Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Ford Motors is out with this latest earnings report. Adjusted
Speaker 2: earnings per share for the fourth quarter beat the average
Speaker 2: analyst estimate, but you're seeing the stock drop in after
Speaker 2: hours trading because of the outlook. Ford warning that profit
Speaker 2: may fall by two billion dollars or more this year
Speaker 2: on an expected drop in vehicle prices as well as
Speaker 2: costly new model launches, and of course behind all of that,
Speaker 2: you also have concerns over new tariffs under President Trump.
Speaker 2: We now want to welcome our TV and radio on
Speaker 2: audiences across the globe because joining us now with more
Speaker 2: is Jim Farley, CEO of Ford. Jim, thank you for
Speaker 2: joining us today. Really appreciate your making the time. I
Speaker 2: want to ask about the expected drop in vehicle prices.
Speaker 2: Is that something that is across the board that we're
Speaker 2: seeing in the industry or is that specific to what
Speaker 2: you're seeing at Ford.
Speaker 3: No, I think it's it's across the industry. We're seeing
Speaker 3: all around the world. You know, after COVID all vehicle
Speaker 3: prices really up, but with the acceleration of evs as
Speaker 3: well as inventories normalizing for customers and dealers, We're seeing
Speaker 3: the prices come down across the globe, and affordability is
Speaker 3: a big concern for customers.
Speaker 2: Yeah, it certainly is, and you of course have some
Speaker 2: new model launches that will be coming up in the
Speaker 2: years to come. But in the meantime, it's a it's
Speaker 2: a matter of managing through this interim period. And during
Speaker 2: this interim period there are a lot of question marks
Speaker 2: over TIFFs. The teriffs that President Trump had planned to
Speaker 2: impose on Mexico and Canada have been.
Speaker 4: Pushed out by a month. How does the.
Speaker 2: Company plan to take advantage of this four week delay
Speaker 2: that was announced earlier this week? Will you be stockpiling inventory,
Speaker 2: for instance, to get ahead of that?
Speaker 3: Well, I think Ford is among the best industrial companies.
Speaker 3: Is scrambling. We have the largest US footprint of any
Speaker 3: car company. You can imagine. We're increasing our component supplies
Speaker 3: both at the company and our suppliers, and we're adjusting
Speaker 3: both our Mexico as well as our US plants to
Speaker 3: make sure nothing crosses the border.
Speaker 4: I think longer term is the bigger concern.
Speaker 3: These kind of tariffs, especially in these two countries, are
Speaker 3: very significant, and if they persist beyond months, you know,
Speaker 3: we could see billions of billions of dollars of pressure
Speaker 3: on the industry, lost jobs, lots of impacts to communities
Speaker 3: and our ecosystem in the industry, and that's what we're
Speaker 3: talking the administration about and congressional leaders.
Speaker 1: So what kind of communications have you had with specifically
Speaker 1: with the White House officials about either tamping down some
Speaker 1: of these potential terrists or assuming that Trump does go
Speaker 1: through with them, how if at all, the auto industry
Speaker 1: either could be compensated or in some way have that
Speaker 1: impact mitigated.
Speaker 3: Well, actually, we spocus the industry, Mary myself, John Elkin
Speaker 3: from Stilantis, we all kind of said the same thing,
Speaker 3: which is four years ago, we can admitted to the
Speaker 3: USMCA tear requirements, and all companies have done their job
Speaker 3: to make sure our vehicle and components are USMCA compliant,
Speaker 3: and we ask for those to be exempt because it's
Speaker 3: a trade agreement that we all agree to. Actually with
Speaker 3: the Trump administration, we think that that's only fair. Look,
Speaker 3: right now, this tariff has proposed as a windfall for
Speaker 3: South Korea and Japanese companies that can import millions and millions.
Speaker 4: Of vehicles without these tariffs.
Speaker 3: Meanwhile, we have USMCA compliant vehicles and components that are
Speaker 3: susceptible to this, which will have all this devastating impact.
Speaker 3: So what we're asking for is a reason policy around
Speaker 3: tariff that's not just these two countries, and we understand
Speaker 3: the pressures on the border and illegal drugs, but it's
Speaker 3: more comprehensive. We also have to work through CO two
Speaker 3: policy as well as tax policy with the IRA.
Speaker 1: So what is your strategy? Then? I'm good to navigate this.
Speaker 1: I mean, this isn't going away, whether it's twenty five
Speaker 1: or something less. This specter is there's certainly a big
Speaker 1: part of the President's playbook to address the issues that
Speaker 1: he wants to resolve here. You can't just up and
Speaker 1: move a factory overnight, Jim. So what exactly are strategizing
Speaker 1: now with your team to make sure that not only
Speaker 1: are you producing the cars you need to produce, but
Speaker 1: you're producing them at a cost that's reasonable to you
Speaker 1: and more importantly, reasonable to the customer.
Speaker 3: Well, first of all, Ford is in a very fortunate situation.
Speaker 3: We decided many years ago to have an outsized footprint
Speaker 3: in the US. So our manufacturing footprint, the number of
Speaker 3: vehicles that we make eighty percent of our vehicles sold
Speaker 3: in the US are made here, all of our transmissions,
Speaker 3: most of our engines, so we have a really big
Speaker 3: advantage compared to our competitors. But there are optionality that
Speaker 3: we can make. And look, we've localized a lot of
Speaker 3: battery plans and ev production in Tennessee and Kentucky because
Speaker 3: the production tax credit is there. So we're really asking
Speaker 3: an administration please preserve the production tax credit. Let's have
Speaker 3: a reasons tear for approach, and most of all, let's
Speaker 3: have reasonable co two targets that are in line with
Speaker 3: what customers are actually buying.
