Ford at Deutsche Bank Conference: Strategic Moves Amid Tariff Challenges

On Wednesday, 11 June 2025, Ford Motor Company (NYSE:F) shared its strategic vision at the Deutsche Bank Global Auto Industry Conference. The discussion revealed Ford’s robust market position and strategic initiatives, despite facing tariff challenges. The company emphasized leveraging its American manufacturing footprint while advancing in electric vehicle (EV) development and connected vehicle services.

Key Takeaways

• Ford increased its U.S. market share to 14.7% in May, a 1.9 percentage point rise year-over-year.
• The company is addressing a $2.5 billion tariff impact, aiming to offset $1 billion through cost reductions.
• Ford Pro reported over 675,000 digital software subscriptions, enhancing fleet solutions.
• Ford canceled a three-row EV model to focus resources on Super Duty production.
• The company is re-entering Formula 1 to enhance its technological capabilities in electric and hybrid propulsion.

Financial Results

• Market Share: Ford achieved a 14.7% market share in the U.S. in May, marking a 1.9 percentage point increase from the previous year.
• Tariff Impact: The company faces a $2.5 billion gross headwind from tariffs but plans to mitigate this with $1 billion in cost-cutting measures.
• Digital Subscriptions: Ford Pro has grown its digital software subscriptions to over 675,000, focusing on fleet solutions.
• Parts Attach Rate: Ford Pro’s parts attach rate increased from a little over 30% two years ago to 35%, aiming for 20% of its profits from parts and services.

Operational Updates

• US Manufacturing: Over 80% of Ford vehicles sold in the U.S. are manufactured domestically.
• Production Stability: Ford reported zero production losses during major launches this year.
• Quality Improvements: Both zero months in service (MIS) quality and three-month in-service quality saw double-digit improvements.
• Mobile Service: Ford has completed over 1.5 million mobile services so far this year.
• European Market: Despite a softening market, Ford Pro’s volume and share in Europe have grown year-over-year.

Future Outlook

• Model E Focus: Ford plans to strategically allocate capital towards profitable EV ventures and next-generation EV development.
• Three-Row EV Cancellation: The company canceled the original three-row Model E vehicle, reallocating resources to Super Duty production.
• Europe Strategy: Ford aims to grow its Pro business in Europe and address costs through its joint venture with Ford Otosan.
• China Strategy: In China, Ford is leveraging joint ventures for exports and learning from rapid innovations in AI and digital experiences.
• Autonomy Approach: Ford is focusing on Level 2 and Level 3 autonomy solutions while evaluating partnerships for Level 4.
• Formula 1: The company’s re-entry into Formula 1 aims to advance its technological expertise in electric and hybrid propulsion.

Q&A Highlights

• European Pricing: EV pricing in Europe is dynamic, influenced by compliance strategies and fleet discounts.
• ICE Pricing: Internal combustion engine (ICE) pricing has stabilized and, in some cases, increased in Europe.
• Pro Business: Ford Pro has avoided the pricing pressures affecting passenger vehicles in Europe.
• Customer Education: Ford is educating customers on choosing the appropriate powertrain for their needs.
• Fleet Management: Ford Pro offers mobile service and charging solutions to support autonomous vehicle companies entering new markets.

For a detailed understanding of Ford’s strategic direction, readers are encouraged to refer to the full transcript below.

Full transcript - Deutsche Bank Global Auto Industry Conference:

Edison Yu, Lead US Autos Research, DB: Welcome to the DB Global Auto Conference. My name is Edison Yu. I lead The US autos research here. We’re gonna kick things off with a bang this morning with Ford. Very pleased to be joined by Andrew and Naveen.

Thank you.

Andrew Frick, President of Affordable and Model E, Ford: Good morning, Trevor. Good morning, everyone. How are doing, Edison?

Edison Yu, Lead US Autos Research, DB: Excellent. Andrew is the president of Affordable and also for Male. Naveen is the CFO of Ford Pro. Between the two of you, I’m sure we can cover many aspects of Afford. Maybe I’ll start with with Andrew.

I know you you recently, you know, ascended to the role, basically, you know, running several divisions now. And I think investors actually haven’t heard as much from you publicly over the last couple of years. So I’d love to know more about your background at Ford and also kind of your your high level priorities coming in.

Andrew Frick, President of Affordable and Model E, Ford: Okay. Very good. Well, good morning, everyone. It’s great to be here with you. And Edison, thank you for hosting us today.

Yes, I’ve been actually, I’ll be celebrating my thirtieth year with Ford on Thursday of this week, so big week and very excited to be here with all of you. My background primarily has been in marketing sales and service in The U. S, worked in our International Markets Group as a general manager and have been able to work in several positions serving both the Ford and the Lincoln brands over those years. And then over the last few years, through general management, have taken on the role of Ford Blue and then more recently Model E and an interim for Pro. So from a priority standpoint, our objectives are very clear.

