Ford Motor (F) 2 May 232023 Q1 Earnings call transcript

Good day, ladies and gentlemen. My name is Gary, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. this being note Please Instructions] event recorded. is [Operator

like the Executive call this of time, to turn would I Tyson, At over to Lynn Relations. Investor Director Antipas

first to Thank CEO and Farley, of Marion and President Lawler, me the also quarter John Jim XXXX CEO; Ford Financial Ford today you, Credit. are earnings welcome Harris, Motor Chief Gary, and for With call. is Company's Officer; Q&A

in some non-GAAP comparable references. These appendix to deck. reconciled earnings most measures include are US the GAAP discussions the our of Today's

You can of other at find the with the deck important our rest along shareholder.ford.com. and earnings materials content

are discussion differ on otherwise Unless all statements from adjusted Our factors flow page about comparisons may The noted, Company product EBIT, an on are stated. cash Actual basis differ most is free significant results and actual forward-looking EPS mix included includes those weighted. are cause and that XX. our also could year-over-year. expectations. to volume results

got IR sure our to few XXst in Markets XXnd, we'll engagements on calendars Dearborn, a May event Want on Capital host your and make you've Michigan. near-term

segments. For the representatives plans the experiences, global markets our the we're our seven over strategic of recent presentations feature to will The business vehicle largest of three memory of displays headquarters. in event of including the capital portfolio to forward one first unprecedented in new immersive on looking time welcoming years, our customer-centered and

of our with well leaders. feature and our details as network as retail will We to commercial, strategy, time also software services both ample and senior

will Conference, New the And Tony Conference keynote on Stanley Bernstein fireside chat at City. with in York York Jim Strategic participate XXth, will a Farley Sustainability May Morgan in Decisions in On May City. also XXst, Jim Saganaki New at

Now the Jim. call over I'll turn to

and this. everyone, joining line first bottom the And today. for quarter Thank you, like us I'd hello, thanks Lynn.

ambitious at a hope a making growth delivered Ford, Our forward real solid I becomes the our and And on creating to future. delivering it dynamic when the team that comes boringly but in plan. trend execution Ford+ and extremely while of predictable quarter progress financials,

the key metrics. For of we all across growth quarter, our saw

addition, profitable in we were where operate. In and Pro every Ford Blue region

is in close and even decision to new commenced create ended separate quarter made and as with the balance accountability we cash, clarity, unleased and that the allocation. sheet capital more shareholders. growth quarter of not whole on mention billion confident capital and to $XX invest to We strong. company, we the This in passes, Our businesses. With each I'm our discipline customer-focused speed three a to thankful has across level return

So size true a know March with we I'd let cover of were I many start Pro. you with Pro vehicles financials. loyalty the world, marketing And of to will leadership our recast tremendous like industry, of services And profitable starts scale business surprised me in our of that will when this and the Ford to and at Pro charging highlights. few across believe in we're layering on tremendous top our growth. an be ecosystem and customers. and customer software knowledge. future we commercial invaluable EV unlock of that our the the

the leader. Super our order March, we well tremendous demand It and a In see the Ohio. year. in Duty reception, nearly franchise as already has the signals strong this Kentucky Europe going target North strengthen EBIT market is we Pro all and received in Pro's Our that as it's for books can double and support launched to America all-new to

ownership. total software a productivity Importantly, Super Duty platform is the services help lower cost uptime, our that and customers their accelerate for maximize of and

to road the is to We quality study system. Simply slowed increased dispatched implementing launch our a across launch the plant. and the approach also a on for say team put, we're added launch Super testing. millions prove and rather all would skilled large drove and we future and good the case issues. system prevent I of our down implant deployed our speeding the we We cat We to industrial than disciplined vehicles. we significantly our pressure test Duty to the artificial new durability, in Basically, find put miles line match intelligence quality launch then curve. technology to issues up and

commercial will quarter, customers our that gain company. Ford believe leadership the Pro in we for patience, long-term extended In yes, the true Short-term result vehicle and categories. its in

of through Europe, top running, one In increased eight X X share the by to we've the commercial now the US truck been brand Class and for our vans more than grew already to share Our share. years share full XX% in point and XX%.

Europe. our maintained and in strength also EV America North We

US, E-Transit the Postal won In E-Transit market the a vans than deliver we US XX% has to contract quarter, share. the already Service. In more X,XXX a to

in Ford higher and quarter like XX% unit Pro's paid sales, the including rose software telematics our subscriptions revenue software software. charging per

cyclical Pro less certainly the automotive is a into Ford initiatives, other resilient the all sector. and developing these than broader With business,

