Ford Motor (F) 26 Oct 232023 Q3 Earnings call transcript

Good day, everyone. 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 Third 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. [Operator Instructions] [Technical Difficulty]

Gary. you, Thank Services. Motor today Ford Lawler, quarter earnings Ford XXXX Financial Welcome Jim Company's Farley, me Integrated President, Stern, are and John President call.With Officer; to Peter third and Chief CEO; Ford Also joining us include Q&A is non-GAAP Credit.Today's CEO references. Marion some discussions Harris, for of are These to most the reconciled U.S. comparable the appendix in deck. measures our earnings GAAP of

Actual shareholder.forward.com.Our could included are You results otherwise that over factors about cause and other and on Page results materials EBIT, can like our Company of basis.Now, are earnings statements those to from the find free comparisons call differ forward-looking on content to may deck all discussion at adjusted stated. Jim. flow rest our significant the are differ an includes to noted, EPS, along cash expectations. with the XX.Unless year-over-year. I'd most also important The turn

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We begin Adam Stanley. Instructions] session. question today with is the will Jonas now question-and-answer first Our [Operator from Morgan

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So my $XX is, EVs? number, keep a year, can question long how allocating you billion to round

Yeah.

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Yeah.

to jump me in, want You Jim?

Yeah.

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

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handle cash you reverse major the issue or year it's the numbers and this flow. and going in on and So are X? here next What's I mean, for going get in results to a hopefully how on this a

Yeah.

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got Yeah, it.

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I strategy to is and us, EV customers For go really think ICE strategy well. after we our our know

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there, has I that's think our us strategy. but generation helped first The

the choice, but overall strategy changeability As and especially capacity. battery the we really John as around certainly the have of flexibility, the timing of capital and we're or far manufacturing mentioned, as that capital, plants flexing

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Mavericks. We have affordable

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Levy question with Dan is The from next Barclays.

broadly, to different as maybe the out, I issue. in and pointed Jim, question I gave on that more appreciate, just obviously, lingering you way. slightly commentary the is, wanted cost warranty a you ask but a This

gives specifically, actually to sight of end. headwinds? architectures for or And here you a the around think What exactly pivoting the your you uncertainty to of the turning said be I been these is new this there's years. obviously that on these earlier gap you issues your have at year, going your in $X sight CMD around? context be some line What for cost billion where it's These some are to the versus turned line competitors cost the can confidence how or Blue. confident of issues

there's I that coalesced a across platform, we right, together, this to and others start, issue of and What is look delivering, work, Yeah. an years for we've and have When of it has and a industrial I'll hand the his Jim company, in now the are mentioned around fundamental that Maybe over issues. in excellence would cause team, And focus been had root you. way real there at and the haven't. think it's thought work it say that been Jim, and our that the you those we I structure the execution. work, those as remarks, the the issues then real around focus have

And about important. the is supply addition from the the a is well, system iceberg, Jim We air her have a issues. driving that it. warranties above now really manufacturing, important Ford it's engineer outstanding. standpoint, Kumar as the said, the have understands water, $X who at water, domain billion, chain under and back the great the in et isn't same company, And together you as quality Door, the cetera, new system standpoint, the area and manufacturing states cause piece understands from talent under change billion, below this but foundational having as design structure the Currie the Liz would driven water. cost to progress now quickly in up And as material of the change see the as problems, expertise in into part in we root Doug, then the It's is there. you showing the and it's being $X in as are a having it's the the the all And bringing them then issues fold, we cost release And have grew driving up well and and most right? it's like about Bryce what's outstanding. and