We are obviously very focused on cost and quality and reducing that across the Ford Blue business right now. We have we’re fortunate to have a lot of iconic vehicles in our portfolio, and we’re really looking to grow at this point. Our Model E business, we are looking to improve our overall profitability as we come out of our generation of products and into our and working on now our advanced electric vehicles for our generation. And on the pro business, we just want to continue to accelerate our growth. This is a huge competitive advantage for Ford.

It’s an area that extremely well in across North America and in Europe. We continue to grow, and we continue to we want to continue to, from a prioritization standpoint, just build upon the competitive moats that we’ve been able to set up with our pro business.

Edison Yu, Lead US Autos Research, DB: It’s been a dynamic start to the year. I think anyone who has been following the auto industry

Andrew Frick, President of Affordable and Model E, Ford: To say the least.

Edison Yu, Lead US Autos Research, DB: Would agree that it’s supposed to be the stable year after everything that’s happened, but we cannot catch a break there. So there’s been tectonic shifts in in US policy. In light of that, I think most people would agree that Ford has emerged at the very least as a relative beneficiary. Where do you see the most opportunities from a competitive perspective? And that could be both for consumer and for commercial.

Andrew Frick, President of Affordable and Model E, Ford: Yes. I would start with of all, that is true. I mean, we are really in a position right now to leverage the American footprint and our deep roots that we’ve had in America for quite some time. Our as many of you know, over 80% of the vehicles we sell in The U. S.

Are built here in The U. S, which gives us an advantage. It’s something that we are not in a position where we’re having to react too strongly at this point because this is not a course correction for Ford. We this is a continuation of our strategy and our deep commitment to U. S.

Manufacturing. So it puts us in a bit of a different position than many of our competitors that are having to react to this. We’re on pretty stable ground at this point as it relates to that footprint, which gives us some optionality in how we want to compete in the market. We have like we were saying, we have optionality across our Ford Blue, our Model E and our Pro business. We also have optionality across our vehicle lines in terms of where we want to flex and do competitively.

And we have optionality across our powertrain lineup as well. We sell our ICE vehicles, we sell our hybrid vehicles and electric vehicles as well. So we have the ability to really react nimbly to the market and the changing customer dynamics. All of our iconic vehicles, really F-one 150, Explorer, Bronco, on the pro side, Super Duty and Transit are all 100% built here in The U. S.

So we really have an opportunity as we look at how we want to flex the market and compete in the market. We have the ability to look at how we’re set up versus our competition and really take advantage of our footprint and really leverage that for us.

Edison Yu, Lead US Autos Research, DB: How important is growth and market share right now in The U. S? You obviously have some structural advantages with the new policies, and I think we’ve noticed some of the promotional activity that’s been implemented. Is that kind of more of a focus now given the situation relative to perhaps pricing going forward?

Andrew Frick, President of Affordable and Model E, Ford: Yes. of all, market share is important to us, but it’s important to us if it’s done profitably. So it is really that balance of growing our share and doing it in a very profitable way. So from a promotional standpoint, like you talked about, it was very important for Ford to take a leadership position in the market on April 2 when a lot of the tariffs went into place. We felt we’re uniquely positioned to really lead in this perspective.

And consumers have looked to Ford. You know, we’ve been around for over one hundred and twenty years. We’ve been through wars. We’ve been through pandemics. We’ve been through recessions, recessions where we didn’t take bailout money.

And we really want to be very we want to be there for customers at times of uncertainty. So on April 2, we launched our From America, For America campaign that provided customers with employee pricing. They pay what we pay. And we did that to really take the long game on being there for customers at times of uncertainty. They look to Ford.

They look to Ford for stability, and that’s what we were able to do. It’s really paid off for us in the last sixty days. You’ve seen a lot of the results in the market last month, and this goes back to your question on growth and how we’re doing it. Last month, coming out of May, we just closed 10 ago or so. We actually posted a 14.7% share here in The U.

S. That’s up 1.9 points of share on a year over year basis. We a lot of times in this industry, we fight for tenths of share, and to have a 1.9% increase year over year was very strong. And we did it with our profit pillars. Our trucks had the best when you look at our whole truck portfolio, it had the best month we have had in two decades, in twenty years.

Our Bronco business continues to grow. Our Bronco family sold over around 30,000 units, and Bronco four door beat Wrangler for the consecutive month. And we also were able to grow with our all new Expedition and Navigator that we just launched Expedition was up 45%. So these are all profit pillars that we’re really leaning into as we look for areas to grow in the market. And we’re leaving the month of May and almost halfway now through the year.

Our inventories are in a really good position. Our dealers have really gotten behind the From America, For America campaign, and we’ll continue to run that through the July 4 time period. And the same is true on the pro side. With Super Duty and transit, we’ve been really able to lean into those vehicles and take advantage of a really strong commercial market right now as well.

Edison Yu, Lead US Autos Research, DB: And then do you want to add anything on the commercial side? Do those kind of dynamics apply as well from a of a competitive and from a kind of growth market share standpoint?

Naveen Kumar, CFO of Ford Pro, Ford: Yes, absolutely. We look at very similar dynamics on the pro commercial side compared to retail. We’re looking at volume opportunities, share opportunities, market equation, and we want to grow profitably. But additionally, in the pro business, we look at our connected vehicle installed base and our growth in software and services because that’s what sustains the competitive advantages and differentiation that Ford Pro has. Our motes are our deep relationships with customers, the breadth of our vehicle lineup.

