Good day, ladies and gentlemen. My name is Holly, and I'll be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Q4 and full year 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during that time, please press star then one on your telephone keypad. At this time, I would like to turn the call over to Lynn Antipas Tyson, Executive Director of Investor Relations. Thank you, Holly. Welcome to Ford Motor Company's Q4 2021 earnings call. With me today are Jim Farley, our President and CEO, and John Lawler, our Chief Financial Officer. Also joining us for Q&A is Marion Harris, CEO of Ford Credit. Today's discussions include some non-GAAP references. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You can find the deck along with the rest of our earnings materials and other important content at shareholder.ford.com. Today's discussion also includes forward-looking statements about our expectations. Actual results may differ from those stated. The most significant factors that could cause actual results to differ are included on page 30. Unless otherwise noted, all comparisons are year-over-year. Company EBIT, EPS, and free cash flow are on an adjusted basis. Product mix is volume-weighted. A quick update on our near-term IR events. On Tuesday, February 8th, John Murphy from Bank of America will host a fireside chat with John Lawler and Kumar Galhotra, who is President, Americas and International Markets Group. On Wednesday, February 23rd, Jim Farley will participate in a fireside chat with Rod Lache at the Wolfe Research Global Auto, Auto Tech, and Mobility Conference. On Thursday, February 24th, Bob Holycross, our Vice President, Sustainability, Environment, and Safety Engineering, and Dave Webb, Ford's Treasurer, will participate in the RBC Global Environmental, Social, and Governance Conference. Now I'll turn the call over to Jim Farley. Thanks, Lynn. Hello, everyone. While some may have described 2021 as a breakthrough year for Ford, I would simply portray it as a year of important progress for the company. We strengthened our base business last year and now expect to deliver even stronger results this year. Just as critical, we started moving with real speed and ambition to build a modern Ford. Our true breakthroughs are still ahead of us, like rapidly scaling production of our popular new battery electric vehicles, like turning Ford Pro into a growth engine for our commercial customers' businesses and ours, like building our intelligent software platform to revolutionize our customers' experience. Even with the recent momentum, I know some observers may remain skeptical that a 118-year-old company like Ford will emerge as a winner in these disruptive times in our industry. I'm okay with that. We're going to compete like a challenger, speak with our actions, prove ourselves over time. Let's dive into last year. As I mentioned, we have significantly improved our base business. In North America, our largest market, we have a very hot portfolio of new vehicles. We've now won awards of North American Truck and Utility of the Year for two years running. That's never happened by any company. The new Bronco, the Bronco Sport, the Maverick, the Mustang Mach-E, all of them brand new nameplates for our lineup, all of them hits. Last month, we launched E-Transit, and this spring, we're in the middle of launching the F-150 Lightning. Few people ask us anymore about why we phased out sedans, but many more are asking when they could take delivery of their new Bronco or Maverick or Lightning. We're doing everything we can in our powers to increase our production and break constraints. We don't like making our customers wait, and we're taking action to ensure that they don't pay unreasonable markups. We've also made progress outside of North America, and this is very important. Ford has been a one-legged stool for too long. We stayed in Europe and South America and other regions because we really believe we can create sustainably strong businesses in those markets. We want to serve these customers with better, more connected, and electric products and services. The deep restructuring in Europe and South America have put us in a position to grow profitability going forward. In China, we're now set up to play a much bigger role in the EV boom going on there. We have quietly grown Lincoln into a strong contender in the world's largest luxury vehicle market. In fact, China is now the number one Lincoln market globally. Our International Markets Group is profitable, and we're now preparing for the important launch of our next-generation Ranger pickup this year. While we remain in the teeth of the COVID crisis and semiconductor shortages, our overall business is still in great shape. At the same time, we're rapidly making progress on key aspects of our Ford+ plan. For customers, that means more distinctive products and solutions, more always-on relationships with our brands, and adding ever-improving user experiences. Now, to deliver these things, we're building new muscles, and that certainly includes scaling up our production of electric vehicles, as I mentioned. We undercalled the demand for our first wave of EVs. The Mustang Mach-E, the E-Transit, the F-150 Lightning. In the past six months, we doubled our 2023 planned capacity for EVs to 600,000 units a year. Now, this required everything from working with SK and LG to increase battery supplies to knocking down walls at our Rouge Electric Vehicle Center while the mortar was still wet to make room to improve and build more Lightnings. Our team knows how to scale manufacturing, and we're now harnessing that capability to ramp up production of EVs. We also have a task force dedicated to lowering the bill of materials for our BEVs above and beyond just the usual declines in material costs. For example, on