And get new this in integrated what a team And and need the we to done. the is new having an having and It's talent talent. place we're together way the team working how attacking. so, as they're in and and place team what go it's the these what focus it's after together as issues. excellence, going working the It's relentless they're on we're watching after to

past. and ICE we're point I'm them EV, encouraged memo.On got is the designing cost, the for because came And On that I test Super carryover quality lot just the throughout us to extra real we a our pride The on in talked going And for That because did understands and all of would parts negotiated talent and about a together team And designing of our so that cost Everyone was vehicle be leadership from most beyond that a message is X material cost Duty. it tackling of The be our vehicles. that on right. ways. of this proof that brought-in what was ideas these bringing factory am got decision. is NVH. quality top complement cost for failure. protection going the to the we approaches on execute. this the held John done XXXX and sent rust until it have process. it happened to They're the be was from the priority. It's They'll going parts systemic our release to standards more of our but company. issues those important -- to test me case And tested in our maybe billion billion-plus in something real we that $X going launches test launches. test, $X for the we team our on Duty, the hopper things did for our quality, our on We readiness deliver testing. in believe in in. already on our and I hasn't test is our going confident and to scratch, than in down as the price And products team was in it's talent, we They're for quality supplier the really test vehicle to standards. Super work year, Ford commitment, like down us recent to in That ideas. and doubled They that

into sustained bit which little quickly and especially on of on in tailwinds questions I can has give Just expectations. you're think you how a you out of can long some on pricing a what follow-up outperform Maybe anyone's voiceover to light there pricing, year. the continued affordability on be these beyond think pricing, all seeing of next

incredible of power the on on different We're it's right? for right downward think year see the EVs, But really I this business Pro, pricing now. to continuing segments, pressure each strong right? pricing

remarks, We're the we've the model for we're the in we got on Blue, look the in strength the And then the year, when for is most you year. model see continuing in his lineup orders coming held. through pricing at ways fresh good Jim the really have a hold part. good prepared mentioned As and to pricing

consumer for thought there's that affordability, that and Right pre some their be, sure, we've XX% of third talked especially than That's through about we disposable issue. a said seen, before. Sure. about there now, it's it on And resilient for Pre-COVID Affordability are an pricing? inflation Now, see vehicle. we would but year. this we more is we've it to quarter.But XX%. been the monthly pressure about income was takes the this a starting

So think to then we that, XX over think it's going to next XX back months. going it's the to we to revert and happen

they so, would But going dealer of higher And percent the $X,XXX. come net the at it's to through still But because do of in transacting are prices. that price lower past. dealers of OEMs in margins it much to to a MSRP reduction have be about that's through that, also believe than going a come also part we

going be of both And so, those. it's to

that throughout Now, the we to expected occur of year. some

it hasn't far, So much.

see going into year. so, we And through next move come to I think start to you're as that

next The with question Wolfe from is Research. Lache Rod

on things I EVs. wanted to couple ask a

original I mean, that some don't -- the think think steeper than you've been I that deflation level been your has XXXX. you're EVs seeing certainly, that deflation you plan I in obviously, assumed, assumed saying but of through

parity ICE? you I Am prices that what case, below premium? to X% with think And a to would even actually the assumptions it plan assumed push do you greater do in order do you reduce need your need to achieve yet with to order some to price parity that view and get harder? I need ICE frame. to correct that's if Do in achieve in price that was even ICE was or you you those your even in in margin time cases, price ultimate

Yeah, Exactly. John. Rod,

Gen way of space If of was, the it's and you going product three-row SUV, an look thought our interior an at of X the exterior Expedition. Explorer we have about size our to the that,

at be for it And targets you will an vehicles. well, the would be should to revenue that a as we between on that so start-out X said, we an team setting know, ICE the when we and assumption looked with -- in those ICE XXXX, priced

premium diligently the to in that. set the lot And that's right still we we but many to areas. try but how working so pressure design the And the is we segment, changed, now, pricing a there's in a to continuing has gave that And to gas to. up to affordable targets team team are deliver EV see

as these you're to so our And vehicle time, that X% And we're targeting basis for think premium reduce is, affordable. then our that's down second-generation assumptions what our we on third-generation move which vehicle, structure we of I step have that's that cost you're to and pricing planning So up is going the vehicles setting into all going over going another for as forward. find built well what are see that after, going margin. was setting our to that and our

Okay.