We have the widest vehicle lineup in the commercial industry. Our partnerships with upfitters, and we can configure these vehicles for virtually any on road use case. And we have the largest dealer distribution and service footprint of any commercial brand, and we’re continuing to deepen those moats. But where Pro goes is with software, we can augment all of that. Taking software and connected vehicles, we’re really unlocking value for customers.

They’re able to do more with these vehicles, be more productive as well as minimize downtime. So we’re helping customers grow their business and their top line as well as optimize on costs. And it’s a virtuous cycle for four Pro. We’re helping customers. We’re leveraging data and insights, which is helping make our vehicles and solutions better and better and more and more optimized, and we’re growing into higher margin parts and services.

And so this market environment and policy really creates opportunity for us to deepen that market leadership. Because of the breadth of our lineup and the customers and the variety of use cases we serve, that’s a real key competitive advantage for Pro. And why that’s the case is as policy drives growth in specific areas, for example, investment in infrastructure and rollout of data centers to support artificial intelligence or residential services, we calibrate our solutions to where the market is, and so we can capitalize on those opportunities. And two years ago, when we presented at our Capital Markets Day, our four pro strategy, we have real tangible proof points of progress. We have over 675,000 digital software subscriptions in the fleet solutions space.

This is telematics and fleet management. We’ve been growing subscriptions, average revenue per subscriptions, and we’ve been growing with both smaller and larger businesses. And on the parts side, our attach rate of parts is about 35%, and

Andrew Frick, President of Affordable and Model E, Ford: two years ago, was a

Naveen Kumar, CFO of Ford Pro, Ford: little above 30%. And we’ve grown that through capacity actions, adding mobile service, dedicated commercial service base as well as on the demand side, leveraging software to lead vehicles, customer data and inputs and our dealers’ physical service networks. And this is all really integral to delivering the Ford plus plan. Our ambition a few years in the future is to have 20% of our profits in Pro come from parts and services. And so what we’re doing in Pro is deepening our leadership, but it’s growing and diversifying the business into more durable profit streams and reducing capital intensity and our exposure to cyclicality.

Yes.

Andrew Frick, President of Affordable and Model E, Ford: And Naveen brings up a really good point. So there’s investment on our side. Our dealer body has also been and our dealer network has also been investing in this area as well, billions over the last several years. And just to double click on one of those services around mobile service, through this year so far, we’ve done over 1,500,000 mobile services, 1,500,000. So it is not insignificant in terms of how we’re really focused on our customers and providing differentiated levels of service for them.

Edison Yu, Lead US Autos Research, DB: So I think it’s safe to say that growth has been impressive. I wanted to shift to costs. Ford, I think, even you have acknowledged this, has has had a cost issue for a while. I think the commonly cited number is at one point was 7,000,000,000. Obviously, it’s been shrinking.

How much progress are we are we making to address that, in particular, on warranty? And can we accelerate that pace of improvement?

Andrew Frick, President of Affordable and Model E, Ford: Yes. We are making progress. This has been a main focus of the company for the past several years, and we’re starting to see it really pay off. So we’ve had three consecutive quarters of year over year improvement. What I really like about how the company is approaching is we’re trying to change our not by doing little tactical things, but really fundamentally changing the system and the culture in the company around how we operate to make this long term durable.

And we’re starting to see this pay off. So So systematically, we’re really working as a team, as a governance process, like across the whole team. It’s not just relying on individual team members, but across our PD engineering team, our manufacturing team, our supply chain team. We’re doing so much more in terms of vehicle teardowns, understanding what the competition looks like, where there’s opportunities. That’s been a big accelerant for some of the growth that you’ve seen and some of the results that you’ve started to see.

In the manufacturing lanes, we’re doing Gemba walks and going to the plants and spending a lot of time at individual stations, making sure that we’re leveraging the best of our plants across the whole Forti ecosystem in each individual plant. We’ve seen really good progress there. And we’ve spent a lot of time with our supply chain team and our supplier partners. So much of our progress will be done through the supplier partners, and I’m really proud of how the team is working differently. We’ve actually brought in a lot of specialists into the organization to bring new technical skills and new technical tools to us.

So we’re starting to see the results, dollars 1,000,000,000 improvement on a year over year basis, excluding the tariff impact. But we just went through the major launches for us this year, and we didn’t lose any production. So our production that’s the time in many years we had not lose production through a launch. So our production stability has improved quite a bit. Our zero MIS, which is the quality leaving the plant when it leaves the plant at zero months in service, is up considerably double digit improvement.

Our three months in service quality is up double digit improvement. So we’re seeing these start to pay off. We’re doing much longer term testing. And we’re really across every nature of the business, just running the business So we are closing the gap, as you said, but we still have a long way to go.

And we’re still really balanced in our approach. Understand what’s ahead, and we know this is a big opportunity for us at the same time.

