We're scaling our BEV capacity to 600,000 units by the end of 2023. Because our products are being so well-received, whether it's the Mach-E, the F-150 Lightning or the Transit BEV. We can't build them fast enough. We have this window of opportunity. It won't be here three years from now. We have to act immediately. It's seeming like every day we needed more. We've doubled capacity in many cases, and we had to double it again. Take North America, for example. We announced BlueOval City. It's gonna be the site of a new battery plant, as well as a new final assembly plant. In Kentucky, we're putting in two more battery plants. Another great example of how fast we're working is our Rouge Electric Vehicle Center. The mortar's still drying in the building, and we're knocking down the walls to expand that facility. We built a building for a certain set of volume, and early on we realized we had a product hit on our hands. We need to scale up. now we have to expand the building in all four directions to accommodate the demand from the public. This is the type of work we do, you know. That's why it's Built Ford Tough. I think that people love to come to work to work on problems like this. Great to see the electric revolution start here where we really started everything out 118 years ago. Once we get them rolling off the line, it's gonna be unstoppable. Every one of our plants is a high-volume manufacturing plant. This is what we know how to do, so I wouldn't bet against us. To reach the 600,000 mark, we are basically doing whatever it takes with our supply base. We're doing things a lot differently now. We're engaging suppliers much earlier in the process. We walk their lines, we see how we can improve efficiencies. We are actually storing batteries as we speak. This is not our first rodeo. No one's gonna find a reason why not to do it. Everyone's gonna find a reason why we're gonna do it. When we started this Go Fast Capacity Task Force, one of the biggest things that we've changed is the interactions with senior leadership. It's like curling. That's what the management team's doing. They're literally out in front looking at where you're going and they're clearing the path. We use small teams. It is 15 leads in the task force delivering an entire Ford ecosystem of expertise. The result of that, we found $1,000 of cost in around eight weeks' work. This isn't just a North American effort, this is a global effort. We're now investing $1 billion to transform Cologne to be our first European electrification center, and that's one of the most important announcements I have made in my career. These are products targeted for the heart of the market in Europe, so we're leveraging the MEB architecture with Volkswagen. Our partner, Ford Otosan in Turkey, builds all of our commercial vans in Europe, and we're making the same transformation there. The Mach-E is a global product. We're selling it in Europe, we're selling it in China, we're building it in China. We're using China in many ways as a little bit of a test bed. We are direct to customer and also carry no inventory with order to deliver. You're able to order a Mustang Mach-E in as few as 13 clicks, and that is the lowest in the industry in China. This isn't just a project, you know. This is transforming the company for the next hundred years. Is it gonna be hard? Absolutely. It's been exhilarating and exhausting, but in a very addictive sort of fun way. Ford is built on people that like hard work. The word impossible really doesn't exist. We've only really shown the first three products in this lineup. 600,000 is really only the beginning. We're just getting started. Today's discussion includes forward-looking statements about our expectations. Actual results may differ from those stated. The most significant factors that could because actual results to differ are included on page 15 of the presentation we have posted at shareholder.ford.com. Please welcome Jim Farley, Chief Executive Officer, Ford Motor Company. Well, hi, everyone. Thank you for joining us today. Before we get into today's news about Ford, I want to express how concerned we all are at Ford for the invasion of Ukraine. We're heartbroken by the crisis that's unfolding in the region. Because of what's happening, we're suspending our operations in the Sollers Ford JV in Russia. The Ford Fund is making a donation to assist the Ukrainian citizens and the families who are now being displaced in the millions. In an expression of solidarity, we're flying the Ukrainian flag in front of world headquarters. Our heart goes out to all the Ukrainian citizens, including those who work at Ford and around the world. You're all in our thoughts. Okay, let's talk about the future of Ford. We're announcing one of the biggest changes in our history today, and let me be crystal clear about why. This is only about creating incredible products that improve over time to create a better customer experience than yesterday and ultimately to win as a company. The reality is our legacy organization. Has been holding us back. We had to change. Let me get into some specifics. 