1 00:00:00,600 --> 00:00:03,440 Speaker 1: A slew of industry executives speaking on Bloomberg about the 2 00:00:03,520 --> 00:00:06,080 Speaker 1: challenges and the opportunities ahead for the EV market, and 3 00:00:06,120 --> 00:00:08,600 Speaker 1: we want to continue that conversation right now. Another major 4 00:00:08,640 --> 00:00:12,360 Speaker 1: industry executive, John Lawler, is the chief financial officer over 5 00:00:12,400 --> 00:00:14,040 Speaker 1: at for John, A real pleasure to have. 6 00:00:14,040 --> 00:00:15,640 Speaker 2: You here on SEB Thanks for having me. 7 00:00:15,720 --> 00:00:16,720 Speaker 3: My big question is when. 8 00:00:16,640 --> 00:00:18,240 Speaker 1: Am I going to get to buy an eleven thousand 9 00:00:18,280 --> 00:00:19,360 Speaker 1: dollars EV from Ford? 10 00:00:19,920 --> 00:00:20,640 Speaker 2: Well, it's coming. 11 00:00:20,960 --> 00:00:21,560 Speaker 1: When When? 12 00:00:21,880 --> 00:00:23,800 Speaker 2: Well, I think you'll have to wait a few more years. 13 00:00:23,840 --> 00:00:26,960 Speaker 2: But you know, one of the advantages we have is 14 00:00:27,000 --> 00:00:29,240 Speaker 2: we've been out with our first generation vehicles now for 15 00:00:29,360 --> 00:00:32,120 Speaker 2: up to three years. We've been developing our second generation 16 00:00:32,159 --> 00:00:34,840 Speaker 2: in vehicles, which is a whole new breakthrough. We've brought 17 00:00:34,840 --> 00:00:38,080 Speaker 2: in people from outside of Ford that have expertise in that, 18 00:00:38,159 --> 00:00:42,279 Speaker 2: and we are developing a low cost EV platform so 19 00:00:42,320 --> 00:00:44,199 Speaker 2: that we can be a big part of this S 20 00:00:44,280 --> 00:00:46,800 Speaker 2: curve when it comes time, and that is I think 21 00:00:47,280 --> 00:00:49,839 Speaker 2: coming in a couple of years from now, and I 22 00:00:49,840 --> 00:00:51,800 Speaker 2: think it's going to be a big inflection point for 23 00:00:51,840 --> 00:00:55,000 Speaker 2: the industry when more affordable evs come online. 24 00:00:55,280 --> 00:00:58,639 Speaker 1: Do you feel like the industry was surprised by the hybrid. 25 00:00:59,160 --> 00:01:01,639 Speaker 1: I know that everyone has some hybrids, but really, Toyota 26 00:01:01,680 --> 00:01:03,560 Speaker 1: bet a lot on that farm and it feels like 27 00:01:03,600 --> 00:01:07,800 Speaker 1: the industry went full throttle into high end evs. Do 28 00:01:07,800 --> 00:01:08,720 Speaker 1: you feel like we missed. 29 00:01:08,480 --> 00:01:09,080 Speaker 3: A trick here? 30 00:01:09,319 --> 00:01:11,640 Speaker 2: No, I don't think so. One of the things about 31 00:01:11,880 --> 00:01:14,840 Speaker 2: Ford that's really good is we lead in hybrids as well. 32 00:01:15,160 --> 00:01:17,240 Speaker 2: We have the number one selling hybrid truck and the 33 00:01:17,319 --> 00:01:20,919 Speaker 2: number one to selling hybrid truck. It grew twenty percent 34 00:01:21,000 --> 00:01:23,360 Speaker 2: for us last year. We expected to grow forty percent 35 00:01:23,480 --> 00:01:25,959 Speaker 2: this year. So we have the ability to provide our 36 00:01:26,000 --> 00:01:29,480 Speaker 2: customer's choice gas, hybrid and EV and I think that's 37 00:01:29,520 --> 00:01:32,440 Speaker 2: really important in the transition because it is a stepping 38 00:01:32,520 --> 00:01:33,760 Speaker 2: stone for consumers. 