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Speaker 1: We're scrupulous at Bloomberg Surveillance about full disclosure. So I'm

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Speaker 1: going to give you a full disclosure. Now. In the

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Speaker 1: old days in our ute, maybe one guy within a

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Speaker 1: zip code had a Renault or a Fiat or something

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Speaker 1: sexy from Europe. Maybe the rich guy had a Citron,

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Speaker 1: and everybody else either had something from Generous Motors of

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Speaker 1: the people of Dearborn, and you were either a GM

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Speaker 1: or a Ford family. Let me make clear, the Keen

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Speaker 1: household was a Ford family. So this is a joy

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Speaker 1: to talk to the gentlemen from ames Iowa and University

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Speaker 1: of Iowa, excuse me, from Iowa City and University of Iowa.

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Speaker 1: John Lawler joins us. He's the chief financial officer for

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Speaker 1: the Ford family, Ford and all that Dearborn stands for.

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Speaker 1: Are the Fords still involved in the company.

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Speaker 2: Oh, absolutely, very much. So Bill's very active, you know,

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Speaker 2: and it's wonderful to have him there because he has

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Speaker 2: such a rich history and experience with the industry and

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Speaker 2: the company, and he really sets the tone about our

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Speaker 2: values and what we stand for. So it's wonderful.

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Speaker 1: Dude. I was in Detroit. I think Steve Rantner was.

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Speaker 1: The cars are at the time, and you people took

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Speaker 1: a different path from everybody else. Do you see the

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Speaker 1: outcome of the courage you had not to take the

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Speaker 1: path everybody else took? Does that still with you this

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Speaker 1: many years on.

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Speaker 2: Yeah, there's a lot of pride in the company about

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Speaker 2: that and running the business well and what that means

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Speaker 2: for us. And you see it in where we're approaching

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Speaker 2: our product lineup. You know, the iconic products that Ford

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Speaker 2: stands for and the rich heritage there. It's very much

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Speaker 2: a part of who we are and what we do.

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Speaker 2: And working through the financial crisis the way we did

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Speaker 2: is a pride point for the company.

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Speaker 3: How do you distinguish yourself in the hottest growing area

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Speaker 3: of electric vehicles at a time when it seems increasingly

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Speaker 3: as though the Fords and the Gms of the world

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Speaker 3: are going to manufacture the cars and Tesla is going

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Speaker 3: to both manufacture the cars and provide the charging networks.

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Speaker 2: Well, it's interesting because we see ourselves as a first

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Speaker 2: mover in that we have three great vehicles on the

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Speaker 2: road today earning a great amount from those customers. We're

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Speaker 2: already working on our second generation electric vehicle, and we've

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Speaker 2: started working on our third generation, so we see ourselves

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Speaker 2: out in front now when we move to charging. The

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Speaker 2: move we made last week or two weeks ago with

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Speaker 2: Tesla is really good for the customers, and that's what

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Speaker 2: it's about. It opens up about twelve thousand additional charging

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Speaker 2: stations for them. It allows them to scale that very quickly,

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Speaker 2: us to scale that very quickly, and it's all about

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Speaker 2: making life easier for the customer. And when we do that,

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Speaker 2: it's good for us.

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Speaker 1: Okay. But our Keithnaughton makes very clear in Detroit, did

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Speaker 1: you're giving it away to Tesla? How much did you

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Speaker 1: give away to Tesla?

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Speaker 2: Here with this agreement, What we don't see ourselves giving

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Speaker 2: it away to Tesla. What we're doing is we're opening

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Speaker 2: up the Tesla network, working with Tesla and providing that

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Speaker 2: for our customers. So I think it's about giving them

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Speaker 2: what they need in the convenience of having more options

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Speaker 2: from a charging standpoint.

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Speaker 3: So, just to sort of put a bow on it,

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Speaker 3: is Tesla the industry standard when it comes to charging.

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Speaker 1: Now.

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Speaker 2: Tesla has a very good charging network and it's good

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Speaker 2: for our customers to be able to participate in that.

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Speaker 3: You talk about the adoption of electric vehicles and people

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Speaker 3: have noted that it's been a lot slower that you

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Speaker 3: make electric vehicles, but people still want to buy SUVs

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Speaker 3: that run on gasoline. You see it coming to about

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Speaker 3: thirty percent of the industry by twenty thirty. That's different

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Speaker 3: from what you know the President has put out there

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Speaker 3: and others seeing it adopt perhaps a little bit more quickly.

