1
00:00:02,520 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:07,480 --> 00:00:10,360
Speaker 2: Ford Motors is out with this latest earnings report. Adjusted

3
00:00:10,440 --> 00:00:12,920
Speaker 2: earnings per share for the fourth quarter beat the average

4
00:00:12,920 --> 00:00:15,920
Speaker 2: analyst estimate, but you're seeing the stock drop in after

5
00:00:16,000 --> 00:00:18,840
Speaker 2: hours trading because of the outlook. Ford warning that profit

6
00:00:18,880 --> 00:00:21,079
Speaker 2: may fall by two billion dollars or more this year

7
00:00:21,360 --> 00:00:23,680
Speaker 2: on an expected drop in vehicle prices as well as

8
00:00:23,720 --> 00:00:27,200
Speaker 2: costly new model launches, and of course behind all of that,

9
00:00:27,280 --> 00:00:30,480
Speaker 2: you also have concerns over new tariffs under President Trump.

10
00:00:30,920 --> 00:00:33,159
Speaker 2: We now want to welcome our TV and radio on

11
00:00:33,479 --> 00:00:36,520
Speaker 2: audiences across the globe because joining us now with more

12
00:00:36,720 --> 00:00:39,680
Speaker 2: is Jim Farley, CEO of Ford. Jim, thank you for

13
00:00:39,760 --> 00:00:42,479
Speaker 2: joining us today. Really appreciate your making the time. I

14
00:00:42,479 --> 00:00:45,000
Speaker 2: want to ask about the expected drop in vehicle prices.

15
00:00:45,080 --> 00:00:47,559
Speaker 2: Is that something that is across the board that we're

16
00:00:47,560 --> 00:00:49,559
Speaker 2: seeing in the industry or is that specific to what

17
00:00:49,840 --> 00:00:50,720
Speaker 2: you're seeing at Ford.

18
00:00:52,960 --> 00:00:55,480
Speaker 3: No, I think it's it's across the industry. We're seeing

19
00:00:55,640 --> 00:00:59,200
Speaker 3: all around the world. You know, after COVID all vehicle

20
00:00:59,240 --> 00:01:03,920
Speaker 3: prices really up, but with the acceleration of evs as

21
00:01:03,960 --> 00:01:08,200
Speaker 3: well as inventories normalizing for customers and dealers, We're seeing

22
00:01:08,200 --> 00:01:11,360
Speaker 3: the prices come down across the globe, and affordability is

23
00:01:11,360 --> 00:01:13,000
Speaker 3: a big concern for customers.

24
00:01:13,440 --> 00:01:16,560
Speaker 2: Yeah, it certainly is, and you of course have some

25
00:01:16,680 --> 00:01:18,720
Speaker 2: new model launches that will be coming up in the

26
00:01:18,800 --> 00:01:21,520
Speaker 2: years to come. But in the meantime, it's a it's

27
00:01:21,560 --> 00:01:24,880
Speaker 2: a matter of managing through this interim period. And during

28
00:01:24,880 --> 00:01:27,280
Speaker 2: this interim period there are a lot of question marks

29
00:01:27,319 --> 00:01:30,760
Speaker 2: over TIFFs. The teriffs that President Trump had planned to

30
00:01:30,800 --> 00:01:32,639
Speaker 2: impose on Mexico and Canada have been.

31
00:01:32,480 --> 00:01:35,080
Speaker 4: Pushed out by a month. How does the.

32
00:01:35,080 --> 00:01:37,759
Speaker 2: Company plan to take advantage of this four week delay

33
00:01:38,240 --> 00:01:42,119
Speaker 2: that was announced earlier this week? Will you be stockpiling inventory,

34
00:01:42,160 --> 00:01:43,320
Speaker 2: for instance, to get ahead of that?

35
00:01:45,840 --> 00:01:48,760
Speaker 3: Well, I think Ford is among the best industrial companies.