Ford red-hot Blue, is capitalizing our team In focused on lineup. the on product

franchises Bronco the opportunity pricing with smartly of the the in and all We'll grow in Mustang. new our pickups, and, F-XXX, grow extends power, to course, new Maverick, like great Our in performance SUVs with to in leadership valuable off-road, derivatives. position the new

it's derivatives, three expanded Jeep transaction Heritage. the neck prices. exciting higher with and less Bronco introduced the just ago. with also than Bronco Bronco neck Wrangler, And like and the the the and the has it in Bronco Everglades, lineup sales we example, Raptor already, We've For years Bronco recently

only to with margin in capital contribution commonality See, and continued contribute part often models, a with derivatives can not increase to two-fold growth, XX% have base XX% transaction higher but prices be can returns. their the but our higher percents importantly, efficiency. these they Derivatives also higher drive

product Ford also We of years have the strongest one Blue. for coming

it's So beginning. just

New Hybrid. now. just It's We have the in Escape, arriving new including dealerships

this Dark will Ranger followed Raptor. and the Mustang summer. by anticipated will Mustang we all-new Horse That the Ranger week, Next all-new in reveal highly be an high-performance

more the And F-XXX arriving later Nautilus. of top at dealerships of vehicles, we have best-selling just on Explorer course, details get revealed Lincoln the we year. about of can't And and into exciting have I two to this now. While the Corsair yet, that, the America's Lincoln we share all the news

Ford investors to experience. business operates build over strengthens supported efficiency e and, costs. volume-driven battery a have and how customer EV portfolio improvements by course, now leverage, US intensity a design a e's profitable differentiated a in of with Now, lower profitability true Model start-up with Model differentiated and visibility Ford into time, operating

down contribution this our in year. cost next e on deleveraged year the quarter, are of as which track Mach-E hitting the have jump weeks, could by Part towards planned, several first-generation EBIT the positive were was capacity, run brought for decline so We're of the margin we structure. our hour per approaching Mustang Model rate XX and for the margin be and we products we end to breakeven a in production double Wholesales plant. in that now almost down

lower now. XXX,XXX the new Lightnings, to We're I also Lightning. on with finding congratulate stopping battery team annual impacted Ford by We my F-XXX rate production do units, property. root of production double about and and were taking by orders Volumes we the and fire of cause output many right immediately an what working that thing, increasing the fixing again, now of and times did the run shipping our then supplier happened the

which revealing We we received. Explorer in revealed well very is Europe, an all-electric now -- are also

in e scale quarter, Park at in already Oval preparation LFP our Battery on EVs. in Blue SK plant progress of Blue site City We made underway Tennessee. continues Michigan. the our The industrial And course, Model the Kentucky Oval is advancing in system for to battery construction and,

Assembly our and a hub transform battery manufacturing. to electric of We now Canadian Complex plan Oakville into pack vehicle

progress we XXXX to our and locking all beyond. targets in in capacity We raw also continue materials to make that support towards need the

excellence customers. was e including example of is A on of which advanced, hit that Reports hands-free Consumer just assist the with it top software. to the for version BlueCruise, that X.X. and Model rated good our driver our the market center system continues be in US, is technology,

X.X. which signal, delivers and driving more is with a latest OTA-ing much it into the we're a of turn experience customers, automatically changes Our release, tap lanes version hands-free. It natural

launched anywhere miles also highway customers became hands-free and upgrade than gain more BlueCruise for -- more than We Mustang over-the-air in the first continue date, and BlueCruise for speed with driven with has and our to XX million update. UK, Europe Mach-E, BlueCruise approval the in to now driving each to OEM we

market as structure, and right points. play at turn the EV I in landscape how about over we and it want look be the the win on right But share surgical It's a is mono market our thoughts Before the to cost to price where plan EV products, we of John, how to easy our eyes. I we with evolving right to the lift. the

course, a look to share share approach. at share and subscribe revenue. not vehicles, of do We vehicle cost any of at We win

and look is also and value, capital at profits We appropriate time. to way we lifetime share believe of customer this on the we share return drive ensure over only the

now the with very utility ensure Against to a something we a we continue market. in small, Mach-E. the will Mustang to saturated compelling the growth, expect It profitable medium EV fresh, we know XXXX, right models to have the EV we offered cost there be in US have to to be By this improve with be XX segment. offering two-row structure, backdrop

second continues We with brand over they they developed full brand-loyal We to Ford. very are in the the that loyal the lineup, also their EV much to for customers purchase. our EV by EV early enter, found to We're Mach-E loyal capitalize markets. reward the to on the Mustang that it but that and with customers more are seeing purchase to is getting and market once first new not us of whole powertrains XX% these

customers in we digital that have physical glad all we're So. and these ecosystem. our

We for our and our costs product lowering next-generation products. current are aggressively

out the per materials of from Capital have Mach-E in Mustang we'll a launch reduced building in the Day. Mustang lot Mach-E You'll vehicle. year, $X,XXX through by fact, find this Markets from But for more end

believe Now, highly in differentiated in this can markets at to utility market, on strategy. that Markets said, we believe share product we our I e like the event the well, our contrast three-row And we'll more as saturated Capital two-world very month we Model customer be will a later about space. know where be crossovers

EV and just look in activity had design EVs gemba, to chance brands to or a few the attracted to market up to see John team, even a of longer our go-and-see most customers with China interesting and are how close. at the luxury weeks traditional hardware in last along no go with I It's leadership anymore.