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Speaker 3: Why is there this differential? Why do you think there's

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Speaker 3: a sticking point that's going to keep it from really

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Speaker 3: getting to that point.

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Speaker 2: Well, when you look at it, ultimately, of course, the

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Speaker 2: consumer decides. And when you look at our business, we

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Speaker 2: have three strong businesses within Ford. We have a strong

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Speaker 2: what we call ice business or Ford Blue, which is

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Speaker 2: gas and diesel. We have the electric business, which is

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Speaker 2: a startup, and then we have our commercial business. And

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Speaker 2: we see that gasoline vehicles, powered vehicles, they're going to

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Speaker 2: be around for a while, especially the vehicles that we

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Speaker 2: lean into pickup trucks, SUVs and those you know a

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Speaker 2: lot of them do work or have different enthusiasm activities

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Speaker 2: that they do, so we see that continuing for quite

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Speaker 2: a while. So we see strength in all three of

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Speaker 2: those businesses. We have two very strong businesses. While we

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Speaker 2: have this startup and the future, of course is ev

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Speaker 2: but the consumer will ultimately decide that adoption rate. And

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Speaker 2: right now we're moving into from early adopters to early

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Speaker 2: majority and I don't think anybody knows how that transition

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Speaker 2: curve is going to take place, and we're watching that

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Speaker 2: very closely.

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Speaker 1: When you were at OX in the University of Iowa,

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Speaker 1: you learned about persistency of free cash flow, which leads

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Speaker 1: into total return. The auto industry has a flat out

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Speaker 1: mediocre total return over ten years. You've got some recent

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Speaker 1: five year dividend growth. It's pretty snappy and all that

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Speaker 1: the airline shifted to a more persistent financial model of success.

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Speaker 1: Can forward in the auto industry do that? Can you

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Speaker 1: move to a more persistent free cash flow that generates

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Speaker 1: high single digit total return?

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Speaker 2: Absolutely, that's what we're focused. How you going to do

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Speaker 2: it well? First of all, it's leveraging the two real

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Speaker 2: strong businesses that we have in Blue and pro. And

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Speaker 2: the great thing about the industry right now in this

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Speaker 2: transition is the ability to attach to the consumer because

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Speaker 2: these vehicles that we're putting out there now are connected

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Speaker 2: and we can create a lifetime relationship with those customers

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Speaker 2: build services and experiences. That's a creative to positive cash flow,

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Speaker 2: and it's a creative to the business.

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Speaker 3: How much can you keep raising prices at a time

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Speaker 3: where you're starting to see some real pushback and actually

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Speaker 3: following car prices on the margins.

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Speaker 2: Yeah, if you look at this year, when you look

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Speaker 2: at prices, they're down slightly. I think the path of

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Speaker 2: continuously increasing prices is behind us, and we're going to

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Speaker 2: have to manage that. In certain areas, we'll be able

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Speaker 2: to price new products and where you have strengths differentiation.

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Speaker 2: But overall, I think the industry's passed the large increases

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Speaker 2: that we solved the last couple of years, largely driven

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Speaker 2: by inflation, and so now we need to look at

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Speaker 2: affordability and where's affordability for the consumer and manage that

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Speaker 2: very carefully.

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Speaker 3: Do you feel like you have to respond to price

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Speaker 3: cuts that have been reversed by Tesla, but price cuts

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Speaker 3: in the industry just more generally that there is is

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Speaker 3: comp dative momentum downward in terms of trying to cater

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Speaker 3: to a consumer that's borrowing at a pretty high rate

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Speaker 3: relative to history.

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Speaker 2: Well, when you look at it, I think you have

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Speaker 2: to look at it by vehicle and by segment and

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Speaker 2: where the competition is, where you're at with the strength

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Speaker 2: of your product, the differentiation that you can provide, where's

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Speaker 2: the natural demand for that product? And right now we

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Speaker 2: have a lot of new product on the road, especially

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Speaker 2: in the blue business as well as the pro business.

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Speaker 2: And what we see there is that with the new

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Speaker 2: product and the differentiation and the iconic brands that we have,

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Speaker 2: we have pricing power and we have high demand.

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Speaker 3: What's the proportion and how has it shifted of cars

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Speaker 3: that are bought in cash rather than credit over the

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Speaker 3: past five years, And I ask this in terms of

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Speaker 3: the haves and the have nots. People with money and

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Speaker 3: cash are buying the cars and fueling the demand, fueling

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Speaker 3: the sales that you're getting, and people on credit are disappearing.