10 months ago, we outlined the Ford+ plan. It's our blueprint for winning in this new world of electric, digital, and connected vehicles. It's how we create more value for our shareholders, as well as build a better world for our children. We've made a lot of progress in a short amount of time. You can see it right here. Look at these products. We're revitalizing our vehicle portfolio, including new EVs that people are absolutely lining up for. We've harnessed our connected technologies in our vehicles and our operations. In fact, we're over 1 million connected vehicles and OTAs now. We're creating Ford Pro to expand our leadership and serve our commercial vehicle and customers better than we've had in the past. We're improving our financial performance. Now we're gonna go all in to be a world-changing company once again. We're forming two distinct but interdependent business units that we're calling Ford Blue and Ford Model e. This is for our current and future customers. They all deserve cleaner, more accessible, more connected, and let's face it, a lot more fun products like that Bronco and then Mach-E. Across our whole portfolio of not just electric, but internal combustion vehicles. Let me tell you how we're gonna deliver it to them. Model e will nurture the talent and the culture and the intensity of a high-tech startup. This will be a clean sheet, breakthrough EV designs, embedded software and software that we'll create and we'll bring to market at scale that's not seen today, even in the pure EV place. Model e will focus on EV platforms, power electronics, inverters, batteries, e-motors, gearboxes, embedded digital software and digital experiences and design language that will define Ford's next century. Model e will be inspired by what we do best at Ford, small, mission-driven Ford teams, the ones that created the Ford GT. We won Le Mans, and we did it working on nights and weekends and our vacations in a custodian room in the bottom of PDC. The Mach-E, the Lightning, these were small teams. It will be a center of innovation where the best digital design and consumer thinking will come together, free of convention, free of hierarchy that's so typical of corporate constraints. It's where we create products that people can't even imagine today. Disruption, risk-taking, experimentation, fast cycle innovation will be encouraged. It will be expected. Model e will produce as much excitement as any pure EV competitor, but with scale and the resources that no startup could ever match. I'm excited about Ford Blue. Ford Blue team will wake up every day obsessed of how to deliver a more vibrant and profitable ICE business, and it will start with those vehicles. Ford is so fortunate to have icons that we do well without trying hard. The F-Series, the Bronco, the Maverick, the Mustang, the Puma in Europe. Ford Blue is gonna make those products even better. More derivatives, more investment. Blue will fuel our customers' lifestyles, their passions, their livelihoods to earn lifelong loyalty. We'll invest more in the ICE products, but only in very specific segments like trucks. Ford Blue will reap the value of decades of industrial engineering expertise and our distribution network across the world. Blue will be a profit and cash engine for the entire enterprise. It will be aggressively lean, structured to drive out waste, cost down, quality up. This is where it gets even more interesting, though. Ford Blue and Model e will drive the success of each other. This is why we didn't spin them out. Each will be the home of specialty capabilities, resources, and culture and talent in specific areas. Each will ultimately, though, have their own profit and loss accountability. Each will drive on the chemistry of the other to create an even stronger and more resilient Ford. For example, the software, embedded software, digital experience inside the vehicle will be developed by Model e, and that will benefit all customers, BEV and ICE. Ford Blue's industrial power will help Model e scale up to reach millions of EV customers. Of course, Blue and Model E are still only part of the Ford story. These two new businesses will reinforce and support the entire company, producing products and technology for Ford Pro and Lincoln brand. They're gonna partner closely with our mobility business, Ford Drive and Ford Credit. By delivering an extraordinary customer experience with extraordinary products that people can't even imagine today, and technology, platform technology, we will deliver extraordinary value for our investors. We laid out the investment thesis in Ford+ last May, showing how our foundational strengths, plus our enhanced capabilities, are gonna produce an expanded total addressable market and create value. Blue and Model E are enabling us to capture even more of that TAM and unpack even more value for our investors. In fact, today, we're sharing new performance targets. We're targeting annual production of more than two million EVs by 2026. Now, I can't predict what's gonna happen by 2030, but I know what's gonna happen in the next four years, and that's two million vehicles. Representing about a third of our volume and half by 2026 and half by 2030. That means we're gonna capture, with EVs, greater market share in the segments where we already compete, but we'll do it with innovative new products that people can't imagine. We're planning to invest $5 billion in