Speaker 1: Do you have spare capacity inside the US right now?
Speaker 1: A significance.
Speaker 3: No, No, we are matched out in the US. As
Speaker 3: I said, we're the largest US producer. We export more cars.
Speaker 3: A lot of people don't realize that Ford exports a
Speaker 3: lot of cars outside the US. We don't have a
Speaker 3: lot of excess capacity a little bit, and we're taking
Speaker 3: advantage of that, and that's why we're building new capacity
Speaker 3: in Ohio and Tennessee and Kentucky for batteries and these
Speaker 3: new Eviso be coming out in the next couple of years.
Speaker 4: That's why we're investing in the US.
Speaker 2: Terrors are clearly on everyone's mind, and that's something your
Speaker 2: CFO has made in her statement as well. And the
Speaker 2: guidance that you offer does not include the potential impact
Speaker 2: of policy changes by the White House. Once we do
Speaker 2: get the actual tariffs announced and imposed, how quickly can
Speaker 2: Ford come out with some specifics, quantify the impact and
Speaker 2: provide a new forecast. Is that something that you intend
Speaker 2: to do?
Speaker 3: Of course, I mean, we're always transparent. I will be
Speaker 3: able to say though in our guidance we can handle
Speaker 3: a couple of weeks of tariffs. If it goes beyond that,
Speaker 3: obviously it will be billions of billions of incremental incremental,
Speaker 3: you know, profit headwinds for the company. So you know,
Speaker 3: I think the most important thing is having a productive
Speaker 3: discussion with the DC leaders, the Trump administration, congressional leaders
Speaker 3: about what this could do to our industry, what it
Speaker 3: means for US jobs.
Speaker 4: And you know, they ran on a campaign of making the.
Speaker 3: Auto industry stronger, and that's what we expect out of them.
Speaker 4: As policy makers.
Speaker 3: We have a lot of policy decisions to make in
Speaker 3: the coming year, As I said, CO two tax policy,
Speaker 3: and we believe that this administration, congressional leaders are going
Speaker 3: to back to US industry companies like four that have
Speaker 3: doubled down in the US.
Speaker 2: Right, Okay, I want to talk a little bit about
Speaker 2: your ED business as well. The EV strategy. Clearly in
Speaker 2: overhaul mode, you're more affordable models that go further on
Speaker 2: a single charge won't really be available for two years
Speaker 2: and for it is kind of unusual on that you
Speaker 2: do break out your EV profits and your financial reports.
Speaker 2: When will you have visibility on those affordable models that
Speaker 2: go further on a single charge in terms of being
Speaker 2: able to really turn around that business.
Speaker 4: Well, look, we made the decision.
Speaker 3: We've been number three to Tesla in the US EV
Speaker 3: sales for three years now, we've been number two for
Speaker 3: three years, and we're also number three on hybrid, so
Speaker 3: we know a lot about these customers. We decided a
Speaker 3: couple of years ago, based on what we heard from customers,
Speaker 3: that we really needed to redo our EV lineup. So
Speaker 3: we made that decision a couple of years ago. You know,
Speaker 3: we canceled a couple models. Those vehicles are in development now.
Speaker 3: We would rather grow profitably than grow and that's that's
Speaker 3: what we're deciding on.
Speaker 4: So this next couple of years. We're number two to
Speaker 4: test a long.
Speaker 3: Way below them, but we scaled one hundred thousand unit
Speaker 3: plus for a couple of years. Now we want to
Speaker 3: wait until those new vehicles come out in a couple
Speaker 3: of years. As you said, that will really transform our
Speaker 3: model ly profits. You know, they're designed differently, They're going
Speaker 3: to be manufactured different they have a different supply chain.
Speaker 3: We've really learned a lot from Tesla, from the Chinese,
Speaker 3: from a lot of people on how differently we need
Speaker 3: to design these evs to be profitable.
Speaker 1: So Ford is committed to a long term EV strategy.
Speaker 3: Then absolutely what about absolutely we see I was just
Speaker 3: going to say, we see the people buy evs, they
Speaker 3: don't go back to combustion. You know, they're they have
Speaker 3: very high level satisfaction with the vehicle. It's a small
Speaker 3: part of the industry in the US, only eight percent,
Speaker 3: but it's growing. But the only way it's going to
Speaker 3: grow in a sustained way if it's a profitable business
Speaker 3: for us, and that's why we had to completely redesign
Speaker 3: our vehicle and our approach.
Speaker 1: Jim, we want to really thank you for taking time
Speaker 1: for us here on what I'm sure is a very
Speaker 1: busy after for you. Jim Farley there, he is the
Speaker 1: CEO over at Ford. Those earnings just out, and we
Speaker 1: shoull reiterate here. The numbers in the most recent quarter
Speaker 1: did beat, but some concerns here about the guidance going forward,
Speaker 1: largely because of costs and maybe some tamp down of
Speaker 1: pricing power. Those shares down five percent in the after
Speaker 1: hour straight