Outstanding -- performance, firmly attract marketplace EV sights and to a value-added services, as our unit, there. software plus The offering in ability for just are integrated we vehicle in software quality attach defined. brands that digital differentiator, retail, Ford radically experience are and lifestyle digital, different our hardware best revenue, can today. cost structure, is This confidence second-generation is are the win and a styling, returns. given new This compete already And delivering us software share a while in Pro and and the gives appropriate EVs. profit

pleased, up by but wrap are saying I'll satisfied. not we we are

progress some Ford+ look execution weeks you our our many will and solid and forward said, really I As our John? progress. for I go thrilling into seeing in three to capital advancing we markets much of deeper strategy our in-person plan. where event,

Thanks, Jim.

up were quarter, $X.X delivered was adjusted X.X%, as wholesales basis up we points. XXX EBIT. billion X% First year-over-year Margin in

e reflecting of Ford Model those as vehicles. first-generation were benefits our our pricing. as clean profit partially portfolio invest improved, next-generation electric and favorable offset in Blue expected, higher and EVs And Pro mix we with loss leading scale a and net in sheet Ford

provides For consistent footprint, our significant of industrial with flexibility consistently with our adjusted while to us flow our million disciplined combined free cash free flow, improving the capital growth to from we delivered allocation, quarter, $XXX also shareholders. returning capital fund cash

of Our balance over close of to the strong. billion quarter and billion ended cash liquidity. We sheet with $XX remains $XX

addition, despite of successfully facilities. volatility, completed market recent credit the sustainability-linked we our the renewal billion corporate $XX In

ago XX.X% supported $X.X our basis in customer than was So up and margin. higher segments. business XXX and EBIT delivered Blue by Ford volume. a favorable a turning billion higher mix focused points That X%, to year With wholesales

our continues Wholesales Our for e demand. to production reflecting strong and capacity the in lineup Model planned drive downtime double declined allowed Mach-E. product quarter, that us Mustang almost exciting fresh for to

highly the volume. any Now to of is Ford start-up, profitability e Model including EV levered

EBIT our constant, Importantly, the flat at around holding volume XX%. roughly to compared margin quarter quarter negative fourth have would been first

negative higher reflecting around EBIT Ford year, expect improve the stronger half of e We unit second Model margin to to XX% volumes. margin contribution per and this in significantly

vehicles target continue positive year, the In by expect Model our fact, approach contribution we to EBIT to for we breakeven first-generation e margin XXXX. end margin this and of

profitability Pro X%. $X.X quarter, pricing, wholesales. by to a The delivered in the margin an increased XX. increase delivering favorable supported billion improved improvement for in Ford and volume of EBIT million mix. XX% net And $XXX higher was

achieved this highly for sequentially year-over-year as a this were both we Importantly, of our and Super during production was version of up quarter ramped wholesales Duty popular when truck. all-new down,

million, Ford has $XXX lower year outlook. from full year and Credit margin, below values average their in of the Credit delivered loss a first but down historical performance down which been of ago, to normalize. in reflected losses reflecting financing and remain from all is our of the peak credit income, higher XXXX. remains beginning strong half still robust, $XXX Auction EBT but million lower lease

strong liquidity billion, remained $XX from Credit up Ford $X billion year-end. at

of issuance company conditions, market plan. roughly volatile has or In funding already public XXXX its addition, completed $XX billion the despite of XX% the

our to outlook. Turning

guidance continue $X of capital billion EBIT $XX adjusted year company $X as pension exchange income, flow expect about global includes and to headwinds such connected We and full billion, and growth service that of investments and customer uncertainty, incentives billion $X to cash $X billion. economic as expenditures adjusted supply vehicle services. industry-wide past billion between demand customer total This lower rebalance, to higher service free in XXXX reflect

improvement driven the million with the US higher commodities. Super goods industry materials of of chain, SAARs and Duty million by our launch cost Europe, of sold, all-new respectively, volume $XX in about tailwinds lower and including and And and our $XX in supply

segments. the to Turning

full deliver with exchange. $X volumes along higher year, partially normalize about stocks offset inventory and by incentives industry likely pricing rise continue cost of year headwinds, to billion be EBIT and Blue improvements as adverse through industry Ford the will to

Model an in Ford investment EBIT new around report and to loss capacity. products reflecting $X of largely disciplined e billion,

the XXXX Pro's The Super of from all-new EBT EBIT around is anticipate anticipated for be double gain And Duty. is billion results. by billion. around and including $X.X compared benefits also $X our improved the Ford pricing launch nearly driven We to to to volume, Credit Ford our to

couple update equipped capabilities for services. the that for and believe an May and event hope strategy, business on all growth software time next This on and even customer-centered a XX, here return. be deep talk dive I targets we're better contributions Fords on important KPIs Additionally, of will for the into of are of of each time take Ford's to capital XX will days of about Dearborn. expected we segments our blocking I our you you value our markets and expectations financial By you and overall each the done, be segments to as and

the minds. So your our Thank that to the balance you. address time We'll up remarks. of use what's on prepared wraps

please open Operator, for line the questions.