EVs just this year. That's a two times, twofold increase from last year. In four short years, by 2026, we'll have invested over $50 billion in EVs and new technology development. We're now anticipating a company-adjusted EBIT margin of 10% by 2026, four years. That's a nearly three percentage point improvement from last year. Now, what's gonna drive that? It's gonna be higher volumes. It's gonna be lower cost of our EVs and better bill of material. It's gonna be about $3 billion reduction in our structural cost at the company. To address one question I've already heard, well, no, we are not spinning off Model e. That's because this structure we've set up actually makes it stronger than a spin-out. Ford's going to be a different animal, unlike any startup or any OEM. No one has done this. We're going to have the ability to scale up quickly, and we have plenty of capital in the company. Thrilling products, a whole new digital experience for our customers, greater value for our shareholders, and a better, cleaner world for our families. As you can tell, I'm pretty excited, and I hope you are too. Now, I'd like to ask some of the key leaders to join me on stage and share some of their insights and perspectives to bring this announcement to life. Come on up, team. You should know that all of us were tested negative for COVID this morning, allowing us to communicate with you without wearing masks. I'd like to start with a few questions of my own that I have for my team. Let's start off with Kumar. Okay. What's your vision for Blue? How do we get all that efficiency and improve profitability? Jim, thanks for the question. Good morning, everybody. Ford Blue has a set of sub-brands that no one else has. Mustangs, Broncos, Raptor, F-Series. These are very serious passion products. We are going to seriously invest in these vehicles, and we're gonna continue to grow this portfolio. I think we have a huge opportunity to do some very cool emotional derivatives for all of these sub-brands. On top of these great vehicles, we are creating experiences for our customers that bring them joy, that remove friction from their lives, like pickup and delivery Ford service, Bronco off-roading. Now, we're going to do all of this with incredibly lean cost structure. You take those things, great products, great experiences, really lean cost structure, and what we have is a great product, profit and cash machine for the entire enterprise. In terms of your question about efficiency, we have three big areas that we really need to go after. Complexity, quality, and structural cost. Nothing's gonna be off the table. Our complexity needs to be radically simplified. Our warranty costs need to be substantially lower. Our advertising cost needs to be lower. What we do when we invest in our products, those investments need to be made at world-class efficiency. You combine all that's how we're gonna take out $3 billion over the next two to three years that you described. It's a really exciting business. Thanks, Kumar. We're all here to help you. I'd like to bring in Hau and Doug now to weigh in on this next question. How is the Model e going to create amazing products, and how are both of you gonna work together? Thanks, Jim. I've been with Ford for 33 years, and we've never have had an opportunity like this to reimagine and transform our business. I can't ask for a better work partner than Doug. We're both united by a common mission, which is to unlock the potential and talent of our Ford teams to deliver amazing products, services, and experiences that will delight our existing customers, but more importantly, conquest new ones. We'll do this by capturing and harnessing the best of Ford Blue as well as Model e. Think about our industrial might, the operational excellence, the engineering mastery that we've amassed and accumulated over the past century. Combine that with our new and emerging talent in tech and software that's underpinned by homegrown talent, as well as new leaders coming, joining us from tech. Together, this combined capability is something that no startup or existing OEM has. This is why I'm so excited to get started. Thanks, Hau. Thank you, Hau. In the same way that you've been here 33 years, I feel in a lot of ways like my entire career has been leading up to this, and the partnership with you is gonna be a huge part of delivering incredible products. The Model e team will have responsibility for a few things. First, we're gonna continue to really invest and push in our embedded systems and software technology for all the products, not just electric vehicles. So our advanced driver assist systems, our ability to do always-on continuing updates to make the products better and better, that is gonna be a key part of Model e. Building a place where we can attract the very best people from consumer electronics or anywhere that can help us on that mission. We've already started this process with some of our products, and it's just gonna get bigger and bigger in terms of the kind of value we can deliver to customers. On top of that, we are building our center of expertise in electric vehicle technologies and propulsion. From energy storage in the cell level through high-power electronics, down deep into power silicon, through