36
00:01:48,760 --> 00:01:52,040
Speaker 3: Is scrambling. We have the largest US footprint of any

37
00:01:52,320 --> 00:01:57,720
Speaker 3: car company. You can imagine. We're increasing our component supplies

38
00:01:57,760 --> 00:02:00,760
Speaker 3: both at the company and our suppliers, and we're adjusting

39
00:02:00,800 --> 00:02:03,920
Speaker 3: both our Mexico as well as our US plants to

40
00:02:03,920 --> 00:02:05,600
Speaker 3: make sure nothing crosses the border.

41
00:02:06,040 --> 00:02:08,320
Speaker 4: I think longer term is the bigger concern.

42
00:02:08,760 --> 00:02:13,000
Speaker 3: These kind of tariffs, especially in these two countries, are

43
00:02:13,120 --> 00:02:17,120
Speaker 3: very significant, and if they persist beyond months, you know,

44
00:02:17,160 --> 00:02:20,680
Speaker 3: we could see billions of billions of dollars of pressure

45
00:02:20,720 --> 00:02:24,160
Speaker 3: on the industry, lost jobs, lots of impacts to communities

46
00:02:24,200 --> 00:02:27,040
Speaker 3: and our ecosystem in the industry, and that's what we're

47
00:02:27,080 --> 00:02:29,840
Speaker 3: talking the administration about and congressional leaders.

48
00:02:30,400 --> 00:02:33,720
Speaker 1: So what kind of communications have you had with specifically

49
00:02:33,760 --> 00:02:38,360
Speaker 1: with the White House officials about either tamping down some

50
00:02:38,400 --> 00:02:40,960
Speaker 1: of these potential terrists or assuming that Trump does go

51
00:02:41,040 --> 00:02:44,800
Speaker 1: through with them, how if at all, the auto industry

52
00:02:45,320 --> 00:02:47,720
Speaker 1: either could be compensated or in some way have that

53
00:02:47,760 --> 00:02:48,720
Speaker 1: impact mitigated.

54
00:02:50,919 --> 00:02:54,880
Speaker 3: Well, actually, we spocus the industry, Mary myself, John Elkin

55
00:02:54,960 --> 00:02:58,280
Speaker 3: from Stilantis, we all kind of said the same thing,

56
00:02:58,320 --> 00:03:00,520
Speaker 3: which is four years ago, we can admitted to the

57
00:03:00,600 --> 00:03:06,080
Speaker 3: USMCA tear requirements, and all companies have done their job

58
00:03:06,160 --> 00:03:09,400
Speaker 3: to make sure our vehicle and components are USMCA compliant,

59
00:03:09,680 --> 00:03:12,079
Speaker 3: and we ask for those to be exempt because it's

60
00:03:12,080 --> 00:03:15,200
Speaker 3: a trade agreement that we all agree to. Actually with

61
00:03:15,280 --> 00:03:18,760
Speaker 3: the Trump administration, we think that that's only fair. Look,

62
00:03:18,840 --> 00:03:22,120
Speaker 3: right now, this tariff has proposed as a windfall for

63
00:03:22,360 --> 00:03:26,519
Speaker 3: South Korea and Japanese companies that can import millions and millions.

64
00:03:26,240 --> 00:03:27,760
Speaker 4: Of vehicles without these tariffs.

65
00:03:27,919 --> 00:03:32,079
Speaker 3: Meanwhile, we have USMCA compliant vehicles and components that are

66
00:03:32,120 --> 00:03:35,320
Speaker 3: susceptible to this, which will have all this devastating impact.

67
00:03:35,400 --> 00:03:39,200
Speaker 3: So what we're asking for is a reason policy around

68
00:03:39,200 --> 00:03:42,840
Speaker 3: tariff that's not just these two countries, and we understand

69
00:03:42,960 --> 00:03:46,040
Speaker 3: the pressures on the border and illegal drugs, but it's

70
00:03:46,080 --> 00:03:48,720
Speaker 3: more comprehensive. We also have to work through CO two

71
00:03:48,760 --> 00:03:51,760
Speaker 3: policy as well as tax policy with the IRA.

72
00:03:52,240 --> 00:03:55,080
Speaker 1: So what is your strategy? Then? I'm good to navigate this.