Please session question question-and-answer Jonas We first will Instructions] the Our Adam now begin Morgan comes with Stanley. [Operator from ahead. go

everybody. Thanks,

is And blink question put cutting will then I EVs going to Tesla Jim, that rhetorically, really you So environment if should the on So surprised Jim, no so maybe year you've own price the who's asked and think for current to blink the Ford to one growth? I you, on your XXXX, that growth? question be saying compared much.

Thanks, -- our first first in EVs are Adam. pricing. depends well, all, It all terms three of very of different

Lightning's is the we is lot. E-Transit since a launched, think and I up $XX,XXX price up

scale that benefit. and to of production course, we're get So -- increasing

great careful Power have the powertrain, to So we or after want as just beyond you Onboard carefully. there's conquest selected software. And innovate lot learned we the and we most we've customers. reputation, but to and have a want is important We compete well four like a segments Pro go where ago three we be years thing where extremely where of compete,

the shippable know overcapacity segments. software great autonomy. course, inevitable safety productivity stacks: hedges security, really Pro for are now those and, of and three We in partial All the certain against

knew We the That's our we Mach-E the team development. could of Literally, $X,XXX. together. brought coming. two-row ago, utility the by like bill in cost electric was of segment the see We finished years got had the material We overcapacity like down we before Adam. this why

We're and doing the the like better normally vehicles get customers' day. the minor a We aren't not off things for we to the every so vehicle we better to do, and waiting make data get better continue change. software

from say just the not price So to the going is would CEO to that, message I market as are share. me we gain

designed didn't We will because a the we balance know ago it's when map of them. always healthy first in know what profit years road we products, challenging generation didn't we pretty four

totally two is we the X% the why everyone take that But into because despite Day, we're grow. absolutely wants now years that all second Markets in get, will through margin pricing realistic, And believe pressure will designing cycle. you to we we Capital

So, EV for say, of some maybe we're players growth. pure that I would quite the just than pricing are different

we We because products. want that, and we're a every business, can will pulling balance in profitable always EV first-gen we lever the

gen is make we second The really where can hay.

And Jim. with a I It's number. that, landing a nervous just a saying is just opinion what just have with you're there target because for the second well quick appreciate you But in half which, XXXX, hanging crazy capacity that of out unit really get my I is resonating. me. high million follow-up, as X the little

Jim. can criteria to I targets as to and continue this, I thing Capital you you that Thanks, the I targets? want admit you're volume is perpetuate? get I think to preempt really it to Can to Markets the don't saying that get alone, And the Day, admit success but volume wrong

our we We happened not in scaling Yes, quarter e. that benefit, important. first the business is but is have what plan that for Look success. Model want all absolutely. to scaling Look, professionally, and

trip our epiphany -- a this team. to study we more the say, leadership our would for China I real fact, was In

just quickness a growth, and future experience off in thing we for software brand me for it's the for to to the say, we -- fast look happen I would make use electric the the loop necessarily customers' this vehicles. actually better. profit product that is the vehicle as digital That, not that fitness volume of the how I category the CEO the more differentiating to the -- data is call new

do volume quickness now OTA. traveled because XX months. already that's at make we're that BlueCruise fast We is we're now months why better. the on gained three better growing million, to ago, three To were it in and million million me, so to miles more XX% and of a XX loop, We've that BlueCruise on continue yes, is miles we reason important, but only to OTAs $XX which

Pro, software Ford those On growing subscriptions are fast.

So, to the this the of a Adam, look call new the proof EVs, scaling. And digital close metrics always I all as for we I profit for the for will product our success me, -- that's category balance I with we think point in look best. one,

Thanks Jim.

The question Wolfe Rod Research. is next from go Lache Please ahead. with

growth. just has I'm actually follow-up volume hit industry I'd of everybody. making investments increase put past, pressure the when $XXX everybody costs for question. know on pricing. But Hi quarter higher which to the costs, and the on in like at in million looking experienced aimed you're targets, to the structural I in Adam's at it the lot a structural wasn't driving ultimately good are that

that a structural to given come increase where that target do there's you're taking And have you're power volume whether assertion targets what you've going even you're in on? And know of to a confident agree planning bit or little said, you cost strong bit the with flexibility the if on you about you of conquesting the short? kind that talk But just be pressure magnitude segments got can pricing assumptions that you and pricing customers. I in Ford make Jim, just to