39 00:01:33,800 --> 00:01:36,480 Speaker 4: Well what's that balance right now? Because it seemed at 40 00:01:36,560 --> 00:01:39,200 Speaker 4: least coming into this year and really last year when 41 00:01:39,200 --> 00:01:42,280 Speaker 4: you started to see the rollout of the Machi and 42 00:01:42,319 --> 00:01:44,600 Speaker 4: the Lightning and you started to get this sense here 43 00:01:44,800 --> 00:01:47,920 Speaker 4: that this was the direction the company was going. When 44 00:01:47,920 --> 00:01:50,400 Speaker 4: the sales numbers came in, we saw that demand was 45 00:01:50,440 --> 00:01:52,520 Speaker 4: at least less than some of the initial projections. 46 00:01:52,800 --> 00:01:56,160 Speaker 2: Right, demand is less on the electric vehicles. We have 47 00:01:56,280 --> 00:02:00,000 Speaker 2: three divisions and we broke them out into segments last year, 48 00:02:00,080 --> 00:02:01,680 Speaker 2: so that you can see what's happening with each of 49 00:02:01,680 --> 00:02:05,080 Speaker 2: the businesses. We're growing across all three of those businesses. 50 00:02:05,120 --> 00:02:08,519 Speaker 2: Our pro business is very profitable, our Blue business is profitable, 51 00:02:08,760 --> 00:02:12,200 Speaker 2: and EV's we're still incurring losses at the start. But 52 00:02:12,320 --> 00:02:17,840 Speaker 2: what you're finding is that as this transition happens, it's 53 00:02:17,880 --> 00:02:19,760 Speaker 2: not a matter of if, it's a matter of when 54 00:02:19,880 --> 00:02:22,600 Speaker 2: and how quickly. And I think that's what we're seeing. Yes, 55 00:02:22,680 --> 00:02:25,520 Speaker 2: it's slower than what people thought. The s curve or 56 00:02:25,520 --> 00:02:28,560 Speaker 2: the adoption curve is less because we're now moving from 57 00:02:28,639 --> 00:02:33,920 Speaker 2: early adopters to early majority and there's different satisfaction issues 58 00:02:33,960 --> 00:02:37,080 Speaker 2: that they have around charging end or price that needs 59 00:02:37,120 --> 00:02:37,760 Speaker 2: to be a resolved. 60 00:02:37,760 --> 00:02:40,040 Speaker 4: So you're still confident on the long term contract, very 61 00:02:40,040 --> 00:02:42,239 Speaker 4: confident as you know. Of course, Wall Street investors tend 62 00:02:42,240 --> 00:02:44,120 Speaker 4: to focus a little bit more on the short term 63 00:02:44,200 --> 00:02:45,680 Speaker 4: and when they look at some of the losses in 64 00:02:45,720 --> 00:02:47,919 Speaker 4: that unit. The question that seems to come up time 65 00:02:47,919 --> 00:02:50,240 Speaker 4: and time again is until we get to whatever that 66 00:02:50,280 --> 00:02:53,680 Speaker 4: future is going to be, how much of the development 67 00:02:53,800 --> 00:02:56,160 Speaker 4: on the EV side of that business can sort of 68 00:02:56,160 --> 00:02:58,240 Speaker 4: feed into some of the other businesses in a way 69 00:02:58,440 --> 00:03:01,600 Speaker 4: that maybe mitigates or at least makes Stell's losses a 70 00:03:01,639 --> 00:03:03,760 Speaker 4: little bit more manageable. 71 00:03:04,000 --> 00:03:06,760 Speaker 2: Well, there are technologies we're developing that will be part 72 00:03:06,880 --> 00:03:10,200 Speaker 2: of the electric business, but will also be used across 73 00:03:10,240 --> 00:03:13,520 Speaker 2: our pro business and our ice business, our gas business. 74 00:03:13,840 --> 00:03:16,680 Speaker 2: And that's things like the digital Electrical architecture, which is 75 00:03:16,720 --> 00:03:18,720 Speaker 2: a new upgrade we're going to bring forward here in 76 00:03:18,760 --> 00:03:20,639 Speaker 2: the next couple of years. That's going to change the 77 00:03:20,680 --> 00:03:22,880 Speaker 2: whole experience you have with the vehicle, from the way 78 00:03:22,919 --> 00:03:26,000 Speaker 2: you interface with the interior of the vehicle, and then 79 00:03:26,040 --> 00:03:28,720 Speaker 2: our ability to update the vehicle over the air and 80 00:03:28,840 --> 00:03:32,280 Speaker 2: provide new features or experiences or services. And that'll be 81 00:03:32,320 --> 00:03:34,640 Speaker 2: across all three. So part of the development for the 82 00:03:34,680 --> 00:03:38,120 Speaker 2: electric business is also going to help the gas business 83 00:03:38,240 --> 00:03:39,840 Speaker 2: as well as the commercial business. 