The information contained in the section of Your Retiree ...

The information contained in the section of Your Retiree Benefits handbook entitled "Tax-Efficient Savings Plan For Hourly Employees" constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.

Tax-Efficient Savings Plan For Hourly Employees

September 01, 2005

After an overview of the Tax-Efficient Savings Plan for Hourly Employees (TESPHE), this section of your handbook answers these questions:

Page

What are the investment options?

131

How can I exchange assets?

133

How can I repay my loans from the Plan?

134

How are assets paid from the Plan?

135

When would assets be paid automatically

from the Plan?

136

What are the tax consequences of my

withdrawal or distribution?

138

When do I contact the Fidelity

Service Center for Ford Motor Company?

144

What circumstances might affect Plan benefits? 146

Can TESPHE provisions change?

147

Administration and other information

147

Appendix

154

129

Tax-Efficient Savings Plan for Hourly Employees

An overview of the Plan

Before you retired, you may have invested in the TaxEfficient Savings Plan for Hourly Employees (TESPHE). Now that you've retired, you'll need to know what happens to assets you may have in the plan.

As a retiree, you may elect to withdraw all or part of your assets. You may elect to defer distribution of your account until age 701/2. If you leave your assets in the Plan, you may elect to have assets transferred to other investment options.

If you took out a loan against your TESPHE account while you were an active employee and you hadn't repaid your loan by the time you retired, you may elect to repay your loan during retirement through a coupon book available through the Fidelity Service Center for Ford Motor Company, unless you have a history of loan default. As a retiree, you may not make additional contributions to the TESPHE. In addition, you may not initiate any new loans after you retire.

Account statements As soon as practicable after the end of each quarter, a statement of your account will be provided, unless you elected to receive your statements online. (If you elect to receive your statement online, you will receive an annual mailed statement).You will also be able to request a statement whenever you want one. The statement shows your savings and investments, the value of your account, and other information regarding your account.

If you think that there is an error in your statement, you should notify the Fidelity Servicing Center for Ford Motor Company in writing within 30 days after you receive it. If you do not notify the Fidelity Service Center for Ford Motor Company of errors, we will assume that your statement is correct.

Performance History Sheet

If you are a participant in the TESPHE, you will be provided with the Performance History Sheet with your Quarterly Account Statement. (Participants who receive mailed statements will receive this document with the quarterly statements. Participants who elect to receive online statement can access this document through Fidelity NetBenefitssw at netbenefits.).Otherwise, the Performance History Sheet may be requested by calling the Fidelity Service Center for Ford Motor Company. You can always obtain performance data on all of the available investment options through NetBenefits. Select any investment option to obtain additional information (e.g., fund overview, quick stats, rankings/ratings, performance, volatility measures, top holdings, fees & expenses, fund facts and prices and distributions). If you do not have web access, call the Fidelity Service Center for Ford Motor Company and request a mutual fund prospectus.

There are several tax consequences that may affect your TESPHE decisions. You are encouraged to consult with your own tax advisor about your personal tax situation.

This section summarizes the TESPHE. It is your responsibility to understand the Plan and make the investment decisions right for you. The Company cannot advise you.

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Tax-Efficient Savings Plan for Hourly Employees

What are the investment options?

The Plan offers a diversified line-up of passively managed, actively managed and life stage investment options from which you may choose. These options provide a range of risk/return preferences. You can invest in any of the 34 available investment options.

A booklet entitled "Your Investment Guide" contains a brief description of the available investment options as well as some educational material. Please call Fidelity at 1-800-544-3333 to obtain a copy of this booklet. You may also print a copy from NetBenefits at benefits..

The current investment options and the accompanying Voice Response System (VRS) codes are listed below.

Available Investment Options (VRS Code)

Life Stage Funds: ? Fidelity Freedom Income Fund? (00369) ? Fidelity Freedom 2000 Fund? (00370) ? Fidelity Freedom 2010 Fund? 00371) ? Fidelity Freedom 2020 Fund? 00372) ? Fidelity Freedom 2030 Fund? 00373) ? Fidelity Freedom 2040 FundSM 00718)

Equity Funds - Passively Managed: ? BGI EAFE Equity Index Fund - Class T (44715) ? Common Stock Index Fund (99527) ? Domini Social Equity Fund (93967) ? Ford Stock Fund (20207) ? U.S. Extended Market Index Fund (10152) ? Vanguard Institutional Index Trust - Institutional Plus

Shares (20745)