Adam. Yes,

Adam's -- sorry, me you're following on up question. Let

software. did our we costs right. off in to on cost in the our So, structural you're year-over-year Yes, invest, on let said, continue start Rod, as up quarter as there. go see me, architecture digital our a in the and We basis our Jim EVs,

costs, and that structural those costs, us, cost structure bringing overall some freight, then I in in warranty, efficiencies cetera. et our in contribution time driving part key a think material is Blue of over costs for and in down

the and see Blue turn cost to to need cost structure in those structure in as e as areas coming our invest And we Pro. then where on that's of we So, out well. continue

pressure have But EVs, we can growth course, it at of we're doesn't investing level much we're where we're as that that proliferating. of do to Jim so talk Now, that it on the the put more. but not in efficient about business, an doing this

disciplined top on We're be efficiency we're footprint, to the of very the the looking have right going that levels. industrial have we plants needed right the very focused the complexity in the and on segments to models hats into, number have, be

goes And the very Capital Markets we'll talk very fact more we're needs very, to about of as that that investment thoughtful but be at that it efficient. Day, in,

now? year. I versus curious more switching little the -- gears the ramping you billion right have Okay. variable of the give seeing volume in to quarter. billion and since a freight full quantities? And in savings this guidance us some just $X assumption second still half the material were later And also implies maybe secondly, the level to whether to variable you first year the about can pretty in commodities you $X.X on half and expecting your costs we're just Are just billion billion in that's year up would the decline bit case, meaningful your like super color $X.X $X costs be

Yeah.

in So just look only happened increases happened when let's cost the quarter. you the what that about at it XX% a XXXX, unpack at from you cost When standpoint, of look first year. in last

a of was read. on last this So coming out a year-over-year year, tough basis,

down significantly you in If the Pro. little sequentially, e, on in And down they and up costs were they Blue. at a at it about in were They bit our costs when our look in you a were basis, quarter. were sequential look flat

billion half. you at see half got look interaction it reductions from we to as cost second that for of the gain Overall, we on So, cost the come total through about expect start as in share of the standpoint, to year, cost down to versus as you'll that's the thought. when fact come and yeah, we go coming the primarily cost sold second we commodities aren't quickly have to through and a billion, and goods that the $X reflecting $X.X down come down our

unfolding see we where the that's the of second So through costs year. half

Thank you.

America. The go question of John from ahead. Bank Please next is Murphy with

afternoon Good guys.

because question be first in to here fleet, volume seems on leading the XXXX. that a Just recovery early

and Just that curious how much expect And for this and the do whether a or how and in of continue go in to you side? a it's you course e the much see where showing was up as in tailwind next or up you tailwind maybe something actually that the do be year shows for that we actually all to through year numbers, Pro of on two? the Blue even

The Transit We'll through see launching the We of to see the Duty. go We business through the Super largely now continuing -- in strength demand. that the half John. year, that the in We Pro league is have be we sitting as continue. There's Pro, the and we in considerable new year. Pro Yeah. pent-up second year. expect

we that's last we quite of bit double go year. this as through the we profits as year, a Pro where year versus So the opportunity see in to expect

were volume the mix really what was in Escape in TICO the mix up we flat quarter. about for strong year series which It the our And plus in was we strong issue, on some and strong the first quarter we quarter. a Blue, first Blue mix, down, this year, mix first in that's that because kept On pricing. was launching And had saw F-Series. Blue last increases X/XX,

where to So as the on unfolding. That's Blue, going we repeat of of run rest when we rest we see things year. that not itself the it, look come we year you to go expect at that's through the mix When the through off.

that On There pent-up close Europe Pro, business vehicle, things, highlight a being huge the want of John. for demand backorder is still I in was to even to US small not satisfied. just few a and

are a and lot bigger want new customers, we've And them lot They imagine course, van getting a U-Hauls, a still they they good that Super So launch of before the is the you Europe. yes, and, more. a a done fleets, new product truck job Duty this we can the in Transit more, want. of

Transit there's three of for their business so profitable Pro But and have they the to demand large of lot business, And and a small four fleets. Super Duty’s. most real years is literally and been pent-up medium-sized waiting for

the products. is to those get seeing customers, demand now going even still really brand-new for. that we're Duty power of Europe, pent-up to and lot Transit and And pricing intense be we lots more now there's a have of especially, it's and in So pent-up orders Super those

which larger So good ton -- the with a the demand small business, fleets, getting vehicles pent-up for heart a done and product, and but of medium-sized we've there's good job them is those the more Pro of soul TAM.

change about way this, in on the are can the seems There a the of you cutting that the thinking to that new, that large And Jim, competitor of up front the cut particularly philosophy not but pricing if worried of the end. software And end you're on I money is so the and you and not price. on lot front whole be just on price discussion. follow could that on profit people so end money on a lot back can a services make the make about hardware,

You back end. make can it up on think you the

going in mean we you over think how plus back about making the I vehicles think forward? should how business sort the on years' going time you five earned the sort all on about do As end? the vehicles to think and time, money hardware balance selling the of be of you're of your is evolving that money

outside Pro. Ford model, and mean model well live business I at that is Will maybe now of Tesla, that business in right

And So rates. business, that is operating are relief advantage. I we where kind would giving or of software I understand any attach am now XX-plus sales answer is answer kind my large please percent our when any after I your the and software for not say that question, of margin sales teams to vehicle

our especially their get for tax to we is not seeing that's and do a do Those not coming are is we products. company percent our do but someone And products to annuity charging those X% equipment software we commoditize rates I not business else's, going plus to we us. want the see and have we create, Pro, after an already that for And with now like hope ours. rates, -- physical Pro, could to That that's on but They sales. that's we're that XX-plus clear. strategy. not Maybe attach own. that. that doing want That's from the to

you. Thank helpful. Very

with Ryan next JPMorgan. from Brinkman question Please go is The ahead.