Mustang Mach-E, in just the last month, our team found $1,000 of opportunity per vehicle, and that's delivered through design simplification, vertical integration, and leveraging our scale with supply chain as we ramp up production. That team is just getting started. We plan to take full advantage of our first-mover position in the fully electric pickup truck market, starting with Lightning, but there's much more to come. In the coming months, we'll break ground on the Blue Oval City electric truck plant in Tennessee. It will be the largest, the most advanced manufacturing complex in our history, and it will produce Ford's second generation of a full-size electric pickup in high volume starting in 2025. At the same time, we have three large-scale battery plants in Tennessee and Kentucky, which will be coming on stream with capacity to produce enough battery cells for more than 1 million vehicles a year. This is in addition to our battery sourcing in China and Europe. We are well on our way to achieve at least a 40% mix of BEVs by 2030, with strong margins and equal to or higher market share in the key high-profit, high-volume segments we compete. For example, the F-150 Lightning, if we had full production today to meet our current demand we would rival the Model Y as the leading BEV nameplate in the U.S. market. We can't grow a profitable BEV business without a very healthy ICE business. To do this, we're reducing complexity everywhere while increasing leveraging the benefits of our connectivity. This includes things like fewer top hats guided by customer demand and a judicious approach to vehicle content based on deep insights generated from that same vehicle data. We're also being disciplined with capital as we deploy that to our ICE products, recognizing that as the mix of BEVs increases, we will continue to manufacture ICE vehicles but with a focus on optimizing cash returns. Our goal is to continue to improve our automotive EBIT margins. Let me say that again. Our goal is to continue to improve our auto EBIT margins even as we ramp up the mix of BEVs. In 2021, we began to bring our vision of an always-on experience for retail and commercial customers to life. Our customers are really realizing the benefits of our over-the-air software updates, but that's just the beginning. We're using our hubs in places like Palo Alto to attract more and more great software engineers and technology specialists, and we're fundamentally changing the culture of engineering inside Ford. The hardware will always be important, but the software and the embedded systems will define the next generation of our vehicles' experiences. I think customers will be amazed at the benefits as we move to central compute rather than the distributed compute we have across all the supplier-provided modules today. Our human-centered interface professionals are now in one single organization with authority over the in-car digital experiences, interfaces, screens, and controls. We're committed to providing an environment where software engineers can do the very best work of their careers. Before I turn it over to John, let me close. The velocity of change at Ford is increasing. We're not seeking half measures. Fear of change and risk has never served legacy automakers well in the past couple decades. We're done with incremental change. We have a clear plan, a bias for action, and whatever-it-takes mindset. We're confident our strong base business will generate the capital we need to fund a very exciting future. We're recruiting incredible talent from outside the company to work with the best people from Ford. As excited as our customers are for the great portfolio we have in the market today, we can't wait to show them what's coming in the future. Now I'll turn it over to John, who will take you through the results for the quarter and our expectations for this year. Thank you, Jim. In the face of ongoing challenges with semiconductor constraints and industry-wide supply chain disruptions, we executed our Ford+ plan, including closing out our global redesign, strengthening our product portfolio, and investing in exciting new opportunities fundamental to growth and value creation. For the year, we posted $10 billion in adjusted EBIT with a margin of 7.3%. That's our strongest performance since 2016. We delivered right at the midpoint of our guidance range, adjusting for the reclass of our Q1 Rivian gain to a special item. Despite a 6% decline in wholesales, our automotive business posted its strongest EBIT margin since 2016. North America delivered an 8.4% EBIT margin and is firmly on the glide path to a 10% EBIT margin. In addition, our operations outside the U.S. collectively posted their best results since 2017. I'm very proud of the team's hard work, their resiliency last year as we rose to the challenge and optimized constrained production to protect customer orders, new launches, our electrification strategy, and our most profitable vehicles. We also remained highly disciplined with our incentive spend and mix management, which combined with improvement in warranty costs, more than offset commodity headwinds and supply chain related production losses. Ford Credit, whose profits and dividends are an important source of capital for us, delivered a strong year. EBT was $4.7 billion as auction values were at record highs and credit losses were near record lows. Free cash flow was $4.6 billion, and we ended the year with strong cash and liquidity, more than $36 billion and $52 billion, respectively, which now includes our stake in Rivian, valued at $10.6 billion at the end of the year. In 2021, we continued to advance our capital strategy given the improvements we're seeing in the underlying business. We reinstated the regular dividend at $0.10 per share in Q4 as we continued