73
00:03:55,120 --> 00:03:57,040
Speaker 1: I mean, this isn't going away, whether it's twenty five

74
00:03:57,160 --> 00:04:00,160
Speaker 1: or something less. This specter is there's certainly a big

75
00:04:00,240 --> 00:04:03,800
Speaker 1: part of the President's playbook to address the issues that

76
00:04:04,080 --> 00:04:06,640
Speaker 1: he wants to resolve here. You can't just up and

77
00:04:06,680 --> 00:04:10,480
Speaker 1: move a factory overnight, Jim. So what exactly are strategizing

78
00:04:10,520 --> 00:04:12,680
Speaker 1: now with your team to make sure that not only

79
00:04:12,720 --> 00:04:14,720
Speaker 1: are you producing the cars you need to produce, but

80
00:04:14,760 --> 00:04:17,480
Speaker 1: you're producing them at a cost that's reasonable to you

81
00:04:17,600 --> 00:04:19,920
Speaker 1: and more importantly, reasonable to the customer.

82
00:04:21,880 --> 00:04:25,320
Speaker 3: Well, first of all, Ford is in a very fortunate situation.

83
00:04:25,680 --> 00:04:29,200
Speaker 3: We decided many years ago to have an outsized footprint

84
00:04:29,240 --> 00:04:32,600
Speaker 3: in the US. So our manufacturing footprint, the number of

85
00:04:32,720 --> 00:04:35,119
Speaker 3: vehicles that we make eighty percent of our vehicles sold

86
00:04:35,320 --> 00:04:38,040
Speaker 3: in the US are made here, all of our transmissions,

87
00:04:38,080 --> 00:04:41,360
Speaker 3: most of our engines, so we have a really big

88
00:04:41,400 --> 00:04:45,240
Speaker 3: advantage compared to our competitors. But there are optionality that

89
00:04:45,279 --> 00:04:47,520
Speaker 3: we can make. And look, we've localized a lot of

90
00:04:47,560 --> 00:04:51,960
Speaker 3: battery plans and ev production in Tennessee and Kentucky because

91
00:04:52,080 --> 00:04:55,000
Speaker 3: the production tax credit is there. So we're really asking

92
00:04:55,000 --> 00:04:58,719
Speaker 3: an administration please preserve the production tax credit. Let's have

93
00:04:58,760 --> 00:05:01,800
Speaker 3: a reasons tear for approach, and most of all, let's

94
00:05:01,839 --> 00:05:05,120
Speaker 3: have reasonable co two targets that are in line with

95
00:05:05,160 --> 00:05:06,680
Speaker 3: what customers are actually buying.

96
00:05:06,839 --> 00:05:10,000
Speaker 1: Do you have spare capacity inside the US right now?

97
00:05:10,080 --> 00:05:10,880
Speaker 1: A significance.

98
00:05:12,680 --> 00:05:15,120
Speaker 3: No, No, we are matched out in the US. As

99
00:05:15,160 --> 00:05:19,360
Speaker 3: I said, we're the largest US producer. We export more cars.

100
00:05:19,360 --> 00:05:21,479
Speaker 3: A lot of people don't realize that Ford exports a

101
00:05:21,520 --> 00:05:24,359
Speaker 3: lot of cars outside the US. We don't have a

102
00:05:24,400 --> 00:05:27,320
Speaker 3: lot of excess capacity a little bit, and we're taking

103
00:05:27,320 --> 00:05:30,000
Speaker 3: advantage of that, and that's why we're building new capacity

104
00:05:30,080 --> 00:05:33,760
Speaker 3: in Ohio and Tennessee and Kentucky for batteries and these

105
00:05:33,800 --> 00:05:35,880
Speaker 3: new Eviso be coming out in the next couple of years.

106
00:05:35,920 --> 00:05:38,120
Speaker 4: That's why we're investing in the US.