I for Hi. to brand have said Ford we're in Jim place like taking event charity what the going a my a read, to in rethink Detroit, Thanks recently you question. means China. at that

do to And operations your those like either what mean seems China in So achieve do stand the time bright portfolio But have think regard operations you terms what for would currently? you a of aspirations? where aspirations returns? Lincoln I market, spot. margins like or with your to in or you that frame you

our I asked in of we Well, I Blue and our charity glad so including the world, finalize are profitable. my there because this success. I China. And a question, China Lincoln everywhere I'm guess thank would But the a work. is Pro as went ICE -- to you. guess And business -- leadership you to end team. is strategy we explain that's profitable But

the that it's And market not customers business but for the But world, us. only is strategy ahead to huge believe it's and so of rest for lens, a in the we not at a EV important the look really are of digitally the world, market biggest you China have us. through

both there we hardware product, really our what and presence software And for and the experience customer battery integrated. see advanced digital is tech, in

Our business in investment, a change. to going focused lower going much with China will in returns. leaner, go We're strategy forward more to China higher

good you to here. the I'll I JMC the And example. since want strategy give an don't is I partnership our question, think a lay example. whole out you with But asked

in to EVs business, We China. are our down going commercial double including on

network an We our distribution affordable business vehicles believe ICE also export and hub that around be commercial the using can Ford for the world. JMC for EVs Pro

that places Africa, fantastic South in we products And affordable can EVs south of export. We in JMC. America, ICE Mexico, have have in and now great Pro we commercial with a Australia, source a dealers

will we're important how focused going serve on. much lower in going a the for in We're team try the to ground that market will we're investment, EV. how the to be of China. China of business now And to approach have resources example on a because company, an more It from That's to is the going everyone. be global leaner, not

higher turmoil in we've particularly market And in just the seen total generally. loan strong the SAAR maybe But what just helped just strong of in of dealers credit at you're Thanks. million line in auto the maybe great. light this terms for vehicles. used stronger of latest the about equity availability, been $XX some expectation curious, from in your your APR, banking if you're The sector Okay, in or the has customers SAAR, you're rates, finance anything is or different the by thinking maybe or the hearing US? light then than in the of that seeing auto year, very lastly, how margin

Marion. Ryan, Hey, Yeah. it's

banks for pulling share kind us. difficult of opportunity from created bit pricing is as lending, improvement well which financing a in of a back markets, through We of number banks auto of a us, a -- that's as share and have seen for hallmark

see coming there availability credit to the support the better over the But customers months for to So for I the OEMs. across it don't is industry, are captives going continue getting banks. and lot still a

Very helpful. Thank you.

Please, BNP Picariello with from The next ahead. James is go question Paribas.

everyone. Hi,

First price. question on

So, sounds Blue how thinking unpack for for just year's full should help Pro is come? the for to about year could yes, though be expected as strength the to be It negative spend we this neutral But, to Model as you be incentive still is Duty the price and pricing picks up. overall is still with Super guided year? e

Yes.

especially year. a see pricing e, believe strength as we basis to supply for see pressures, that well. And We Blue Pro, expect for pricing pricing our demand be XXXX, overall, do we throughout on us expect half neutral. normalize. slightly there case. expect the us, we We being the from to bridge and down see will to XXXX as year-over-year be So, second to pricing be still the on we on

Ford. had about for to no overall, see pricing change we neutral talked is So, teaching. at the what We

second And XX% that confirm, for got -- Okay, or the Model talked it. margins you e then Is to just minus right? half. about XX%

yes. Contribution margin,

margin. Contribution

Okay. All you. right. Thank Appreciate it.

Total -- no. margin EBIT -- would be total minus be margin, no, no, About XX%. positive, margin Sorry. contribution margin would

it. Yes. Got

provided So, terms maybe helps the my buckets minus that benefits XX% bridge what from follow-on the to what Thanks. teach-in, you Can that because that's rate are of that second to materials a get the what for in half? you scaling I thought at the you'd perspective, run sit.

in to year. different through when you mean not we're going the what's teach-in. it, look We grow start than I volumes. to at It's scale the

talked reductions LFP getting and we the have about $X,XXX design then coming Jim a have battery Mach-E. about, We in, on reduction that to the

as significant We on have reduction a in play well. Lightning

it's that about at the So, the talked same we buckets teach-in.