to focus on creating value for our shareholders. We also further strengthened our balance sheet by repurchasing $7.6 billion of high cost debt, de-leveraging the balance sheet, and significantly reducing our ongoing interest expense. We introduced the industry's first fully integrated sustainable financing framework, covering both an auto OEM and its captive finance company. In November, following the launch of the framework, we completed our inaugural $2.5 billion green bond issuance, which was met with incredible investor demand and will help fund our exciting BEV portfolio. Our strong balance sheet, including cash, provides a solid foundation to continue to invest in our Ford+ priorities. Let me briefly touch on Q4. With a margin of 5.4%, adjusted EBIT was $2 billion, and we generated $2.3 billion in free cash flow. Some modeled stronger EBIT for us in this quarter. We know that was largely driven by higher volume expectations relative to the 10% sequential increase we guided to in October and lower corporate other expenses. North America delivered $1.8 billion of profit with a margin of 7.1%. Volume was up 10% on a sequential basis as supply chain constraints eased and customer demand for our products remained strong. South America delivered a modest profit for the second consecutive quarter, and the business is now set up to deliver sustainable profitability. With restructuring of the legacy business complete, the region is now focused on strengthening Ford's position in the truck market, growing its new commercial vehicle business, and enriching customer experiences. In Europe, the underlying trajectory of our business continues to accelerate towards a 6% EBIT margin. However, the adverse effect of near-term supply chain disruption continues to mask that improvement. Importantly, we were the number one commercial vehicle brand in Europe for the seventh consecutive year, and Transit continues to have an extremely healthy order bank. Mustang Mach-E sales in the region are off to a strong start, with the order bank building momentum as we accelerate the transition to BEVs. In China, Lincoln continues to be a real bright spot and gained share in the highly profitable and growing premium segment. In Q4, we achieved record sales of the brand in China, contributing to an almost 50% increase for the year. We are expanding the Lincoln portfolio in 2022 with the launch of the all-new Zephyr. The order bank for that vehicle opened recently and is off to a fast start. In Q4, we also achieved an important electrification milestone in China as we began local production and customer deliveries of the Mustang Mach-E. Our direct to customer model for Mach-E allows people to order online and through 25 Ford Select city stores. Our International Markets Group performed well in Q4 and had a record year playing to its strengths, especially from our flagship Ranger pickup, which delivered full year segment share of 14.9%, up 1.1 percentage points year-over-year. We also announced major investments in both South Africa and Thailand to modernize production and launch the next generation Ranger from four assembly plants later this year. In mobility, we've made steady progress towards the scaled commercialization of moving people and moving goods, and we are confident in Argo's progress in delivering a level four autonomous vehicle solution. In addition, we are rationalizing our investment portfolio and focusing on autonomous development. Now, I'll share with you our current thinking about 2022. We expect supply constraints to remain fluid throughout the year, reflecting a variety of factors, including semiconductors and COVID. Based on what we see now, we believe our full-year wholesales will be up about 10%-15% in 2022, with a high single- to low double-digit decline in Q1, reflecting supplier shortages related to Omicron shutdowns and semiconductors. For the full year, we expect to earn between $11.5 billion and $12.5 billion in adjusted EBIT, and that's up 15%-25% versus 2021. The high end of the range equates to an adjusted company EBIT margin of 8% and our North America business at 10% EBIT margin, which, if we achieve, would be one year earlier than the target we shared with you last May. Now turning to GAAP results for a minute. It's important to point out that each quarter we will mark to market our investment in Rivian, which sits in cash and marketable securities on our balance sheet. This is not something we can forecast. The market to market may cause volatility in our quarterly GAAP net income and EPS results. Looking at how our adjusted EBIT guidance rolls up. Our range assumes significantly higher profits in North America and collective profitability outside of North America as we realize the full benefits of our global redesign efforts. We also expect Ford Credit EBT to be strong but lower than 2021 profits, and we expect mobility and corporate other EBIT to be roughly flat. Lastly, we expect to generate adjusted free cash flow of between $5.5 billion and $6.5 billion. Now, other assumptions we factored into our guidance include, first, we expect customer demand enthusiasm to remain strong for our new and iconic nameplates. We'll have a full year of production of the award-winning Bronco and Maverick, in addition to a robust BEV lineup with Mustang Mach-E, E-Transit, and F-150 Lightning, all in production. Second, with wholesales up about 10%-15%, we anticipate the pricing environment to remain strong, although the interplay between volume and pricing will remain dynamic. Third, we expect commodity headwinds of about $1.5 billion-$2 billion. Fourth, we anticipate other inflationary pressures which will impact a broad range of costs. Fifth, at Ford Credit, we expect auction values to remain strong in 2022 as supply constraints persist. However, as