Equity Funds - Actively Managed - Domestic: ? Fidelity Capital Appreciation Fund (00307) ? Fidelity Contrafund? (00022) ? Fidelity Dividend Growth Fund (00330) ? Fidelity Equity-Income Fund (00023) ? Fidelity Growth Company Fund (00025) ? Fidelity Magellan? Fund (00021) ? Fidelity Real Estate Investment Portfolio (00303) ? Janus Aspen Growth Portfolio - Institutional (20569) ? Neuberger Berman Genesis Fund - Class I (45418) ? Oakman Select I Fund (92778) ? Royce Low-Priced Stock Fund (22434) ? Vanguard Explorer Fund - Admiral Class (44702)

Equity Funds - Actively Managed - International: ? Fidelity Overseas Fund (00094) ? Morgan Stanley Institutional Fund, Inc. - Global Value

Equity Portfolio - Class A Fund (93984) ? T. Rowe Price International Discovery Fund (99542) ? Templeton Foreign A Fund (99500)

Fixed Income: ? Bond Index Fund (99529) ? Interest Income Fund (97981) ? PIMCO Real Return Fund - Institutional Class (96095) ? PIMCO Total Return Fund - Institutional Class (99622) ? T. Rowe Price High Yield (99544) ? PIMCO Total Return Fund III - Institutional Class (91391)

There are no fees for any of the investment options at the time of purchase, and any normal sales charge or "load" of any fund offered under the Plan is waived. However, all of the investment options have management fees and other operating expenses associated with them. Ford will pay all fees and expenses of the Ford Stock Fund and the management fees of the Common Stock Index Fund and the Bond Index Fund. All other fees and expenses are deducted from the assets of the particular option.

Tax-Efficient Savings Plan for Hourly Employees

131

? Plan administrative expenses are the costs of maintaining the Plan's day-to-day operations. These expenses include the cost of all services such as recordkeeping, loan processing and annual maintenance fees, statements, and education. Generally, Ford Motor Company pays Plan administrative expenses.

? Expense ratios are the percentage of the fund's assets used to pay for the fund's operating expenses. Mutual fund expense ratios are reported in "basis points". A basis point is 1/100th of one percent.

Example: If a fund charges a fee of 55 basis points, the fund's return is reduced by 55/100ths of one percent (0.0055) annually to cover expenses. If you have $10,000 invested in that hypothetical fund, $55.00 annually would be deducted from your investment in that fund. Fees are deducted from the fund's returns on a daily basis (the fund's basis points charged divided by 365).

In addition, certain funds may charge participants a "redemption" fee ("short-term" trading fee), or impose a short-term trading restriction at the time the participants move money out of the fund.

The management fees, operating expenses, redemption fees and short-term trading restrictions, if any, and any other fees associated with the mutual funds are explained in each fund's individual prospectus or the "Your Investment Guide" brochure.You should request and read the mutual fund's prospectus prior to making a decision involving that fund. You may obtain a free mutual fund prospectus by calling the Fidelity Service Center for Ford Motor Company at 1-800-544-3333. You may also view fund information online, or request a mutual fund prospectus at Fidelity NetBenefits by accessing netbenefits..

Responsibility of Members

Under the Plan, you are solely responsible for the selection of your investment options. Ford Motor Company, the Trustee, any appointed Fiduciary, the Plan Administrator, the Fidelity Service Center for Ford Motor Company, the Union, and employees and agents of the Company are not empowered to provide investment advice.The fact that an investment option is available for investment under the Plan should not be construed as a recommendation for investment in that option. It should be noted that the market price and the rate of return on each investment option may fluctuate over time and in varying degrees. Accordingly, the proceeds realized from such investments, if any, will depend on the prevailing market price of the investments at a particular time, which may be more or less than the amount expended initially. There is no assurance that the investment options will achieve their objectives.

The Plan is intended to constitute a plan described in Section 404(c) of the Employee Retirement Income Security Act, and Title 29 of the Code of Federal Regulations Section 2550.404c-1. The fiduciaries of the Plan may be relieved of liability for any losses which are the direct and necessary result of investment instructions given by a participant or beneficiary.

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Tax-Efficient Savings Plan for Hourly Employees

How can I exchange assets?

Assets may be exchanged from any one investment option directly to any other single investment option, subject to certain fund restrictions. You may initiate one or more exchanges daily. For example, on any day, you could exchange the value of a portion of your Common Stock Index Fund assets and reinvest the value of those assets in the Bond Index Fund and then request a second exchange from the Common Stock Index Fund and reinvest the value of those assets in the Templeton Foreign Fund - Class A.