electromagnetic design of motors, we are gonna get really, really deep, and we're gonna become the best in the world at these core EV technologies. We're gonna obsess over the efficiency that's so important to generating electric vehicles that actually have margin. Finally, we are gonna lead the programs that create the vision and the opportunities with these new electric vehicles. The project that we called Edison that gave birth to the Mach-E and the Lightning, which are incredible entries, first entries into the EV market, we're gonna scale that model. We're gonna take what we learned, keep small teams, but back them up with the industrial might that Hau talked about. Those are gonna create, I think, incredible opportunities beyond just what we did in Edison, because we're gonna have the opportunity to start with a clean sheet, optimize vehicles as EVs, and not inherit the constraints of internal combustion engine vehicles. Throughout this, the way this works, particularly when compared to startups that have started to really get good at these technologies, our secret weapon is Ford Blue and the backing that we'll have in scale, in great engineering, and in the depth of over a hundred years of history that Ford has built. Thanks, both of you. To complement that, I'd like to bring Lisa in to talk about how we, because in this change in technology, it's very clear that the supply chain and the supply side is actually as important, if not, as the product creation and the excellence. Lisa, what's your remit in Model e? There is no doubt we have to be hyper-focused on product cost, and that means sourcing excellence in sourcing, and also competitiveness in manufacturing. Not only the efficiency of how we operate these new plants like Louisville City, but how much capital we put into them. The way we're looking at sourcing Ford Blue, they will source with breadth of scale. They have millions and millions of units of scale to source in Ford Blue. Ford Model e will be able to take advantage of that on things like sheet metal, glass, seats, steering wheel, things that aren't EV specific. We'll enjoy the benefits of that scale. Ford Blue or Ford Model e will actually source very deeply with depth. We will only focus on a few things that are very specific to EVs, batteries, power electronics that Doug mentioned, raw materials in the batteries, nickel, lithium, but very deep into the supply chain, tier two, tier three, tier four. Places where we actually haven't gone before and where the semiconductor situation has now shown us where we need to be. When we do that, some of these great embedded systems that Doug talked about that will ultimately be in Ford Blue, delivering these digital experiences for F-Series and Bronco, they're gonna need some of those same components. By the work from Ford Model e, Ford Blue will then benefit from that, from that lower cost work that we've done. On the manufacturing side, it is all about complexity reduction in the EV space, and then also using these embedded systems that Doug and the team are designing and making them part of the manufacturing process to make us even more efficient than today. You know, on the complexity side, I think it surprised even us that the F-150 Lightning generated 200,000 reservations with one cab, one box, four by two, four by four, those are the truck choices, but standard and long-range battery, but 200,000 units of scale on one body style configuration. Dearborn Truck and Kentucky Truck, for example, can run 70, 80, in some cases, 90 jobs an hour in those facilities. Can you imagine how efficient they will be when we can reduce that complexity on EVs down to the levels that we've seen on the F-150 Lightning? That is gonna unlock amazing efficiency through the process. When we learn those things, we will then apply it back to Ford Blue. This is complementary work that we see between these two organizations, and you know, I'm super excited to get started. Thank you. Thank you, Lisa. Maybe last question before we open it up is, John, to bring all the comments from Kumar and the team together, how are we gonna get to that 10% You know, we're below 8% now last year, so this is gonna be a big move in four years. It is, but I have to tell you, I am so excited about what's in front of us and the value this team is gonna create across the five businesses. You heard some of it here, just how we're going to do that, but it's really gonna come down to execution. The first lever we're gonna pull is growth. We're gonna reach two million electric vehicles by 2026. Then in Model e, as Doug was saying, and Lisa was saying, we are going to lower our material costs, our bill of material as we scale in achieving fully competitive margins with those that are best in class by our next generation of products, while also establishing an incredibly efficient manufacturing footprint. Now, as Kumar said, Ford Blue, it's all about lean, it's about complexity reduction, it's about efficiency and taking out $3 billion over the next two to three years. When you bring those three things together, that drives value, that drives growth, and that's how we get to the 10% EBIT margin by 2026. Thanks, John. Well, let's open up the floor to questions from the audience. Operator, can