107
00:05:38,880 --> 00:05:41,039
Speaker 2: Terrors are clearly on everyone's mind, and that's something your

108
00:05:41,120 --> 00:05:44,479
Speaker 2: CFO has made in her statement as well. And the

109
00:05:44,520 --> 00:05:46,880
Speaker 2: guidance that you offer does not include the potential impact

110
00:05:46,960 --> 00:05:50,080
Speaker 2: of policy changes by the White House. Once we do

111
00:05:50,160 --> 00:05:54,480
Speaker 2: get the actual tariffs announced and imposed, how quickly can

112
00:05:54,560 --> 00:05:58,400
Speaker 2: Ford come out with some specifics, quantify the impact and

113
00:05:58,880 --> 00:06:01,760
Speaker 2: provide a new forecast. Is that something that you intend

114
00:06:01,760 --> 00:06:02,040
Speaker 2: to do?

115
00:06:04,200 --> 00:06:07,240
Speaker 3: Of course, I mean, we're always transparent. I will be

116
00:06:07,240 --> 00:06:09,840
Speaker 3: able to say though in our guidance we can handle

117
00:06:09,960 --> 00:06:13,080
Speaker 3: a couple of weeks of tariffs. If it goes beyond that,

118
00:06:13,200 --> 00:06:17,560
Speaker 3: obviously it will be billions of billions of incremental incremental,

119
00:06:17,800 --> 00:06:21,280
Speaker 3: you know, profit headwinds for the company. So you know,

120
00:06:21,600 --> 00:06:24,480
Speaker 3: I think the most important thing is having a productive

121
00:06:24,520 --> 00:06:28,720
Speaker 3: discussion with the DC leaders, the Trump administration, congressional leaders

122
00:06:29,000 --> 00:06:31,719
Speaker 3: about what this could do to our industry, what it

123
00:06:31,760 --> 00:06:33,000
Speaker 3: means for US jobs.

124
00:06:33,480 --> 00:06:36,800
Speaker 4: And you know, they ran on a campaign of making the.

125
00:06:36,720 --> 00:06:40,880
Speaker 3: Auto industry stronger, and that's what we expect out of them.

126
00:06:41,000 --> 00:06:42,200
Speaker 4: As policy makers.

127
00:06:42,440 --> 00:06:44,839
Speaker 3: We have a lot of policy decisions to make in

128
00:06:44,880 --> 00:06:48,400
Speaker 3: the coming year, As I said, CO two tax policy,

129
00:06:48,720 --> 00:06:52,320
Speaker 3: and we believe that this administration, congressional leaders are going

130
00:06:52,360 --> 00:06:54,640
Speaker 3: to back to US industry companies like four that have

131
00:06:54,680 --> 00:06:55,920
Speaker 3: doubled down in the US.

132
00:06:56,960 --> 00:06:58,599
Speaker 2: Right, Okay, I want to talk a little bit about

133
00:06:58,600 --> 00:07:02,040
Speaker 2: your ED business as well. The EV strategy. Clearly in

134
00:07:02,680 --> 00:07:06,560
Speaker 2: overhaul mode, you're more affordable models that go further on

135
00:07:06,560 --> 00:07:09,640
Speaker 2: a single charge won't really be available for two years

136
00:07:09,720 --> 00:07:11,600
Speaker 2: and for it is kind of unusual on that you

137
00:07:11,640 --> 00:07:14,360
Speaker 2: do break out your EV profits and your financial reports.

138
00:07:15,240 --> 00:07:19,360
Speaker 2: When will you have visibility on those affordable models that

139
00:07:19,400 --> 00:07:21,360
Speaker 2: go further on a single charge in terms of being

140
00:07:21,360 --> 00:07:23,520
Speaker 2: able to really turn around that business.

141
00:07:25,720 --> 00:07:27,040
Speaker 4: Well, look, we made the decision.