I mentioned, we anticipate lower EBT reflecting primarily non-recurrence of reserve releases, fewer returned off-lease vehicles, and more normalized credit losses. Most importantly, we're committed to our Ford+ plan and will continue to invest aggressively to drive growth and value creation. This includes devoting resources to customer-facing technology, connectivity, our always-on relationships with customers, and electrification. We are confident the long-term payback from those investments will be substantial. That wraps up our prepared remarks. We'll use the balance of the time to hear and address what's on your minds. Thank you. Operator, please open the line for questions. Thank you. As a reminder, if you would like to ask a question, please press star then one on your telephone keypad. If you would like to withdraw your question, press the pound key. In order to allow as many callers as possible a chance to ask a question, please limit yourself to one question. Thank you. Our first question is going to come from the line of John Murphy with Bank of America. Good evening, everybody. Thanks for the time tonight. Just a first question. Jim, there's been a lot of speculation that, you might consider spinning a portion of the future car business, whether it be EV or AV with Argo. There's also the backside of that that might make more sense to spin some of your legacy ICE assets and have the entire company become a more pure play EV, AV company in totality. H ow do you think about this? What would be your motivations either way? How are you strategizing this? Thanks, John. I don't want to speculate on rumors or speculate on the speculation in the press, but I will go back to something we've said and I've said over and over again, which is, running a successful ICE business and a successful BEV business are not the same. The customers are different. We think the go-to-market is going to have to be different. The product development process and the kinds of products we develop are different. The procurement, supply chain are all different. The talent is different. The level of insourcing is different. A ctually, the rhythm of the business is different, fundamentally different. I'm not going to talk about, speculation in the press, but I will tell you that the way we're operating the businesses acknowledges those differences. I'm really excited about the company's commitment to operate the businesses as they should be. Thank you. Our next question will come from the line of Rod Lache with Wolfe Research. Everybody, I wanted to ask you a little bit about margins. As John said, it looks like you guys will hit 8% if you hit the high end of your target range. Jim, you said that you're targeting improving margins from here. Maybe you can give us a little bit more color on that, how we should think about it. I'm not sure that 8% is the benchmark anymore, just given how many years ago that's been and how many changes there are to the business. You're ramping up a lot of spending on engineering and standing up an EV infrastructure, but you're also going to grow the Ford Pro business. Maybe you can just give us some of the puts and takes, how to think about it. As part of it, if you might just give us a data point on where Ford Pro stood in 2021. Hi, Rod. It's John. I guess I would say that as Jim just said, that we're looking at the ICE business and the BEV business, and we're managing both differently. When you look at the ICE transition, I think there are still a lot of opportunities for us to improve that business. We're very focused on reducing our structural costs. We've done a lot already, but there's a lot more that we think we can do there. We're looking at operating with much lower stock levels as our business continues to develop. We'll operate at leaner inventories than we have in the past, which will help our top line and continue to strengthen that top line. We're improving our quality, which is important. We saw that come through this year from a year-over-year warranty standpoint, was down, roughly $1.4 billion. We want to be the top in quality in every segment, and that's going to have opportunity for the business. We're also working to revitalize our business through our digital capabilities, leveraging what we have from a connected vehicle to improve warranty even further, as well as improve what we're doing from a manufacturing standpoint and leverage that technology to bring those types of costs down. There's opportunities in maximizing our parts business, and we're going to lower our distribution costs. There's opportunity there. We see that over time, as we manage the ICE business, there's opportunity to improve margins even further from there. When you talk about BEVs, as we've talked about in past calls, our BEV margins are not where we intend them to be. We have opportunity, but we need to do that through scaling them. We're not going to chase top line. We're going to look at scale. We're going to want to have a strong lineup where we can lean into it with key vehicles in high volume segments like we are today with Mustang Mach-E, the Lightning, and in our commercial vehicles with the Transit. We're going to reduce complexity. We know that one of the things that we need to do on our vehicles, and we saw that as Jim talked about, with the team finding $1,000 a unit on Mach-E, and they just got started, is that we need to approach the design of these vehicles differently. That's what's really important about having the first-mover advantage there. We're on the road with these. We're in production with these. We understand what we need to do in that second generation, and we're off doing that right now, improving what we have on the road today and really bringing that knowledge into our second generation designs. As I