84 00:03:40,200 --> 00:03:42,520 Speaker 1: So just broad picture too. And I've covered commodities for 85 00:03:42,560 --> 00:03:45,960 Speaker 1: a long time. I'm hearing reports like glen Core, for example, 86 00:03:46,000 --> 00:03:47,720 Speaker 1: they might have to shut our a nickel mind because 87 00:03:47,720 --> 00:03:50,680 Speaker 1: the demand for evs isn't there and that's causing them 88 00:03:50,720 --> 00:03:53,520 Speaker 1: problems on the mining side. What I see playing out though, 89 00:03:53,720 --> 00:03:56,160 Speaker 1: is when that es curve really moves, you're not going 90 00:03:56,200 --> 00:03:58,040 Speaker 1: to have the stuff like how do you make sure 91 00:03:58,040 --> 00:04:00,920 Speaker 1: you have the nickel, the lit all the stuff you 92 00:04:01,000 --> 00:04:02,920 Speaker 1: need when the demand isn't there today. 93 00:04:02,840 --> 00:04:05,920 Speaker 2: Right, go back eighteen months right, eighteen months ago. Eighteen 94 00:04:05,920 --> 00:04:09,240 Speaker 2: months ago, the narrative was, look, people aren't going to 95 00:04:09,320 --> 00:04:11,560 Speaker 2: have the minerals or the battery, so you have to 96 00:04:11,640 --> 00:04:14,360 Speaker 2: vertically integrate. You have to create your own battery plants. Right, 97 00:04:14,520 --> 00:04:16,960 Speaker 2: So it's shifted a bit. I think what needs to 98 00:04:16,960 --> 00:04:19,480 Speaker 2: happen now is we need to be more thoughtful as 99 00:04:19,520 --> 00:04:21,840 Speaker 2: we go forward. And of course we're going to have 100 00:04:21,880 --> 00:04:24,760 Speaker 2: to balance that, but I think the demand signals as 101 00:04:24,800 --> 00:04:27,360 Speaker 2: we move through time are going to be much clearer, 102 00:04:27,400 --> 00:04:30,040 Speaker 2: whether than they were a year ago or two years ago, 103 00:04:30,240 --> 00:04:31,920 Speaker 2: and so I think we'll have a little bit more 104 00:04:31,960 --> 00:04:33,239 Speaker 2: time to get out in front of things. 105 00:04:33,480 --> 00:04:35,080 Speaker 1: What is your biggest headache? I'm gonna give you like 106 00:04:35,200 --> 00:04:38,120 Speaker 1: five multiple choice. Okay, So what's the biggest headache you 107 00:04:38,120 --> 00:04:40,159 Speaker 1: have right now? Is a government policy? Because that could 108 00:04:40,240 --> 00:04:44,120 Speaker 1: change in like eight months. Tesla price cuts, competition from 109 00:04:44,240 --> 00:04:48,520 Speaker 1: cheap China evs, or your costs, whether that's labor, whether 110 00:04:48,560 --> 00:04:50,480 Speaker 1: that's material cost or interest rates. 111 00:04:50,640 --> 00:04:53,160 Speaker 3: Yes, awesome, good, I'm glad to we solve that. 112 00:04:53,640 --> 00:04:56,000 Speaker 2: Those are all those are three key variables that we 113 00:04:56,040 --> 00:04:58,280 Speaker 2: need to work on a continuous The hardest for you, 114 00:04:59,040 --> 00:05:02,880 Speaker 2: I would say that right now it's cost. It's making 115 00:05:02,880 --> 00:05:06,080 Speaker 2: sure that we get to an affordable cost structure that 116 00:05:06,120 --> 00:05:08,840 Speaker 2: can allow us to generate what you started out with 117 00:05:09,040 --> 00:05:12,240 Speaker 2: is an affordable EV that can appeal to more customers. 118 00:05:12,600 --> 00:05:13,599 Speaker 3: How do you do that? Though? 