Thanks.

go from is ahead. with question Barclays. next The Levy Please Dan

Hi, last the the midpoint teach-in. just in sort taking margin reduction. is the at contribution it's look margin want good now, this said negative of deck, roughly you your didn't contribution on what contribution on that at But and I questions. $X,XXX you lot question follow-up a the just of evening. for Thanks material I of at to know on if And margin. I disclosed right disclose you

can understand easily see you typically, that to content a changes mid-cycle of I the you some of product. wanted just end cycle. more you I there So, a that reduce are at how you content do. modifications product But design know can material said

a get of visibility to contribution want margin to your content So, modification breakeven? get sense just on to that

from down. to things can a your of couple standpoint drive cost a do there's content So, you

customers is if the them that the we using features the using valuable. find connectivity to One can of understand we of design have vehicle, vehicle not something digital they're we're out. And on that what that

The other wait thing Mach-E. said, we we're as doing Jim on is, didn't

to work into through we Model thought e, as $X,XXX year to this year minor us we launching get we're that reduction. programs of those and through and the as go into together bundled what we as actions started we put So, next year to

market it where of needs we was As mover, isn't on readily We've it quickly. products first first-generation our get a and working design and the that be, to admitted to felt important we're efficiency to a we'll And reductions in incorporating Markets now. -- into talk taking all our Capital we're the learnings and those more couple second-generation Day. about it at from that that weeks of products and that

So, yes, there's do. things can you

product. You do what it using minor be together, value. the that a just and thoughtful take launch, that's about opportunities, on you out doing And as you go. change go you we're data you e, connected and a to customers you bundle them there's we're And the features where do need through and don't to the

how punching if and would these actually this versus four tell necessarily be just the focused clearly as you you're that fray then low And volume me I segments there with touch dictated units follow-up, been and million lower that want were that I earlier little you're a that if making probably you. at Thank or is a segments on utilization. some that historically, you're of -- is bit, this more unique want on But I the looking you're think And year at that unique on which read forward. volume. been much questions And going segments my Great. profit. you've balancing you're the has get that correctly premium you're is by could business out of This of notion is to focused where more comments by your now, to a volume. a that if volume asked historically, message dictated not you're that

the how So question CMD. realize look we future? how type are should I about should probably broadly? structurally But better volume you your we more thinking the of volume a for think what about that's at in

question. Yeah, good

the it clear on growth to our for that I aggressive, want make focuses strategy and is very company it customers. So conquest really

So we And that for mostly when launched is lost new Ford software e not were It's and we well. to segment. increase to conquest full-size categories on new all customers Lightning, to and we almost confidence overall the are growth. customer the we EV pickup the that know is Pro additive that us in truck to us company's to vehicles gives and grow, targeting plan capacity that what really and that

been the product for emissions So what much segment a and career funk, pretty XX% of when Lightning's industry add to features much, storage you whole we learned lockable can be a full-size ability in much truck, the bigger for traditionally like case, a a has Lightning that think my three-row with vehicles, new of and for pickup of do a Pro us. be that days. we your to intend power EV owned bunch three before. house huge And never for A bought truck lot a new which a growth with customers will we crossover zero

a product at lot into putting we're but and we for new So our to of strategy. capacity of are that for growth in expect thinking lot incremental that is you going cost. not should put and company, a profitability the we've for growth We're to together, grow any that manage going growth

to the our have We top engineering. of have hat top aspects much of strategy hat. most not is scale One want product important to a per too lot of

second is we'll very this else. the for of us radically for And into Frankly, the we're can answer you a we can to day we'll life. we've our lot And it's because But in encouraging you examples I capital capacity where with for from as Lightning strategy because Mach-E. our markets customers effect. and the seeing think capital best for aside see there know and really for again, you lower day, be product cycle scaling the go And again, increase. new said, of out simpler markets real learned that and lay number coming cost, everyone

Great. Thank you.

Please go Narayan The next from question ahead. is RBC. Tom with

taking for the Thanks question. guys. Hi,

quick follow-ups. two Just had

net downshift right? So that it coming the of year like for more from kind neutral saying full is the on price rest for of really not the you're Blue, implied Is as mix year. sounds in price than the

Yes.

for really very as we year what's we mix to the go through full on had we see we out a of levels a are in to you So expect back from that pricing understand we then repeat that units the in all go the have that and and to units Remember, of accrual end as price year, that full of you it the do of have QX the are run is in basis that strong QX. mix expect rate -- important second the half of stock Blue year. stock. on to as the in XXXX will incentive year those some pressures come through on because take impact you We of the year and apply don't basis

that yes, a out run about pricing. definitely on there'll business be of But on some -- So you've it's overall, to coming year. end for got that the rate pressure the we think of Blue, see