Naveen Kumar, CFO of Ford Pro, Ford: Edison, I’ll add that growing the pro services ecosystem is directly linked to us addressing costs as a company. Those connected vehicles and the software, that data directly links into our quality systems. And like Andrew mentioned earlier, mobile, growing our physical services and our proactive service and our reactive service, that helps us not just minimize vehicle downtime for customers but optimize on total cost of repair, which will translate into improved warranty costs. And then longer term, that data will help inform the vehicles and the solutions we provide, and we can optimize on cost there and including on things like order to delivery, where we’re driving more efficiencies in those processes for customers. So the customers benefit because they know when vehicles are coming and entering into their fleets, and we optimize on inventory and working capital, which will also benefit costs.

So growing those services is also just really directly linked into the cost optimization that we’re doing in the company as well.

Andrew Frick, President of Affordable and Model E, Ford: Speed to resolution as we have issues really does matter. It really helps the warranty side.

Edison Yu, Lead US Autos Research, DB: Another element of cost, and I promise we won’t dwell on this too much tariffs. Someone’s probably gonna throw something maybe if we talk about this too much. But, you

Naveen Kumar, CFO of Ford Pro, Ford: know Okay.

Edison Yu, Lead US Autos Research, DB: What what what are you planning to do to to mitigate some of these? I realize you’re probably in the best position among the OEMs, but for example, I saw you raised prices on models produced Mexico. Is that kind of the response basically to some of these costs?

Andrew Frick, President of Affordable and Model E, Ford: Yes. I mean, we were clear in our first quarter earnings that we see about a 2,500,000,000 headwind associated with this on a gross basis and net around $1,000,000,000 because we do plan to offset around $1,000,000,000 of cost actions and mitigating actions. The pricing environment is really interesting because it’s really important as the way we’re looking at it is we’re really doing a we spend a lot of time doing market analysis and segment analysis. So we are looking literally vehicle by vehicle, segment by segment. Where is our manufacturing footprint set up?

Where are our competitors? Where are they likely to price? How are they likely to price? A lot of people just think top line pricing is what we should be looking for. The reality is there are many different ways to price a vehicle, and we’re starting to see that play out in the marketplace right now.

Is top line pricing, which some companies have taken and some are starting to take more of as we get into the June time period here. We’ve seen more activity in the last, I’d say, twenty days or so. But it’s important to also look at the net pricing. And what I mean by that is there are a lot of levers. There’s variable marketing incentives.

There’s different series mixes that companies can use as a lever to manage their overall pricing. We’ve seen companies change the way they provide customer incentives, maintenance packages. So we’ve seen companies say, Oh, we’re not going to actually raise prices. We’re committed to not raising prices, yet they deescalated their variable marketing. They took away maintenance packages, and they did other things, which is a form of net pricing.

So there’s a lot of ways that companies are doing this. We’re watching this literally every single day, and we’re game planning it around our strengths and where we can lean into the market. This goes back to the growing and growing profitably and leveraging the footprint that we have here in The U. S. Because it is really important for us to take advantage of the market where we can and price in an intelligent way.

But like I said before, we’re really going to balance that mix of production, pricing and overall competitiveness based on what’s most profitable for Ford. But it is a you used the word dynamic earlier. It is an extremely dynamic market right now, and competitors are facing a lot. Fortunately, we’re in a better position, so it allows us to be more nimble and react and lean into customers. And I like to say right now at these times of crisis, just like our From America, For America campaign, during these times, we want to really be

Naveen Kumar, CFO of Ford Pro, Ford: on the right side of

Andrew Frick, President of Affordable and Model E, Ford: the customers and lean into the customers.

Edison Yu, Lead US Autos Research, DB: On the Ford Pro side, how do we I guess, do we think about it from the fleet perspective maybe perhaps or the government customer perspective? Is the tariff you sort of pass that on? Or is it mitigated differently?

Naveen Kumar, CFO of Ford Pro, Ford: It’s it’s exactly the same levers that Andrew talked about on the retail side. And the and this is one of the great one of the great things of having Andrew as a partner because there are things that are very segment specific, like growing our services ecosystem. But when it comes to market equation, tariff mitigation actions, we’re working together as one team, and we’re balancing across the business. Now in the fleet space, you have orders that we get in from large corporate fleets, and we’re negotiating those directly. We have our dealers engaging with small businesses.

So there’s a lot of dynamics there, and there could be things like taking what Andrew said about variable marketing incentives. You have some volume weighted incentives in those markets. So you have these other levers and dials. That said, three weeks ago, we had our fleet showcase event in Detroit. So we had a top 400 large accounts coming in, and we’re talking to them about the business, the market environment, vehicle lineup and our services.

And there’s a lot of optimism. Demand for trucks, chassis, wagons continues to be robust in the environment. And so we look at the same levers. But additionally, Edison, like I mentioned earlier, we’re really focused on growing our connected vehicle installed base. So what we’re looking at also on top of all of the levers that we just talked about is customer lifetime value, share wallet growth, units and operation potential and other loyalty factors.