119 00:05:13,680 --> 00:05:16,480 Speaker 4: I mean we look at competitors. I mean I think 120 00:05:16,520 --> 00:05:19,599 Speaker 4: you kind of reference byd Obviously we know that the 121 00:05:19,680 --> 00:05:22,479 Speaker 4: sort of business model the Tesla has taken here, the 122 00:05:22,560 --> 00:05:25,320 Speaker 4: structure afford is the structure of its supply chain, The 123 00:05:25,360 --> 00:05:27,960 Speaker 4: relationship you have with your workers and the contracts you 124 00:05:28,000 --> 00:05:31,479 Speaker 4: have with unions puts you at a higher baseline cost 125 00:05:31,560 --> 00:05:34,760 Speaker 4: level than some of those pure play EV competitors. 126 00:05:34,880 --> 00:05:38,120 Speaker 2: Well, well, you know there's advantages as well that we have, 127 00:05:38,240 --> 00:05:40,640 Speaker 2: and that's why we've started what we call the skunk 128 00:05:40,640 --> 00:05:44,719 Speaker 2: Works project, which is a small group of EV experts 129 00:05:45,200 --> 00:05:49,480 Speaker 2: working outside of Dearborn to develop the most cost effective 130 00:05:50,680 --> 00:05:53,240 Speaker 2: platform from not only from a lance point of the 131 00:05:53,279 --> 00:05:57,000 Speaker 2: material costs that's required, but also the manufacturing, the supply chain, 132 00:05:57,320 --> 00:06:01,440 Speaker 2: the logistics, and then how we distribute and sell the vehicles. 133 00:06:01,800 --> 00:06:04,479 Speaker 2: We're looking at taking breakthroughs there, and that's why we 134 00:06:04,520 --> 00:06:06,919 Speaker 2: have a small team working on that to change the 135 00:06:06,960 --> 00:06:10,040 Speaker 2: way we do things and actually provide us significant breakthroughs. 136 00:06:10,360 --> 00:06:13,120 Speaker 2: And we love what they're doing. It's been fantastic and 137 00:06:13,160 --> 00:06:14,640 Speaker 2: we're really encouraged by their work. 138 00:06:14,720 --> 00:06:19,120 Speaker 4: How many what's to been the conversation forward about the 139 00:06:19,240 --> 00:06:22,160 Speaker 4: charging network. There's been a lot of discussion that some 140 00:06:22,240 --> 00:06:24,400 Speaker 4: of the slow pace of EV adoption, and which is 141 00:06:24,440 --> 00:06:27,280 Speaker 4: a point out non Tesla EV adoption was less about 142 00:06:27,320 --> 00:06:30,400 Speaker 4: the individual automakers, are more about what most people perceive 143 00:06:30,600 --> 00:06:33,719 Speaker 4: as a lackluster charging network across Well, clearly. 144 00:06:33,440 --> 00:06:36,800 Speaker 2: That's a pain point for EV customers. What we've done 145 00:06:36,960 --> 00:06:39,200 Speaker 2: is we've thought about what would be the best for 146 00:06:39,240 --> 00:06:42,719 Speaker 2: our customers. Well, first is you know that we're joining 147 00:06:42,760 --> 00:06:45,760 Speaker 2: the Tesla charge network. The other thing that we've done 148 00:06:45,880 --> 00:06:49,520 Speaker 2: is for all of our EV dealers, what we've said 149 00:06:49,600 --> 00:06:51,880 Speaker 2: is that to be an EV dealer, we've set standards. 150 00:06:52,040 --> 00:06:53,880 Speaker 2: One of those standards that they have to have high 151 00:06:53,920 --> 00:06:58,280 Speaker 2: speed charging and on average you are no further than 152 00:06:58,320 --> 00:07:00,919 Speaker 2: twenty miles from the Ford dealer in the United States, 153 00:07:01,000 --> 00:07:04,360 Speaker 2: wherever you're at. That's going to open up significant charging 154 00:07:04,360 --> 00:07:05,599 Speaker 2: for our customers. 155 00:07:05,160 --> 00:07:07,119 Speaker 3: As well, are the majority of your dealers on board 156 00:07:07,120 --> 00:07:07,320 Speaker 3: with this? 157 00:07:07,640 --> 00:07:10,480 Speaker 2: A majority of the dealers are becoming certified EV dealers. 