you please call on our first question? Certainly. Our first question is going to come from the line of Mike Colias with The Wall Street Journal. Thanks for the question. Jim, can you talk about whether you guys looked at any kind of spinoff, either for the EV or ICE business, and whether there's still a chance that going forward, you could consider some sort of change in the capital structure, that would allow investors to make a cleaner bet on the growth side of the company? Thanks for your question. You know, first of all, our auto business is gonna have three parts to it. We'll have Ford Pro, which is distribution and services for our professional customers, then we'll have Blue, and we'll have Model e. They'll have P&Ls, and it'll all be clear to everyone. No, we certainly looked at a spinoff, but number one, we have enough capital. We can fund this ourselves. We don't need access to capital markets to do everything that the team just explained. Number two, the magic in this is to focus both organizations on what they need to focus on more than asking everyone to do everything like we do today. Number two, to get that leverage between both organizations. If we spin this out, one or both entities, or all three, we really risk that leverage. The new startups would love to have the industrial know-how accompany. Why would we spin out Model e and risk that? The same thing goes for Blue. We have such great technology opportunities, like Doug mentioned, for our ICE business. Why would we spin that out? It doesn't make sense. We looked at it carefully. This leverage is really the key point, and we have enough capital. John, anything else to add? Jim, you're right. We spent a lot of time talking about this, and we have the capital we need, and the synergies are really the cornerstone of how we're going to deliver this and drive towards that 10% EBIT margin. We spent the time, and we've agreed that this is the best way to move forward. This change is not about financial management of the company. This is about focus, capabilities, better products, better experience. It's how we're gonna win as a company. Thank you. Our next question will come from the line of Phil LeBeau with CNBC. Hi, guys. Quick question. You mentioned the $3 billion in the cost savings that you believe that you'll be able to extract out of the company over the next couple of years as you grow your margins, grow profitability. Is most of that coming out of what would be the Ford Blue or the ICE business? Where is most of that, most of the cost savings and the greater synergy savings gonna be coming from? The answer is yes. I'll ask Kumar or maybe John to comment. Beyond that, though, we wanna make it really clear. We're gonna go after bill of material on the EVs. That's also part of that 10% roadmap. The $3 billion, Kumar? Yeah. The $3 billion, Phil, comes from primarily from Blue. We need to get much more efficient than we are today. I'll share a few examples with you. The cost of our quality, our warranty costs are higher than our competition, and we're working diligently to bring that lower. That's gonna be substantial. Then we're gonna attack all parts of the income statement. Our advertising costs will have to be lower. I talked about we're gonna invest heavily in these products that are icons, but that investment needs to be efficient. Today, when we build plants, when we buy tooling, when we invest with our supplier partners, the investments we're making are not world-class. Those investments will have to be extremely efficient for us to reap the benefits of these efficiencies. To put it simply, nothing's off the table, all parts of the income statement, and a major attack on our structural costs. John? Yeah. The only thing I'd add is we'll be investing in Model e. There will be costs added into Model e. That focus that Kumar just talked about is going to be on Ford Blue. Thanks, team, and thank you, Phil. Next question. Our next question is going to come from the line of Michael Martinez with Automotive News. Thanks, guys. Wondering if you can address where these units will be physically based. Will Model e, for example, work out of the train station in Detroit? Thanks. Thanks. Nothing's changing. Our company's headquartered right here in Dearborn where Henry Ford was born. Nothing is changing. Will we have new satellite operations where we need expertise, maybe in Tel Aviv or Palo Alto? Sure. We're gonna have more talent, especially for Model e around the world in those hotspots for talent. We're gonna make some several policy changes though as a company. Be more flexible about where people live, and those will be rolling out to the employees this morning. Nothing's changing about our headquarters. We're a Michigan company. That's where we're headquartered, and that's where the businesses will be run. We will definitely have part of our mobility and some of our software team down in Corktown, and we cannot wait to open that and show the world what the Midwest can do when we invest. We're also investing quite a bit, but we'll be very lean in our facilities here in the Midwest as we headquarter these two businesses here, as well as Ford Pro. We are rejuvenating the facilities we do have while we speak, Mike. It's a big investment