said earlier on the ICE business, we're going to leverage the compute on the vehicles to really lower our manufacturing costs and leverage that compute to simplify what we do coming down the line and bring that down to the bottom line of the vehicle. Distribution. We all know the difference in the distribution cost for the legacy system that's out there versus what we see with other manufacturers. That's an opportunity for us to work with our partners to improve that. On both of those, we see opportunities. As you said, Rod, there's opportunities to grow our business and lean into our leading position in commercial vehicles with Ford Pro. We're looking to grow that business to $45 billion in revenues by 2025. I think there's opportunities across both of our key segments and with Ford Pro to improve the business as we move forward beyond the 8%. Now we need to stay extremely focused and relentless on that execution. Thank you. Our next question is going to come from the line of Dan Levy with Credit Suisse. Hi. Thank you. Dan Levy with Credit Suisse. I'd like to ask about your JV with GlobalFoundries and just broadly about what you're trying to do with electronic components and the notion of simplification, which you talked more about. We've heard that, with GlobalFoundries, I think, how Hau Thai-Tang mentioned you'd like to control more of the sub-sourcing to suppliers. You'd like to dictate more of the design of some of the electronic products that, in the past have been handled by suppliers. Maybe you could help us unpack this. How significant of a change is this in your operating model where you frankly focused on, just the core vehicle itself and outsourcing where you can? H ow achievable is this, especially given you're concurrently undergoing this transition to EV? Broadly, how should we think of the financial implications given you're going from what's been more of a just-in-time approach on inventory, and components to now more of a just in case and deeper in the supply chain? Thank you. Thank you for your question. Perhaps the biggest gift for all the pain we're going through now in semiconductors is that we have very painfully learned the lesson that we cannot manage the supply chain for these key components as we have. In fact, you could argue that in the change of transition to these digital, electric vehicles, that supply chain could be one of the biggest advantages a particular company has or doesn't have. The way we look at it is the key electric components, memory chips, semiconductors. I would break semiconductors into two types. I'll come back to GlobalFoundries in a second. Feature-rich chips that we still use a lot. A window regulator doesn't need to have a 4-nanometer chip and the advanced. We also have sensors, power electronics for our inverters, the batteries themselves, all the way back to the mine. The inverters of different battery chemistries itself have different raw materials and ecosystems that support them. This is a very important topic for the company. How different it is? It's really different. We need different talent at the company, and we need physical inspection of the actual producers. We need direct contracts with them. We need to design the SoC ourselves. We need in some cases to even direct prefer build to print or actually use supplier XYZ to get out of where we've been. This takes talent. It takes a different approach. It takes more resources. On GlobalFoundries, it's the first big bet, but there'll be many, many more coming for us. We're very dependent on TSMC for our feature rich nodes. Obviously, the capacity is at risk over time as the industry moves to more advanced nodes, including us. We're going to need feature rich nodes for many years to come. GlobalFoundries knows how to build them and how to build them in the United States. We can partner with the government, depending on the CHIPS Act to capacitize here. It will be a few years until we benefit from that, but it's a really big thing to descale ourselves on the feature rich chips from the current ecosystem that we depend on around the world. I think GlobalFoundries is a really interesting deal when we get into the details. We have to put cash up, but we participate. Those feature rich semis will be used by other companies, industrial companies, not just Ford. It's a really interesting deal. I was talking to the U.S. government today about how critical this is for our company. You can expect the same thing on advanced nodes and all the other components I mentioned, including more deals on the raw material for various types of battery chemistry. This is a culture change at Ford. As I said, this is part of the rhythm change between ICE and BEV. Thank you. Our next question will come from the line of Ryan Brinkman with J.P. Morgan. Hi, thanks for taking my question. Slide 20 shows you with $36.5 billion of cash and investments, which might be a record, but is certainly the most that I can remember and compares to, I think, 5+ years ago, you used to talk about wanting to have cash of something closer to in excess of $20 billion, with another $10 billion or $13 billion of more liquidity on top of that. I get that there's more uncertainty now with the pandemic and the chip shortage, and of course, you're investing heavily for electrification. Despite those investments, though, you're still calling for $5.5 billion-$6.5 billion of FCF this year versus dividend costs like $1.5 billion or $1.6 billion. With the current trajectory, it seems like the record cash pile should only grow bigger in 2022. I'm just curious what your thoughts are on this, whether you have any updated thoughts on the optimal capital structure, over what time or under what conditions you might move toward that more optimal capital structure, and if being so far above the earlier