158 00:07:10,520 --> 00:07:12,640 Speaker 3: The ones that aren't, what's your relationship with them. 159 00:07:12,560 --> 00:07:14,840 Speaker 2: But I think they'll come along. They'll have another opportunity 160 00:07:14,880 --> 00:07:17,760 Speaker 2: to do that. And you know it's the adoption rates 161 00:07:17,760 --> 00:07:19,920 Speaker 2: different around the country. If you take the West Coast, 162 00:07:19,920 --> 00:07:23,840 Speaker 2: like Oregon and Washington and California, thirty percent of our 163 00:07:23,920 --> 00:07:27,120 Speaker 2: F series sales are EV another fifteen to twenty percent 164 00:07:27,200 --> 00:07:30,240 Speaker 2: are hybrid, So up to fifty percent of our F 165 00:07:30,320 --> 00:07:33,800 Speaker 2: series sales out on the West Coast are electric views. 166 00:07:33,800 --> 00:07:36,520 Speaker 1: So it happens on gasoline's over five dollars a basis, 167 00:07:36,560 --> 00:07:38,520 Speaker 1: you're like, go at the EV, I don't care about 168 00:07:38,560 --> 00:07:42,640 Speaker 1: charging network to policy, So two pronged one is that 169 00:07:42,680 --> 00:07:47,640 Speaker 1: the Biden administration supports evs and also have stringent requirements 170 00:07:47,680 --> 00:07:50,400 Speaker 1: on what sales have to be of EV's. But then 171 00:07:50,440 --> 00:07:53,440 Speaker 1: you have a possible President Trump that wouldn't care about evs. 172 00:07:54,160 --> 00:07:55,320 Speaker 1: Which policy is better? 173 00:07:55,760 --> 00:07:57,680 Speaker 2: Well, I don't know that one's better than the other. 174 00:07:57,760 --> 00:08:00,640 Speaker 2: I'm not going to get down say that, but but 175 00:08:00,760 --> 00:08:02,480 Speaker 2: I think what we need to think about is that 176 00:08:02,520 --> 00:08:06,240 Speaker 2: you also have the states involved as well, and regardless 177 00:08:06,280 --> 00:08:08,760 Speaker 2: of what is done at the federal level, I think 178 00:08:08,800 --> 00:08:10,800 Speaker 2: the states are going to continue down the path they're 179 00:08:10,840 --> 00:08:13,320 Speaker 2: down and that's going to drive us to be more 180 00:08:14,120 --> 00:08:17,320 Speaker 2: efficient from a CO two standpoint and need to meet 181 00:08:17,320 --> 00:08:20,760 Speaker 2: their compliance requirements. So I think it's multifaceted, and you 182 00:08:20,800 --> 00:08:23,480 Speaker 2: have to look at each of those variables federal, state 183 00:08:23,960 --> 00:08:25,440 Speaker 2: and satisfy both of those. 184 00:08:25,600 --> 00:08:28,960 Speaker 1: And then to that point, the battery factories are construction 185 00:08:29,040 --> 00:08:31,800 Speaker 1: that you're building across different states, like in Kentucky, Tennessee 186 00:08:31,880 --> 00:08:34,560 Speaker 1: or Michigan. You've already cut some of those. What is 187 00:08:34,559 --> 00:08:36,800 Speaker 1: your level of confidence and where you guys are at 188 00:08:36,880 --> 00:08:38,040 Speaker 1: right now at those investments. 189 00:08:38,040 --> 00:08:41,440 Speaker 2: Stay very confident. We think we've right size based on 190 00:08:41,480 --> 00:08:44,160 Speaker 2: the demand curves we see now which have been adjusted down. 191 00:08:44,559 --> 00:08:46,959 Speaker 2: So we've right sized the capacity going in and I 192 00:08:47,000 --> 00:08:49,000 Speaker 2: think we're in a good spot relative to what we 193 00:08:49,080 --> 00:08:49,839 Speaker 2: see coming. 194 00:08:49,960 --> 00:08:52,760 Speaker 3: All right, John, appreciate you taking time for us. John Lawler. 195 00:08:52,800 --> 00:08:56,280 Speaker 3: There is the CFO over at Ford Motor