in the local community and nothing's changing at Ford. Our next question is going to come from the line of Chris Bryant with Bloomberg. Chris, your line is open. Our next question will come from the line of Sam Abuelsamid with Guidehouse Insights. Thank you. Earlier, I think Doug mentioned that the Model e team will be responsible for things like ADAS systems. Is primarily all of the things like electronic control systems gonna be done out of Model e and then shared back to Ford Blue? You're gonna partition things that way? Yes, exactly. Model e will be the place where we can attract the very best talent in embedded systems and software, silicon electronics. That's got to be a key hub that allows Ford to be world-class in those areas. We will partner very closely with Ford Blue. These technologies are critical to the advancement of our ICE business as well as EVs. That's exactly what we'll do. Thank you. Thank you. Our next question will come from the line of Joe White with Reuters. Hi, good morning, everyone. I'm actually just following up on the point that was just made. How do you manage sort of the, what I guess is gonna be a different way of compensating people between Model e and Ford Blue? Probably also a different way of kind of, you know, engineering and, you know, kind of how long you take to validate or engineer a product. Because obviously the software side of it probably needs to move faster. Can you talk about that? Thanks. Maybe Doug and Hau, you can take the last point. Before I do, absolutely we're gonna make changes as we have to our compensation system. Also, our performance management system will have a number of other policy areas that will change. There's gonna be a lot more Ford people driving electric cars, and we want more and more of our team to go to the dealership to experience things firsthand. That's part of revitalizing the company, including our compensation. Over to you guys for the engineering. Yes. We're really trying for a distinct culture in Model e, a culture that cultivates a different kind of work that's required for some of these technologies, but that's still very compatible with the culture of Ford Blue. These are different cultures, but they're compatible, mutually respectful. Hau and I are really committed to that not being a cultural divide. We need a culture in some of these new technologies and for clean sheet EVs that's the kind of culture that attracts the best technical talent. This is how a lot of these startups have made such progress in technical areas, is they've created an environment where people from tech who never dreamed of actually joining the auto industry have a place, and we have to have that place as well. It's gonna be a culture of rejecting constraints, never inheriting them from the past, never accepting constraints from suppliers, being able to start from scratch, go deep on the technology, and be really focused on building great talent. We want the best people. I don't care if they come to work in bunny slippers, but we gotta have the best people. Hau? Yeah. You heard Jim mention that when we reflect on when Ford is at our best, it's really these small, dedicated, co-located teams that are mission-based, you know, whether that's the Ford GT, the Maverick team, Edison, and that's what we wanna replicate, and that's gonna benefit both Model e as well as Ford Blue. In terms of the product development process, Doug and I are working together and really going through and decoupling the hardware, long lead items and the timelines that's dictated by that versus software, where we have a lot more agility. Those learnings, again, will be applied to both, Model e as well as Ford Blue. Thanks, Hau. Thank you. Our next question will come from the line of Brian Sozzi with Yahoo Finance. Hey, good morning, guys. Hey, I'm rocking proudly my bunny slippers here. So don't knock them unless you're trying. You know, I think the significance today is not lost on a lot of us. Jim, a thoughtful question to you, does today mark the start of a slow wind down of making gas-powered cars in this country? What is the message to America's dealer network? Yeah. First of all, this day is about growth. This day is about Ford growing. Yes, maybe over time, as mass adoption to these digital electric vehicles change and accelerate, will our ICE volume fall off at some point or deteriorate? Yes, that could happen. The one thing that people need to understand is that. A lot of our ICE products, those segments are not served well with electric vehicles. If you have a Super Duty and you're pulling a horse trailer in Montana, you know, an electric vehicle isn't an ideal solution. A lot of the vehicles we've shrink-wrapped the company around the ICE vehicles are those kinds of vehicles. Although maybe the volumes go down as mass adoption happens, we aren't the average company. We make Super Duties. We make Ranger Raptor. We make, you know, Broncos. These are vehicles that are different than the large adoption of EV. I think we'll see a really revitalized ICE business. We have to focus more on post-warranty customer retention. That's gonna be really important. Your second question, can you repeat again? On the dealer network. Yep. What's the message to dealers? You