142
00:07:27,480 --> 00:07:30,600
Speaker 3: We've been number three to Tesla in the US EV

143
00:07:30,720 --> 00:07:33,200
Speaker 3: sales for three years now, we've been number two for

144
00:07:33,280 --> 00:07:35,840
Speaker 3: three years, and we're also number three on hybrid, so

145
00:07:35,880 --> 00:07:38,360
Speaker 3: we know a lot about these customers. We decided a

146
00:07:38,400 --> 00:07:41,000
Speaker 3: couple of years ago, based on what we heard from customers,

147
00:07:41,320 --> 00:07:44,240
Speaker 3: that we really needed to redo our EV lineup. So

148
00:07:44,240 --> 00:07:46,440
Speaker 3: we made that decision a couple of years ago. You know,

149
00:07:46,480 --> 00:07:49,840
Speaker 3: we canceled a couple models. Those vehicles are in development now.

150
00:07:50,080 --> 00:07:54,280
Speaker 3: We would rather grow profitably than grow and that's that's

151
00:07:54,360 --> 00:07:55,360
Speaker 3: what we're deciding on.

152
00:07:55,640 --> 00:07:58,440
Speaker 4: So this next couple of years. We're number two to

153
00:07:58,840 --> 00:07:59,600
Speaker 4: test a long.

154
00:07:59,480 --> 00:08:02,480
Speaker 3: Way below them, but we scaled one hundred thousand unit

155
00:08:02,520 --> 00:08:05,080
Speaker 3: plus for a couple of years. Now we want to

156
00:08:05,400 --> 00:08:07,480
Speaker 3: wait until those new vehicles come out in a couple

157
00:08:07,480 --> 00:08:10,240
Speaker 3: of years. As you said, that will really transform our

158
00:08:10,280 --> 00:08:13,160
Speaker 3: model ly profits. You know, they're designed differently, They're going

159
00:08:13,200 --> 00:08:15,600
Speaker 3: to be manufactured different they have a different supply chain.

160
00:08:15,960 --> 00:08:19,760
Speaker 3: We've really learned a lot from Tesla, from the Chinese,

161
00:08:19,800 --> 00:08:22,320
Speaker 3: from a lot of people on how differently we need

162
00:08:22,360 --> 00:08:24,400
Speaker 3: to design these evs to be profitable.

163
00:08:24,600 --> 00:08:29,000
Speaker 1: So Ford is committed to a long term EV strategy.

164
00:08:28,440 --> 00:08:33,360
Speaker 3: Then absolutely what about absolutely we see I was just

165
00:08:33,360 --> 00:08:36,320
Speaker 3: going to say, we see the people buy evs, they

166
00:08:36,320 --> 00:08:39,440
Speaker 3: don't go back to combustion. You know, they're they have

167
00:08:39,520 --> 00:08:42,319
Speaker 3: very high level satisfaction with the vehicle. It's a small

168
00:08:42,360 --> 00:08:44,480
Speaker 3: part of the industry in the US, only eight percent,

169
00:08:44,559 --> 00:08:47,200
Speaker 3: but it's growing. But the only way it's going to

170
00:08:47,240 --> 00:08:50,160
Speaker 3: grow in a sustained way if it's a profitable business

171
00:08:50,200 --> 00:08:53,079
Speaker 3: for us, and that's why we had to completely redesign

172
00:08:53,120 --> 00:08:54,600
Speaker 3: our vehicle and our approach.

173
00:08:55,120 --> 00:08:57,679
Speaker 1: Jim, we want to really thank you for taking time

174
00:08:57,720 --> 00:08:59,440
Speaker 1: for us here on what I'm sure is a very

175
00:08:59,440 --> 00:09:01,760
Speaker 1: busy after for you. Jim Farley there, he is the

176
00:09:01,840 --> 00:09:04,880
Speaker 1: CEO over at Ford. Those earnings just out, and we

177
00:09:04,880 --> 00:09:07,320
Speaker 1: shoull reiterate here. The numbers in the most recent quarter

178
00:09:07,400 --> 00:09:10,080
Speaker 1: did beat, but some concerns here about the guidance going forward,

179
00:09:10,480 --> 00:09:14,160
Speaker 1: largely because of costs and maybe some tamp down of

180
00:09:14,240 --> 00:09:16,440
Speaker 1: pricing power. Those shares down five percent in the after

181
00:09:16,480 --> 00:09:16,920
Speaker 1: hour straight