resume paying dividends until after su ch assistance has been repaid.

Ford recognizes that transforming our industry will require the shared sacrifice of many stakeholders and we will be asking our employe es, dealers, and others to make changes to help save their jobs and our compan y. To underscore our commitment, Ford’s senior executives will not recei ve any salary increases or bonuses in 2009, and we will extend that restrictio n if business conditions continue to warrant it. We believe that the executive compe nsation limits imposed under TARP (to which we may be availing ourselves even wi thout bridge loans if the TALF program is implemented so that our credit operation s can participate and benefit from this program) are equally appropriate for the automobile industry.

In order to innovate and develop the smaller and mo re fuel efficient cars of the future, we also need to attract and retain highly s killed employees. As it considers legislation, we hope that Congress will provide us with adequate flexibility to attract and keep the quality employees essential to our tra nsformation and not impose overly broad restrictions that will inhibit our com petitiveness.28

Include proposals to address the payment of healthc are and pension obligations.

As stated in our submission, Ford is a significant provider of health care coverage in the United States, providing expansive health care coverage current and retired employees and their dependents –covering over 500,0 00 people in total. In our agreement with the UAW, we agreed to help ensure th e coverage for current and future UAW retirees by paying $13.2 billion in the form of cash and notes into a Voluntary Employee Beneficiary Association trust (“ VEBA”) to fully settle the Company’s obligation, effective at year-end 2009. We intend to fully meet the terms of our agreement with the UAW to transfer the asset s and the notes by December
31, 2009.

In the area of salaried health care, our obligation at year-end 2007 was $2 billion. We have implemented cost caps on salaried benefits beginning in 2007, which will limit our exposure to future cost increases. In ad dition, we continue to drive efficiencies for all participants through wellness education programs and competitive benefit sourcing. The funding of our salaried heal th care obligations in included as part of our Plan.

The Company provides substantial retirement benefit s to both hourly and salaried U.S. retirees – 207,000 UAW retirees and 128,000 sa laried retirees. At the end of 2007, our hourly and salaried pension plans were fu nded at levels of 104% and 111%, respectively, with combined assets of $45.8 b illion. Stock market declines, however, have resulted in a significant, unexpected reduction in the funded status of U.S. pension plans, so that without an improvement in market conditions, required contributions to our major U.S. pension plans are e xpected beginning in 2010 – with a total of about $3-4 billion in contributions star ting in 2010.

Should pension investment returns not recover, or c ontinue to deteriorate, government loans could be used to ensure the overal l strong funding status of our pension plans.29

Demonstrate the auto companies’ ability to achieve the fuel efficiency requirements set forth in the Energy Independence a nd Security Act of 2007, and become a long-term global leader in the product ion of energy-efficient advanced technology vehicles.

Ford Motor Company understands the importance of fu el economy to both our

customers and the Nation and we are committed to de liver the best or among the best fuel economy with every new vehicle. In fact , half of our Ford, Lincoln and Mercury light duty nameplates qualify as “Advanced Technology Vehicles” under the Energy Independence and Security Act by 2010 – incr easing to 75 percent in 2011 and more than 90 percent in 2014. As part of our c ommitment to be America’s fueleconomy leader, we will:

• Improve Ford’s U.S. light-duty vehicle fleet fuel economy from the 2005 model year baseline every year. From Ford’s largest ligh t duty trucks to our smallest cars, we will improve the fuel economy of our fleet by 14% in 2009, 26% in 2012, and 36% in 2015. We fully intend to meet or exceed the fuel efficiency requirements set forth in the Energy Independence a nd Security Act of 2007.

• Deploy affordable fuel economy technologies in hig h volume for all customers, including :

 EcoBoost Engines (turbo-charging plus direct injec tion combined with downsizing – with up to a 20% improvement in fuel economy) – f ollowing introduction in 2009, application of this technolog y will increase to more than 85% of Ford/Lincoln/Mercury nameplates by 2012 and 95% by 2015

 Electric Power Assisted Steering – will be availab le on 90% of Ford/Lincoln/Mercury nameplates by 2012 and 100% by 2014. Electric steering improves fuel economy by 3%, and is just o ne example of the attention-to-detail necessary to deliver fuel econo my leadership

 6-Speed Transmissions – currently offered in more volume than any other manufacturer. 6-speed transmissions will be in 100 % of Ford/Lincoln/Mercury nameplates by 2012

• Support bio-fuels such as ethanol as an important long term solution to our energy needs, especially as second generation fuels become available. Ford has committed to doubling the production of flexibl e fuel vehicles by 2010 and to producing 50% of our products capable of running on E85 by 2012. In addition, we have produced demonstration fleets of hybrid and plug-in hybrid vehicles capable of running on E85.

• Continue to develop and deploy Hybrids while reduc ing cost for expanded market applications. Ford was the first U.S. company to i ntroduce a hybrid with the introduction of the Ford Escape Hybrid in 2004 and the Escape and Mariner Hybrids remain the fuel-economy leaders among all s port utilities. Full HEV nameplate offerings and volume will double in 2009 with introduction of Fusion and Milan Hybrids, which best the Toyota Camry hybr id by at least six mpg.

• Achieve annual fuel savings of 2.5 billion gallons by 2012 model year and 3.1 billion gallons by 2015 model year from new fuel ef ficient vehicles including:30  2009 Ford Escape with better highway fuel economy than Toyota RAV4

and Honda CRV.

 2009 Ford F150 with class leading fuel economy bet ter than Toyota

Tundra and Nissan Titan.

 2010 Ford Fusion HEV with better fuel economy than Toyota Camry HEV by at least 6 mpg.

 2010 Ford Fusion with better highway fuel economy than Toyota Camry

and Honda Accord.

 2011 Ford Explorer with better highway fuel econom y than Toyota Highlander HEV.

 2011 Ford Fiesta with better highway fuel economy than Toyota Yaris and

Nissan Versa.

• Achieve cumulative gasoline fuel savings from Ford ’s advanced technology vehicles of 16 billion gallons from 2005-2015.

Our plan calls for an investment of roughly $14 bil lion in the U.S. on advance technologies to improve fuel efficiency by over 25% . We have submitted these projects to DoE under Section 136 of the Energy Ind ependence and Security Act, and expect to receive $5 billion in direct loans by 2011 to invest in these technologies.31

Require that government loans be immediately callab le if long-term plan

benchmarks are not met.

Should business conditions worsen, and we needed to avail ourselves of government financing, we would accept a callable st ructure if sufficient flexibility was provided to address unforeseen events that might le ad to deviation from any loan requirements.32 

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