targeted cash balance might influence how you go about deciding what to do with the Rivian stake once the lockup expires? Thanks, Ryan. Yes, we're really pleased with the position we have from a cash standpoint because it gives us the flexibility to invest in the business as we go. We've talked about the investments we'll be making in BEVs. We'll be breaking capacity constraints, and we're going to continue to focus on scaling as quickly as we can. The other thing we need to think about is the supply chain for our BEVs. There's opportunities potentially for vertical integration. There's opportunities for looking beyond as we move into these connected vehicles with more advanced electronics, potentially leveraging capital to secure supply chain there. There's a lot of opportunities as we move forward to leverage this cash to improve the business. We're also focused on our shareholders and of course, total shareholder returns is important as well. We're going to continue to provide dividends to our shareholders, which is important for us as we move forward, given our shareholder base. I think what you'll see is that cash balance is going to be a benefit for us as we look to grow the business, as we look to expand as we look to vertically integrate, as we look to secure our supply chain, and we continue to develop our Ford+ plan. Very interesting. Thank you. Our next question will come from the line of Emmanuel Rosner with Deutsche Bank. Thank you very much. Good evening. I wanted to ask you a little bit more detail related to two items in the 2022 outlook. The first one is your volume and mix assumption. In Q4, when I look at the North American walk, your wholesale were up something like 60,000 units year-over-year, but the volume mix piece of your North American bridge was up only $100 million, and that despite what, F-150 may be up 34% year-over-year if IHS is right. Just curious what's going on in terms of mix and why that contribution didn't really flow through to the EBIT and how to think about as you grow your volume 10%-15% in 2022, what EBIT contribution can we expect from this? That's the first item. The second one is in terms of additional investment costs. You've quantified the step-up in CapEx for 2022. I'm just curious if there are things in the income statement that you're able to quantify in terms of additional investment in technology that we should think about as we model 2022. Let me focus on 2022 first. Looking at the walk for 2022, you have to think about the 10%-15% in the volume growth. Mix is also a strong part of that on a year-over-year basis. We expect to see continued strong mix. Pricing, as I said in my remarks, we do expect the continued strong pricing environment. When you look at volume, mix, and pricing, we expect that to be up about $5.5 billion-$6.5 billion. I'll just walk through where we see on that on the bridge to 2022. We are continuing to invest in modernization and that, along with our product spend-related spending as we're continuing to build out our BEV business, that's about $1.5 billion headwind. That's broadly offset with other efficiencies that we're working on. You also see that commodities are going to be a headwind next year of about $1.5 billion-$2 billion. Ford Credit is going to be strong, but we do expect them to be down about $1.5 billion. Of course, we've got lower net pension income. We expect the top line to be strong with the volume increase. We continue to expect to have strong mix, and then we expect pricing to be a strength as well on a year-over-year basis. What's nice about what we're seeing this year or our forecast this year is we're seeing good profit leverage from that incremental top line. I think that's very encouraging. We'll have a lot of statistics about how that compares in the past, but that hasn't always been the case at Ford. It's great to see that top line flow into our profitability increase. Thank you. Our next question is going to come from the line of Colin Langan with Wells Fargo. Great. Thanks for taking my questions. Following up on the walk, if I actually annualize Q4, you're running at only $8 billion. What was particularly weaker about this quarter as a starting point? It's also down sequentially on higher sales. Is that seasonality, higher commodity costs hitting worse this quarter? Any color there? From a quarter-over-quarter basis, how the quarter developed, we hit the midpoint of the guidance. One of the things is I think some expected volumes to be up higher than what we had guided and just we had supply chain constraints hitting us this quarter. Omicron disrupted several of our key suppliers. They couldn't produce, they couldn't get us products. Net, when you look at Q4, relative to where we were Q3, let's say as a proxy, volume and mix was up slightly. It was up about 0.6%. Then we had additional headwinds on commodities. We had some modernization costs that came through, specifically around our IT as well as connectivity as we're investing in those growth areas. Then we saw costs come through from inflation. We saw costs come through on transportation, on fuel, et c. We're seeing some of those headwinds were hitting us in Q4. Demand was strong. If we could have met the demand and the production without the disruptions, you would've seen a stronger quarter. As we go into 2022, as we see those supply constraints ease, as we see the demand for our really strong product lineup, we see the top line growing. We see continued improvement in mix. We see continued improvement in price, and that's going to be much more of a tailwind versus some of the headwinds we're seeing that we're- Just following up on the mix, any color on how the Lightning will impact as it runs in, obviously, pretty large battery there. Is that going to be dilutive as we think