Andrew Frick, President of Affordable and Model E, Ford: And we have in the commercial space, again, our two primary vehicles with Super Duty and Transit both built here in The U. S, our competitors are not in that same position. So there’s an opportunity with highly profitable vehicles for Ford and two vehicles that our pro customers really rely on for their business to generate their own revenue. We’re really going to take advantage of that situation and lean in, and already paid off in the last sixty days or so.

Edison Yu, Lead US Autos Research, DB: I wanted to talk about Model E. You’ve obviously taken the lead over there. We’ve heard Jim talk about Skunkworks being the foundation of the future EV strategy. I guess what is the objective until then? Because I realize you kind of keep some of the skunkworks up unwrapped for a surprise people.

Sure. So from now until the next couple of years, what is the strategy?

Andrew Frick, President of Affordable and Model E, Ford: Well, BB strategy really hasn’t fundamentally changed. We want to exercise the right capital allocation and foremost. So we want to put our money into the vehicles and into our Model E vehicles where we know we have a long term sustainable future. So it’s important to know we have a strong basis even in this generation where we’ve learned a lot. I mean, we the last three years, we’ve been the number two automaker in EV sales in The U.

S. So Mach E and Lightning are our two main vehicles, have done very well in the market. Mach E continues to grow. What doesn’t get talked about a lot right now is we actually are launching right now new vehicles in Europe. We have the Capri, we have the Explorer, we have our next generation Puma electric vehicle that we just launched that’s doing extremely well.

And those are all in a better profit position than even the Maku and the Lightning have been here in The U. S, and we’re improving on that profitability as well. So in the near term, it’s about making competing in the market with those products. It’s about allocating capital in a very smart way. It’s about making tough choices at times.

For example, our battery capacity, making sure that we have the right footprint there to serve our longer term needs. It is we made a tough decision on the original three row Model E vehicle that we ended up canceling because we didn’t think it was going to be profitable in the long run. And we repurposed that capital allocation actually for Super Duty, where we have a tremendous amount of upside on our with our pro business. So it’s about really in the near term making those decisions and investing for the long term. And a lot of that has to go into the advanced next generation of EV vehicles that we’re really looking forward to.

We’ve learned a lot around how the market is reacting to electric vehicles, around the use cases that customers that make sense for customers. And if you look at an F-one 150, for instance, we offer a gas, hybrid and electric. And for some of our electric F-one 150 customers, their use case doesn’t make sense for them to buy an electric vehicle. They should buy a hybrid with pro power onboard or they should buy a gas vehicle. And in some cases, they should be buying a Lightning instead of one or the other.

So we are really trying to educate customers on what the right use case is for their specific needs, and having that flexibility across powertrains really does matter. In the future for electric, we really think that the smaller sized vehicles where we actually do very well in trucks and utilities are going to be a great place to compete. We think they can really lean into the specific customer use cases, and we can control the costs in a completely different way than what we’re seeing others invest in in the market. So we feel good about the near term. We have work to do on this as well, just being completely transparent.

We’re continuously working our profit improvements and focused on what the customer is and what they’re looking for.

Edison Yu, Lead US Autos Research, DB: I think it’s a good segue to Europe. You already sort of mentioned it. What what are you seeing on the ground over there? It’s obviously a much different market than than The US. And, you know, whether it’s on the mission side, I guess, what’s what’s Ford’s kind of strategy to to to deal with that?

And, also, just longer term, think it’s maybe not clear from the outside, what is the end game in Europe, both

Andrew Frick, President of Affordable and Model E, Ford: on commercial and Yes.

Naveen Kumar, CFO of Ford Pro, Ford: I’m happy to take this one, and I’ll start with Ford Pro. Arthur, we’ll start with Ford Pro, and it is good. Our Pro business is strong and growing, and we’re managing new entrants, compliance and costs. So the overall commercial market in Europe is softening, and we’re seeing some contraction in end markets like manufacturing. That said, Ford Pro’s results on a year to date basis, our volume has actually grown year on year, and our share has grown by over three percentage points.

And that’s been driven by our fresh product lineup that includes the Transit Custom, Ranger, the Transit Courier and flexibility on powertrains, like Andrew mentioned, ICE, hybrid, electric vehicles. So we’re giving customers in Europe the power of choice. The Chinese are in the space in Europe in commercial, and they’ve been to date delivery focused. And the modes we talked about earlier with Pro on our breadth of customers we serve, our use cases, the widest vehicle lineup of anyone in the industry, our partnership with us, Biggers and our service ecosystem. What we are seeing in Europe is Ford Pro has gained share year on year in the commercial space.

And so that is a key critical proof point of showing how we can compete and differentiate versus new entrants in the market. And then on the compliance side, what the EU is doing in terms of working through three year fleet averaging for CO2, We strive to be CO2 compliant in every market we operate in, but that puts us in the that moves the market in the right direction to start better calibrating regulations with customer demand. And for Ford, that gives us levers to optimize on vehicle, vehicle mix, markets and between commercial and consumer retail applications. On the cost side, we have made progress, but we have more work to do. It’s everything that Andrew said earlier.

What’s different about Europe and for the pro business is that we source our vans from our joint venture partner, Ford Addison, which is based in Turkey.