Okay. And then follow-up. another

an think you on attach trade-off? attach rates, the going And attach price? XX% which So in subscription think you Pro, curious, is that that rate on is a the product. at question services Presumably, just we is incentive as are that, there the of to you not mean perhaps or increase revenues -- products come about end have day, of subscription perhaps I those amazing. higher make view enhance on we're these Thanks. the add-on rate by and to sacrificing how this margins, at about do these to

don't business, the we I asking invest realize for margins But Pro's more given high-growth think the are the profitable similar. that think it's pretty bank we can better. software see and order parts you because actually in question a products, the on on important the for margins great question. a very everyone should It's Right would Pro, now, you're

the day, largely but fantastic wants in the kind the they're truck or have of products or whatever. Pro, box So end customer regulated, us to of pet for pickup

the software, really rates for be get attached is approach. customer, to with an the going So they experience value and the the the integrated

Think prediction too. they XXX% okay. of failure before state, future about components we executing which sale, of are this

gets to failure predict software better vehicle more do everyday, precisely can more components. the you that? sense You integrated software, for so and and It’s

service. out of The customer really that gets a vehicle never goes

commercial customers, most is in the which XX% revenue. take customer, Pro small, down, the you're If medium US, of those the size TAM van Europe that’s and they of a one

the can So more that’s drive the pay they vehicle because road. off will business with they never

for so the think Think about doing integrated the you a is think customer parts not an of design there, service. this do it to each between could where as a the of approach, the other, and trade-off parts the is without vehicle off does pre-picking business standpoint they about prognostics that need the vehicle vehicle road so really the the as software. So fulfillment even quickly, that for customer if business where profit, can't or gets the before from service everything not designed very the it do part the long,

really don't product value, we or as of a piece of think We -- the it it think of of from margin. designing the and it's I system, you think whole So the adds can't think other. trade of of from so standpoint like customer that software the physical every kind each independently

the standpoint, part like from example. that That's business designing on profitable. the customer hope I it time, you. Pro. is inseparable, where business in pro turn a out let's more But makes to over the the low say, we're prognostic they're sense Now, software may of the parts

Yes, does. you. it Thank

last today from with question Rosner Emmanuel go the And Deutsche is Please, Bank. ahead.

very you much. Thank Hi.

more is you a EV competitive price this to on think your the Jim, So a within I all announced point, the today. segment Mach-E segments. I think cut And various

yes. Yes,

which should some ability comment to anecdotal than that to planning supply. maybe you market on you're I've ship Can it demand environment on like have pickup -- some sitting your more read feels the seen US demand decent some some There's dealers' amount evidence for of the Lightning? to lots. I Norway,

down and So are talk order cost needed just a price? whether Lightning actions can like general in demand about in little to bring is where sort of you the maybe bit

the But so Lightning two from our market, maybe product way people look market. there's at some or don't have in a I would the they the understand it outstanding. one But only in is if can that why standpoint, demand

goodness are of Lightning. Lightning excited course, and, really the X.X. about We've But cost BlueCruise the stock that worth thank of $XX,XXX demand on taken first seeing the is we're for software like the for are strong. we like some years vehicle really, dealer now And really time in for we Lightning, reductions $XX,XXX. pricing our two yes, And, shipping at

Trailer a they're Bring the was MSRP most was miles I come with know, it prices someone ago, vehicle down two on And that at have look Trailer because don't new now. every week, I it, popular four and a the years on Bring basically flipping. at Lightning like, was a

So selling it at we're is full demand higher. MSRP. The

everywhere. we say In is out MSRP the are Norway, higher fact, sold totally in And I would that still. pricing we're than like

we this a global So is segment, believe.

and US. just in our the clearly one to number the a we're It's world, in maker global going keep is the market. trucks pickup pickup Ford not truck

be we this or about else great doubling the So production year. demand wouldn't feel we

John. that for one Jim. then, for Thanks maybe Yes. And just follow-up

curious put final So the you could puts and on a unchanged your for point just XXXX if guidance. takes

terms saw or than a of benefit costs any a maybe of materials previously? big now $X in and billion a other I more think $X.X less there billion. freight you instead for Are of pieces either which mentioned are benefit or headwind you

Yes, sure.

had we So, was bridge the year. earlier what we thought shared this

COGS had That's primarily as billion for as And overall neutral logistics. that due billion. are that be We us commodities now. about we would $X We down to pricing $X.X about so for it said not about I our will think had the we We thought. think quickly primarily it's coming said and be material said, year. as

X% QX. Volumes, we in were up

the -- expect X%-ish for about be overall. to up year We about full

have that, and are at changed that can before. So, what had areas look those versus I three you bridged we think basically the

a we and past other going negative. $X of about exchange invest in billion and to there, stock growth and that to pension we change We continue $X.X Credit, about don't see we're billion. about million, service we're at $X then

between except bit bridge costs. So, same, little movement the some remains and of volume that largely a got some commodity we

Perfect. Thank you.

for This XXXX conference concludes your Thank call. Motor Company first earnings participation. quarter the Ford you

You disconnect. may now