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Speaker 2: We haven't seen a large shift in the mix between

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Speaker 2: cash purchases and purchases through credit. You know, we have

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Speaker 2: a very strong credit company and Forward Credit, and they

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Speaker 2: do great job working with our customers. And what we

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Speaker 2: have is we have a proprietary credit scoring model, and

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Speaker 2: so we'll buy customers that others might say aren't aren't purchasable,

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Speaker 2: or aren't qualified and we have a very good record

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Speaker 2: with that. And you see that our credit losses are

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Speaker 2: our severity. It's not increasing, it's still low. So I

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Speaker 2: think we have a really good model in how we

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Speaker 2: do that.

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Speaker 1: The Bloomberg terminal says, you've got an eight multiple. To

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Speaker 1: be kind on a forward view, that's just subpar in

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Speaker 1: this environment. What is a multiple you perceive for should

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Speaker 1: earned by the market?

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Speaker 2: It is a par if you look at the industry.

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Speaker 2: The industry has been, you know, contained in this box,

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Speaker 2: which is.

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Speaker 1: How do you That's the heart of the matter. How

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Speaker 1: do you get out of the box.

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Speaker 2: I think it's execution, it's capital efficiency, really watching where

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Speaker 2: you are from a capital even dial over capital expenditures

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Speaker 2: and then consistently delivering. And now with the industry and

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Speaker 2: the ability to expand our TAM and expand our business

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Speaker 2: with our customers, we have an opportunity breakout and we're

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Speaker 2: going to.

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Speaker 1: Get It's not good enough for Keith Thaughton. He wants

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Speaker 1: to know the number you perceive. Should Ford be a

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Speaker 1: fifteen multiple company? Twelve multiple? Can you be you know,

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Speaker 1: like Apple, a thirty multiple company.

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Speaker 2: I think you need to look at the best performing

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Speaker 2: industrials and that's the first step.

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Speaker 3: Are there going to be job cuts? Is that part

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Speaker 3: of the way you get there?

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Speaker 2: Well, we're consistently adjusting our employee base because you have

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Speaker 2: new skills and capabilities that are required and then other

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Speaker 2: skills that are no longer required. So you're going to

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Speaker 2: see that on a regular basis from us as we

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Speaker 2: transform the company.

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Speaker 1: I'm going to go back to sitting in my grandparents'

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Speaker 1: garage with their cool Mustang that was just unbelievably cool.

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Speaker 1: And then as a Ford family, we were the coolest

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Speaker 1: people on the block with the Bronco with the white top,

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Speaker 1: and my father folks would take the screws to the

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Speaker 1: Bronco and actually take the top off in the summer

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Speaker 1: as well. Tell me about the romance and the sales

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Speaker 1: you've had with this new Bronco off of that memory

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Speaker 1: from nineteen sixty nine.

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Speaker 2: Can't make enough of them. Demand is very high, and

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Speaker 2: I think the design team did an incredible job taking

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Speaker 2: the attributes of that historic Bronco and bringing it to

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Speaker 2: the new Bronco.

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Speaker 1: And you can provide a profit model of a thirty

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Speaker 1: four thousand base, we can what's the average sale price

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Speaker 1: of a Bronco.

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Speaker 2: Oh, the average sale price of a Bronco's it's fifty plus.

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Speaker 1: I mean, my father would be in the in the

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Speaker 1: auto room. I don't know. I don't need the Russ stuff,

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Speaker 1: and I just think we got to bring this down

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Speaker 1: one hundred dollars. I mean, that's the way it used

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Speaker 1: to be. You can't make enough of them.

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Speaker 2: We can't make enough of them.

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Speaker 1: It's still at the end of the day, it's about

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Speaker 1: the romance of selling autos during a football game. That's

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Speaker 1: still what this is about.

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Speaker 2: It is and that's what's great about Ford and Mortar Company, Bronco,

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Speaker 2: F Series, Mustang. The is iconic brands. There's incredible demand

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Speaker 2: for them, an incredible power in there.

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Speaker 1: John Lawler, thank you so much. Rick Farley with I

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Speaker 1: like the two of you, you know, at the same time,

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Speaker 1: would be great. We could go, but he never Farley

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Speaker 1: never talks about finance stuff.

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Speaker 3: Well, he doesn't want to talk about I think the

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Speaker 3: same person they could be.

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Speaker 1: They want to see John Lawler with the Ford Motor Company. Dearborn, Michigan,