Andrew Frick, President of Affordable and Model E, Ford: And so this is

Naveen Kumar, CFO of Ford Pro, Ford: a purchased vehicle arrangement, And the Turkish inflation has been persisting, and the lira has not devalued against the dollar at a pace that would offset those costs. So everything that Andrew described earlier in terms of processes, governance, wide walks of plants, technical teardowns, working with suppliers, we are doing that in our joint venture partner, Ford Audislain. And it’s been driving a very tight partnership with Ford. And so the learnings we’re getting out of doing that work with Audislain is helping influence what we’re doing in Ford and vice versa. So it’s a really good symbiotic partnership.

And we’re making progress, but we have more work to do. And on the retail side, we’re seeing some pricing pressure as OEMs are taking actions to deliver compliance. But like Andrew mentioned earlier, it’s really about having great product, and we’re really pleased with the Puma EV recent launch, the Capri and Explorer EVs from last year. And so to summarize on the retail side, it’s really about having that great vehicle and EV lineup. Our Pro business has grown historically, we’re going to continue to grow it on volume and on our services.

And just like with Ford overall, addressing

Andrew Frick, President of Affordable and Model E, Ford: cost

Naveen Kumar, CFO of Ford Pro, Ford: is the biggest unlock for our operation in Europe.

Edison Yu, Lead US Autos Research, DB: You mentioned China earlier. Maybe we can go through that part of the world. Ford obviously has a presence there, but I think, you know, you’ve talked about, you know, learning applying some of those learnings as well taken from the the JVs over there to even, you know, US or Europe. So so I guess what is the what is the role of China, I guess, for China now going forward? Is it is it mainly export hub?

Is it mainly to kind of cultivate r and d that can be used also because speed of competition? How does one think about that?

Andrew Frick, President of Affordable and Model E, Ford: I think it’s everything that you actually just said, really. It is about being an export hub for Ford. We’ve really right sized our overall presence in China to scale to the market and what we’re actually selling in the market. So that is also a dynamic market, as you can imagine. But we’ve done quite well out of in China last year, 900,000,000, and a lot of that was based on the export success that we had.

So I take a vehicle like territory with our JV partner. We are now exporting territory all around the world throughout ASEAN markets, throughout South Africa. We’re in South America. It’s doing quite well in Mexico. Actually, in Mexico, territory is now our best selling vehicle.

We sell more territories than we do F-150s in Mexico, where there’s a big Chinese influence. So it’s doing very well for us. It’s a very profitable business. It’s capital light because of the partnership that we have. So it’s a really good investable business there.

And in terms of what we’re learning from the market itself, we were just there a few weeks ago as a leadership team, speed, the way they’re integrating AI into their vehicles and into their customer experience and their digital experience is really impressive. And how we leverage the learnings that are there, not only from the actual customer experience that they’re going through, but the development plans, their processes, we’re taking a lot of that knowledge and trying to transfer it. Now it’s not just a copy and paste because the markets are so different. China is different from The U. S, different from Europe, etcetera, South America.

So what we’re trying to do is really replicate the intellectual approach, the speed that they do business on, learn from our JV partners and then transfer that knowledge within the company. But it’s an impressive industry. We’re learning a lot on their new energy vehicles as well and where the natural demands of electric vehicles and eREV technology and hybrids are really landing because that will likely inform plus or minus government subsidies and incentives that will inform where natural customer demand may be in other parts of the world. So there’s a lot to learn in China.

Edison Yu, Lead US Autos Research, DB: If we tie the two regions together, there there’s obviously a lot of them trying to go to Europe. From from that perspective, are are you some of the China OEMs getting any traction?

Andrew Frick, President of Affordable and Model E, Ford: Yeah. They’re setting their presence up in Europe. They’re setting it up in ASEAN markets and South America and Mexico, like I said. I think almost 30% of the Mexico industry now is there. But in Europe, yes, they’re growing, increasing their presence, increasing their footprint.

This is where I really love our pro business because our pro business strength and the over three points of share growth we’ve seen there and continued investment in pro, that they are not necessarily investing in that area. So that’s a really good opportunity for us to continue to differentiate the Ford brand and compete in a different way. That’s very that plays to our strength and really should be a long term advantage for us. It’s a different market. It’s a or it’s a different type of business, so you have to invest over a long time.

Edison Yu, Lead US Autos Research, DB: I hear you.

Andrew Frick, President of Affordable and Model E, Ford: So Ford Sorry.

Edison Yu, Lead US Autos Research, DB: Yeah. So switching we’ll also do something secular, about something secular autonomy, vehicle autonomy, which is everyone’s favorite topic, I’m sure. You you’ve hinted that, you know, you will partner up potentially with advanced vehicle autonomy. What what can you tell us about about these efforts and and how you think about build versus buy on ADAS or advanced ADAS?