Assets may be exchanged in dollar amounts, percentage of current balance (in increments of 1%) or a number of shares or units. The minimum exchange amount is $250, or the entire value of the assets invested in the option if $250 or less.

Making an exchange You may request an exchange by calling the Fidelity Service Center for Ford Motor Company or through Fidelity NetBenefits at netbenefits..Your exchange will be effective as of the close of business on any business day if your request is made and confirmed prior to the close of the New York Stock Exchange (usually 4:00 p.m. Eastern Time) on that day. If your request is made or confirmed after this time or on non-business days, such as weekends or holidays, your exchange will be effective as of the close of business on the next business day. Because of high call volume near the close of the market at times, you may wish to call early to be sure your request is made and confirmed before the deadline. A business day is any day that the New York Stock Exchange is open.

Short-term redemption fees Several mutual funds in the TESPHE impose a short-term redemption fee, which is charged to discourage short-term buying and selling of fund shares. Short-term redemption fees are disclosed in each mutual fund's prospectus. Since these fees are subject to changes at any time by the fund, you should always consult the fund's most recent prospectus or contact Fidelity for current short-term redemption fee information.

Trading restrictions The investment options in the TESPHE may impose limits on how frequently you may trade into and/or out of the investment option. For example, a fund may not allow you to exchange back into the fund if you exchange out of the fund within the previous 90 days. You may contact Fidelity for up-to-date information on a fund's trading restrictions.

Exchange privileges

The investment options available through the TESPHE reserve the right to modify or withdraw the exchange privileges at any time, including rejecting any transactions deemed to be disruptive to the fund manager's ability to manage the fund's portfolio. This may include, but is not limited to substantive dollar amounts and/or frequent "round-trip" transactions. (Generally, a "round-trip" is defined as an exchange into and out of or out of and into the same fund).You are able to make exchanges out of a fund at any time.

If your transaction is rejected by the fund, Fidelity, as the provider of recordkeeping services for the TESPHE, is not notified until the following business day. At that time, affected participants are notified and the transaction is reversed (monies are reinvested into the fund(s) from which the exchange was originally processed). Please note that neither Ford nor Fidelity has the ability to influence the fund's decision with respect to modifying or withdrawing exchange privileges.

Exchange privileges regarding the Ford Stock fund

Effective December 1, 2004, you may exchange out of the Ford Stock Fund at any time.You are limited to five (5) exchanges per month into the Fund. This restriction is subject to change. As with other investment options, be sure to confirm trading restrictions on the Ford Stock Fund with Fidelity prior to investing in this Fund.

Tax-Efficient Savings Plan for Hourly Employees

133

How can I repay my loans from the Plan?

Loan Provisions You cannot initiate any new loans, but you have several options for payment of loans outstanding at retirement.

Generally, if you do not pay off your loans in full at the time of retirement, you will be sent a coupon book for your use in making monthly loan repayments directly to Fidelity.

If you are allowed to make loan payments via coupons, Fidelity will mail the coupon book within 15 days of notification of your retirement. Ultimately, YOU are responsible for loan repayments. If you do not receive the coupon book within this timeframe, you must contact the Fidelity Service Center for Ford Motor Company immediately so that they can take corrective action.

If you do not comply with the Plan's loan repayment provisions, (e.g., failure to make payments on time), the outstanding loan balance (principal and accrued interest) will be treated as a distribution of assets and will be subject to federal, state and local income taxes, and possible early withdrawal penalties. The Trustee will report the taxable amount of this distribution to the IRS and you will be sent a Form 1099R.

Loans taken beginning January 1, 2004: Internal Revenue Service (IRS) regulations stipulate that Plan Members who: ? have a history of a loan default; ? initiate a TESPHE loan beginning January 1, 2004 or

later; and ? cannot continue loan repayments via payroll deduc-

tion due to retirement (or otherwise become payroll ineligible) will not be allowed to continue repayment of such loans via coupon. Loans taken out beginning January 1, 2004 must be paid off in full or they will default, and the principal and any accrued interest will be subject to income taxes and if applicable, the penalty for early withdrawal.

Loans taken prior January 1, 2004 are not subject to this IRS regulation and you may continue to make repayments via coupon book upon retirement.

Investment of Loan Repayments

Loan repayments, including interest, will be invested in accordance with your most recent investment elections, except as noted below.

If you ceased to actively contribute to the TESPHE prior to October 1, 1995, and have not made an election since, your repayments including interest will be invested in the Interest Income Fund and can be exchanged to other investment options, subject to the Plan's exchange rules. See the "How can you exchange assets?" section for details.

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Tax-Efficient Savings Plan for Hourly Employees

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