about the second half as that starts to ramp? No, I don't think that as we ramp up at the start with the launch this year, that it's going to have a significant impact on what we see from a standpoint of our profits in North America. Then coming back, I think one of the questions, Colin, you had asked that I didn't touch upon with Q4, or maybe it was Emmanuel earlier, on the mix side, is we did have lower Super Duty mix in the quarter, and that was again, driven by supply chain disruptions. There were vehicles that we weren't able to build and complete because of certain commodities that weren't coming through to get those vehicles down the line and done. Our next question will come from Brian Johnson with Barclays. G ood afternoon. want to talk a little bit about dealer pricing versus your pricing. The Detroit Free Press ran some articles in January on Ford taking action on some of the more egregious markups on EVs. Yet, if I look at the broader lineup, I see that per J.D. Power, your revenue per unit is up about $338, which puts to your $7.6 billion pricing you cited. Yet the transaction prices are up $5,600, meaning you're leaving about $1,850 of profit in the dealer's hands, which would be about another $3.6 billion of profit. Just wondering as you go forward as the dealers especially move to this our simplified inventory model you're looking at, how you're thinking about the balance between your invoice, your revenue per vehicle, and the actual transaction prices at the dealer level. Thank you. I would say the answer to your question for ICE and BEV would be slightly different. We have about 10% of our dealers last year in this supply constrained environment that were charging above MSRP to the best of our knowledge. We have very good intelligence of who they are, and their future allocation of product will be directly impacted because of that policy. We've seen really quick action by our team. On the BEV side, this is quite important topic because the margins that we want to build to in BEV are going to be heavily dependent on a different go-to-market and customer experience. I won't go into it any more than that, but this is a quite important lesson for us of the franchise system and the way we will manage going forward. I'm very optimistic now that our team has the intelligence in the market, that we put an allocation trigger in for those dealers who choose to price that way. It's a inefficiency, no doubt about it. Thank you. Our next question is going to come from the line of Mark with Goldman Sachs. T hanks very much for taking the question. If you could help us better understand the linearity of reaching the 600,000 annualized EV capacity target, and what visibility you have into securing the necessary supply to do that, both in terms of things like semiconductors as well as batteries. Thank you. We've been hard at work at this for quite some time, actually. We knew we were oversubscribed pretty early in the process, and the team has been at it. The primary lift for us is battery availability. We've actually been securing extra batteries for quite some time now. We have some mapping options for Mach-E, so we will move close to 100,000 units this year on Mach-E. That'll be our big move this year. Next year our big move will be Lightning going to 150,000 units. I won't get into battery chemistries and all the details, but I'm really excited about the progress we've made so far in securing batteries. On the F-150 Lightning, we actually had a physical capacity constraint of the facility, and so we took the decision already to again redesign the facility so that we can accommodate the 150,000 units. We have great capacity on F-150 for the non-electric components, so this is just a matter of the Mach-E getting the labor in place and getting the batteries, and the F-150 getting the batteries out of Georgia and redesigning the facility so we can get the final assembly done. As far as chips are concerned, these battery electric vehicles and the supply chain are a strategic advantage for our company, so we will protect, in the constrained world, our battery electric supply production. Thank you. Our next question will come from the line of Joseph Spak with RBC Capital Markets. Thank you. Jim, it's really refreshing to hear you talk about the two different businesses and how you managing them and running them and planning for them separately. I guess though, and it's also good to hear you think you have more to wring out of the ICE business. I guess the question is, as CEO of Ford, which is managing those two businesses to the extent you are able to wring more out of ICE, does that give you leeway to accelerate or increase your investment in the EV business. H ow do you think about combining the two businesses back together in terms of the investment spend? Absolutely. The profitability of ICE is very important because it gives us optionality not only of scaling BEV but also vertically integrating BEV, which is increasingly becoming important for our profit lever. We definitely want to push our ICE business as far as we can. We're going into this transition with the freshest ICE lineup I can think of any of our competitors, not just in the U.S., globally. But we think there's, as John said, a ton of other levers that we can pull to improve the margins of our ICE business. We see our ICE business increasingly in specialty groupings of passion brands like Bronco and Mustang and our pickup truck customers retail side using those for recreation and for everything they use them for. L ook at the success of Maverick we've had, for example. We're really excited about this opportunity for BEV, and you betcha, it gives us all sorts of optionality as a company to really continue to invest in this high-growth business, but also allow us to focus our