Naveen Kumar, CFO of Ford Pro, Ford: So I’ll take this one. Actually, before I was the CFO of Ford Pro, I actually worked in the autonomy and mobility space for Ford. And at Ford, we’re taking an evolutionary approach to transitioning to software defined vehicles. We’re focusing on centralizing compute, middleware and controlling key areas of the software tech stack, and that includes infotainment and ADAS. And we’re really focused on areas that are visible to the customer and integral to the customer experience.

So then to get the specifics on autonomy, our Level two solution is called BlueCruise. We have over three fifty million miles driven. It’s won multiple consumer awards. The system is getting more and more capable. For example, last year, we launched automatic lane changing, and it’s all developed in house.

And building a customer installed base with BlueCruise is really important to build trust in the brand and the solutions. And this is a precursor to Level three autonomy, which is right around the corner. And with Level three, it’s eyes off on highway driving, and that’s really game changing. We’re developing those solutions in house with our Latitude team, and that consists of many of the people where at Argo and transitioned to Ford a few years ago. And we believe our Level two and our future Level three solutions will be among the best in the industry in execution.

And regarding Level four autonomy, we’re being really thoughtful and practical. We’re balancing innovation, capital, and we’re well positioned. And in my view, there are four elements. One, we have a really strong technical leadership team in Doug Field and Samuel Mari. They know the space really well.

They know the solutions out there. They have a deep understanding of Waymo solution, for example. The while it’s a different technology stack with Level four versus Level two and Level three, building and scaling Level two and Level three with customers builds trust in these economy solutions. So there is an inextricable linkage there. The point is we’re really confident in our ability to integrate future and more and more advanced autonomy solutions into our platforms into the future.

And then the point is Ford Pro has a really important role to play here because there’s autonomy technology, there’s the integration with vehicles and putting in all those functional safety redundancy systems, but there’s integrating these vehicles into mixed fleets, especially for commercial applications, orchestrating these vehicles among a mixed fleet, servicing these vehicles, charging, maintaining these vehicles. And we’re doing all of this right now with electric vehicles. In aggregate, we’re the country’s largest electric vehicle fleet. We have hundreds of thousands of customers. They have a myriad of use cases and needs around range and charging.

And so we’re learning a lot. We’re getting deep operational expertise, technical know how, customer use case insights. And this is all going to be really relevant as autonomy scales into use cases and expands beyond RyHale over time. And then on the part of your question regarding bill, buy and partner, we believe, as an industry, OEMs should be evaluating partnerships to unlock value for customers, and that can be in vehicle platforms, technology and just general areas of scaling. What we look at at Ford, because we have a pretty good track record in partnerships, we mentioned Ford AutoSun earlier, our Chinese partners, is really customer and foremost.

Is this going to drive differentiated and unlock value for customers? Is our IP with a partner’s IP going to be game changing? Is it going advance speed to market efficiency, drive a better execution? And then fit, which is really important, strategic fit, long term growth potential, durability in these partnerships. I come from an M and A background in business development, so I spend a lot of time in this space.

And culture, cultural fit, aligned values, brands. And really, does it tie to the tenets of our four plus plan? Is it going to drive growth, diversification, margin expansion and derisk in terms of capital expenditures as well as cyclicality? And so we apply the same frameworks as we look at potential autonomy partnerships in parallel with our internal development of our Level two and Level three solutions. And like I mentioned, Ford Pro has such a key role to play because it’s not just about the technology, it’s about bringing this ecosystem to customers, especially in the commercial space.

And that involves maintenance, service, upfitting vehicles, charging solutions, and then deliberately working with customers to scale these solutions over time. And the beauty of Pro is that we directly engage with customers. So we’re getting those insights and those feedback that can help inform how to deploy and scale economy.

Edison Yu, Lead US Autos Research, DB: So if you use that together with a obviously, ProPro has a lot of fleet management, number one, fleet management. You also have the biggest US footprint, Robotaxi. Any thoughts there?

Naveen Kumar, CFO of Ford Pro, Ford: Yeah. You know, we we look at that space. We see we see scaling there and and, you know, what Weibo is doing, and I think there’s definitely opportunities. I’ll give a really discrete tactical example. As autonomy scales and they start mapping out cities and you want to go in and start mapping those markets, you want to do that in a very astute light way.

And that front pro can become a really valuable partner in terms of our mobile service, our charging solutions, and we’ve actually set up, you know, our charging solution network with our dealers. And that can help, you know, autonomy companies enter markets, test, pilot, validate, start mapping in a really quick and and lean way. And and I love to give a tactical near term example because there is a ambitious future state out there with autonomy, and there’s way more we can do with the pro ecosystem. But even in the now, as you’re starting to see companies like Waymo start mapping and scaling into other markets pretty quickly, we definitely believe we have an important role to play as a partner.

Edison Yu, Lead US Autos Research, DB: So lastly, from my end, Ford is getting back to F1 in a big way. Your crosstown rival has a team now. Why do you think there’s this big push from The U. S. To get back to F1?

And what is Ford looking to achieve?