parity So, an still get your reflects margin that's ICE? expectation, have a that would with you that you to cost price would X% structure and

the Yeah, the that efficient additional be is as scaling that changed, for know, say elements And vertical that move The business, is pushing capabilities that is most the are lot team there needed possible. differentiating ultimately opportunity we've watts there, efficiencies to working the the of as as of the through vehicles aren't can the target as through and X using that. on that our the we set would key target hard integration, to after. and There's get the build-out facilities battery, has X% went for is Gen are lean partnering profitable commodity and importantly, vehicle, the a we the things the we size to deliver every the what of parts to over team that of the as the the X save build-out team is Jim them. vehicle you manufacturing going that

critical view batteries cost I'm secondly, integration still just achieving that and assuming you And your Okay. vertical to is and LFP targets.

just Just lower you've you an costs us is on some achieving can is give that, you -- to plan given what the batteries, your that can some in these plants, and got of the of all just how delays or update of and trajectory the on issues around those pauses changing?

Yeah.

We're working design. So, we're forward itself, with the the the on integration to chemistries. cell move working vertical continuing battery on on

of we But we change EVs, out before the our our important battery Park be said, cost-reduction path LFP a plant that future in for Gen real forward have in is here going very to As Michigan. to and we've part what vehicles. step definitely on is put no X BlueOval

as of ranges combination reductions size to looking And that. of efficiency is battery, it's vehicle, integration So a comes of that working the the the of all toward and together vertical the we hit. battery get across It's the the well across lowest the is the all vehicle then the possible the watts cost It's combination that vehicle's as chemistries. to drive need a part to of and hit the the target. of we're vertical and integration that the team to

with Deutsche Bank. our And Rosner comes today final question from Emmanuel

So candid assessment near term. time, more would Gen well you of I going X. as X, same trying that you not EV the in that the the generation and is and the acknowledged investment reduce change actions the At as change business terms affecting appreciate the in of come all to detailed your Gen rightly on to the be, first in losses easiest,

to Does lot on your of before a for a like be few fairly something done improving better? generation? at Gen You're still can you're loss in something e. you billion first we changes has us does Model Not where near-term and Obviously, terms it with that targets Gen just ago, running then the here? $X worse? these this addressing positive. changed. any way EBIT So, Can from to how annual had it go during expect get it But X much losses? get that so long Does frame you bring X improvement ago, months a can now actions,

just about. on So to have more I make right, Gen freedom types Xs degrees where the is you're talked to going of change changes the we'll Step function Emmanuel. be of

the diligently diligently term, on before in lower and the Xs, quicker couple additional had work products, working out. of design expected, than Gen results. on continuing Gen comes years and we've showing we come and impact down course, is very also of the up the the Gen the very On price in cost near the that's our to We're next to in the much X reductions team X prices minimize of seen

products battle we through going so adjusting X can as we so And can between demand we that working pricing to and crazy that of top to vehicle line reductions the can, cost balance relative put Gen then the on from to to be standpoint line. that the managing like bottom it's a the whatever best supply

to very to and as team as bring revenue it's much term, So it's near much going to And quarter-to-quarter. going It's we as continue working cost the product to I as the think in to reduction be going hold we through be diligently can. just continue be that. can to the

And was then of a quick a and the the mix extremely in both margin solid but and quarter. on very bit pullback follow-up in Pro. same business a strong there volume at Obviously, quarter, Ford little time, and

and prospects So this normalizing timing and for back-up? can that you factors the the just go over drove

Yeah.

had in you a still And F-XXX as seasonality Europe, you that Super bit. because when we look some quarter. of volume which was well on know, that some hiccups you look at like Pro, Part volume was So, in going commercial a We down we then And down or disruptions there like that of a the the to had was the suppliers that. some normal from lose cost the Duty. on Ranger bit Ranger. new little improvement things and have then bit motorhomes at when on of was with ramp us

saw think seasonality. some you I So

You we the continue due were missed up strength supplier yet volumes And then which fluctuations a of pricing the with in showing the volume see constraints revenues, some higher to Super on the is saw bit. quarter. Duty, course, to some down the of some and

think our very vehicles, order not. Pro is I The not we're the robust. it's for that reduction seeing overall, in a significant we're demand bank So

we a and I to for Pro at forward here. demand as model of Europe lot year, be performing the to a continue have is high We going move level think

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

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