cash and our investment in building the margin for the high-growth business through things like vertical integration and new customer experiences, accelerating our physical experiences to the dealers on both businesses. Thank you. Our next question is going to come from the line of Itay Michaeli with Citi. Great. Thanks. Good evening, everybody. I was hoping to go back and get an update on Mach-E profitability. I think a couple quarters ago you mentioned you were already positive EBIT. It seems like pricing has been really strong the last few quarters. You talked about taking out maybe $1,000 of cost going forward, and of course you're scaling up volume. I was hoping maybe you could give an update on where you see Mach-E profitability this year versus your original expectations and maybe even relative to ICE vehicles, perhaps like the Edge. Hi. Thanks. It's John here. When we look at our Mach-E profitability, as we said, we are profitable from Mach-E standpoint. We're seeing great demand we're seeing strong mix, we've seen the profits improve. Importantly, what else we're seeing is opportunities to continue to reduce the cost and reduce the complexity. We're very focused on improving those margins. Overall, as we've said in the past, our BEV margins are not yet quite where we'd like them to be, especially relative to our more profitable ICE vehicles. We have to continue to do work there, primarily around scaling, reducing the complexity, as we move forward. We're encouraged by what we're seeing on Mach-E so far, especially with the strong demand in the mix. There's other work that we need to do as well to continue to further improve those margins. Our expectation is that we're fully competitive on our BEV margins as we move forward, and that's what we need to work towards. Just to complement John's input. I'm struck throughout my career at how different the rhythm of this digital BEV business is versus ICE. We all grew up in a business where you launch the vehicle and then you work on a minor change or a next model. I certainly grew up in that model. What we're finding with ICE, thank goodness we're scaling now, because what we're finding in Mach-E is that actually most of the exciting work starts after job one. That's when the OTAs really make a customer impact. On the cost side and the profit side, I guess we have learned so much about the lack of integration in our engineering operations as we compared our engineering at Mach-E to others that are best in class. We are finding lots of profit opportunities as we get after that integration between engineering, supply chain, and manufacturing, even within engineering. If I showed you our cooling system from Mach-E, it has four motors, probably needs to be two. It has 60 or 70 hoses, probably needs to be a third of that. Those are the opportunities we're going after, and we are not going to wait for next year. We're not going to wait for a minor change. We are going to re-engineer that vehicle now and then use that expertise for Lightning, E-Transit, and of course our all-electric platforms. I'm really excited about this opportunity, being in the industry as long as I have. I haven't felt this chance to take out so much cost after job one, both from the customer's use of the vehicle from the data, as well as actually all these integration opportunities. The other thing is the vehicles are much more simple than we thought. The F-150 has one cab, one box, for the same ICE offering, it's like 40 configurations. They're much simpler. I'm really excited about. I guess what I'm saying is we're at the very beginning of this journey, and it's already very exciting on the profit improvement, as John said. I haven't seen this opportunity in the past in my career. Thank you. Our next question is going to come from the line of Anindya Das with Nomura. Your line is open. O ur next question will come from the line of Jeoffrey Lambujon with Tudor, Pickering. Good afternoon, and thanks for squeezing me in. I just wanted to go back to the regional discussion, as we think about the thoughts you shared on margins in North America that are embedded in the upper end of the full year 2022 EBIT guide. I wonder if you could just give us a sense for how you're thinking about the trajectory of margin improvement in Europe and IMG specifically. Just thinking about the semiconductor shortfall evolving over time, the focus on Ford Pro, and new product launches potentially helping to accelerate some margin recovery in Europe, and then the continued focus on Ranger and new products in IMG. Look at Europe, we expect profit improvement. We expect them to be meaningfully profitable in this year, in 2022. We're still committed, Europe is on track to deliver the 6% EBIT margin by 2023. They're continuing to move forward. They're seeing favorable pricing environment continue. They're accelerating into their BEVs. The Mach-E is a very strong product for them. Again, commercial vehicles, it's a strength of ours, and we continue to see that, grow next year and be a pillar for Europe, a strength for Europe. With IMG, as you go into 2022, International Markets Group, we expect them to be down year-over-year, but profitable. That's going to be driven by two key things, the India transition, and what we see there, as well as the fact that our Ranger volumes are going to be down year-over-year as we launch the new Ranger. It's a transition year for us in International Markets Group. They'll be down year-over-year, but profitable. Then from there, with the new Ranger, we're really excited about that product and what we can leverage with that product as we move forward in our International Markets Group. Thank you. With that, we will conclude today's Ford Motor Company Q4 and full year 2021 earnings conference call. You may now disconnect.