Andrew Frick, President of Affordable and Model E, Ford: I’m not sure why there’s a broader big push. I can tell you what it means for Ford and why we’re excited about it. So and foremost, it is a growing sport without question and a very popular sport. But I always joke, Lynn always says, and I love this line, it’s not a vanity product project for Ford, and it’s not. This is actually just like Naveen was talking about technological know how and really understanding the future of electric vehicles and hybrid propulsions and different technologies, there is no better field to get into than what’s going on in the F1 field and when it comes to that type of intellectual advancement.

So when we look at it, we’re not just slapping a Ford oval on a vehicle. Like we are totally involved in the process. We have dedicated motorsports teams and racing teams and engineers that are co developing. We partnered with Red Bull, who’s a proven leader, to be able to actually get the most out of where they’ve come. We’re not building from the ground up.

We’re actually joining a partnership that’s been very successful, and they’ve been extremely collaborative for us in even the early phases as we go to enter it next year. But this is I like a lot of people don’t realize that we do a lot of partnerships like this so we can make our mainstream vehicles better. So if you look at NASCAR, for instance, it makes Mustang better for our customers. That’s why Mustang has almost 60% segment share. If you look at Bronco, the success of Broncos, we race the king of the hammers, not just to have fun racing the king of the hammers.

We learn so much about the necessary technology that we want to put in the what we want to put in, what we don’t want to put in for our mainstream customers that makes Bronco as good as Bronco is. And the same will be true with F1 with our future electrified vehicles. Like we are learning this is a learning lab for us. It’s a great way to practically apply all of the learnings from world class engineers into our mainstream products, and we are really excited about the overall the sport itself. There’s a lot of obviously, a lot around it worldwide.

It’s a global business as well, just like we are. So there’s a lot of there are a lot of marketing opportunities. There are a lot of those aspects to it, of course, that we’re going to lean into as well and a fan base that’s really big and exposure for the brand is great. But this is it’s a marketing plus technological know how that we’re really looking to get. That’s why we’re that’s why we’re so excited about it.

You know?

Naveen Kumar, CFO of Ford Pro, Ford: Yeah. Addison, I’d add as you know, I was an engineer, like, over 20 ago, and I can geek out about this stuff all the time, and it’s great for our talent. When we work with these partners and we get improvements at aero, weight reduction, design changes, system changes, removing a bracket, like those type of things really excite our team because it shows progress and continuing to build on the success. And so, you know, there there’s everything that Andrew described, but for the internal team, it’s really galvanizing in terms of product development and and deployment.

Andrew Frick, President of Affordable and Model E, Ford: That is really true. The the ability this relationship and the amount of talent that we’ve been able to take a look at bringing into the company because people are attracted to this and want to work in this, you know, on this type of a project is really important. And we’ve already built a really good advanced electric vehicle team that you mentioned before. We’ve got world class the best EV leaders in the world are working at Ford now, and this is going to continue to attract talent for us. So there’s a lot of reasons to get into it besides maybe the face value side of it.

So thank you for asking that.

Edison Yu, Lead US Autos Research, DB: I think we have time for one question. Anyone in the audience wants to? I think we have one in the back. Don’t if we can get a mic over there.

Unidentified speaker: Thank you. I’d like to come back to your comments on Europe, if I may. Could you comment on the pricing by powertrain? So I think you said pricing is a bit under pressure. Is that mostly PEVs or is it also on ICE?

And then if you could comment on the order momentum in that market. Yes.

Andrew Frick, President of Affordable and Model E, Ford: It’s a really good question, and it’s actually changing by the month. And it’s changing by the month for a few reasons. Naveen talked about the different pricing environment. But you have some companies that have chosen to purchase credits to help accomplish those compliance, know, the regulatory compliance needs. Some have not participated in that pooling.

And so there are certain channels in Europe that are getting really aggressive in their pricing. So if you look at some of the EV pricing around some of the fleets, some companies are going very deep into that. They’re discounting on certain fleets, 25%, 30%, which is more than what we’ve seen over the last even sixty, ninety days ago as they’re trying to balance their full year compliance position. We’re not in that position. We did purchase credits.

We feel very balanced. We’ve actually seen our ICE pricing stabilize quite a bit. And in some cases, we’ve actually been able to increase our ICE pricing as we try to balance that with our electric vehicles. So generally, the EV pricing environment has come down very similar to what we’ve seen in other parts of the world just as there’s certain volume that is trying to be a hit versus the natural adoption curve. At the same time, that three year leveling that has that was announced across from a compliance standpoint is really helping.

People are reacting to that in terms of their near term pricing actions as well. So it is extremely dynamic, maybe more dynamic than anywhere else right now in the world in terms of the ICEV pricing environment. That’s where another on the pro side, we’ve been able to actually take a totally different tack and not have to participate as much in that pricing dynamic that’s happening more in the PVs, passenger vehicle side of the business. Good question. Thanks.

Edison Yu, Lead US Autos Research, DB: Fantastic.

Naveen Kumar, CFO of Ford Pro, Ford: Thank you, Edison.

Edison Yu, Lead US Autos Research, DB: Thank you. Edison, thank

Andrew Frick, President of Affordable and Model E, Ford: you very much. Really appreciate you doing this, and thanks for

Naveen Kumar, CFO of Ford Pro, Ford: everyone. Good day, everyone.

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