know- Yeah. If you're a dealer out in the middle of the country, this is gonna require a lot of investment from them too. Yeah. Thank you so much for your question. You know, we're making a different bet than a lot of our competitors. We're gonna bet on the dealer franchise system. That's a different bet that I hear from others. But we're gonna do it by asking them to specialize. Our dealers may be a Ford Pro dealer. If they're gonna be an electric dealer, we're gonna have new standards. In the next 60 days, we're gonna be out talking to all of our dealers around the world and developing a pithy list of standards for a new experience that's gonna be better than Tesla. It'll have to catch up in certain ways, like digital, remote, no inventory, but it's gonna be better in other ways. That will be through our dealer network. It's interesting for me to see the net promoter score from some of the new startups. The net promoter score is much higher than ours in the early part because the experience is transparent, it's digital, there's no inventory, they can track their vehicles. It can be remote. It's really interesting. It's an epiphany for me as a leader. After three or four years, the second owner, their net promoter score is actually much worse than ours. The reason is because people have fender benders, parts on their vehicle wear out, their doors don't shut right, they have questions about the sixtieth OTA they have, and the system that is lean and very cost efficient doesn't work for everyone, especially as they get late in their ownership cycle. That's where we have the opportunity. Our message to the dealers is, "We're betting on you, but we're gonna work together as a team to develop new standards for these electric customers to deliver those new experiences that'll be superior to the startups." It's a big bet for our company. I talked to the dealer council with many of our teammates late last night, and they are pumped up to get ready to go. The real message for our dealers is, get ready to specialize. You may be Lincoln, you may be Ford Pro, you may be electric, you may be an ICE dealer in rural America, that's fine. Get ready to specialize. Our next question is going to come from the line of Paul Eisenstein with The Detroit Bureau. Well, thank you, gentlemen and ladies, for taking the call. Couple of questions for you. First of all, why could you not do it under the current structure? The second question is sort of a flip on that. We have seen other companies, one across town, has had some experience with doing major reorgs, splitting the company up in different ways, and found itself facing, in some cases, years of turmoil. What did you learn from things like that, and how do you prevent having a situation where you create paralysis rather than efficiency? Yeah, great question. A very important one. This is something that, as a leadership team, we spend a lot of time benchmarking and looking at different possibilities. I mean, the reality is we've been Lisa's a good example. As the CEO of North America, she's working on chips. The next meeting, it's raw materials for batteries. You know, I could see it in the face of our people. We gotta stop asking them to do everything. We have to specialize. Unlike our competitors, we're not creating a separate brand. We're not creating internal competition. In fact, if anything, you could see today is the commitment we have each other on leveraging the expertise for the other businesses. We've been very intentional to do that. Today, our corporate structure is holding us back. It does not allow us to focus. We need the ICE business to be cash generating and serving those iconic brands, and we need our electric business and digital business to be about innovation. We cannot ask the team to do both at the same time. That is a very poignant lesson for us as a team. We have a lot of epiphanies as leaders around that. Make no mistake about it, even though this is a big change from where we've been, we are not gonna create separate brands. You know, we are not going to compete with each other. In fact, that's why I'm leading the electric business as a CEO, because I cannot allow any of that to happen at Ford. Thank you. Our next question will come from the line of Nora Naughton with Business Insider. Hi, guys. Good morning. Morning. I'm curious if you could talk about whether the cost cutting for Ford Blue might include staff reductions and just more broadly, what the personnel restructuring for this move looks like. Then related to that, you know, if you see a Model e specific EV team as a draw for recruiting talent that might not otherwise think about coming to a legacy automaker. Maybe Kumar and Doug, if you could touch on those two questions. Yeah. As I mentioned earlier, in terms of cost, we don't have anything to announce today, but everything is on the table. It has to be if we're going to take out $3 billion over the next two to three years. In terms of specifically about your question on personnel, as we move forward, there's going to have to be a change in the skill mix. We will reduce skills in certain areas, and we'll have to invest more in other areas. Nothing's off the table, and we're going to work with our employees, with all our partners to do this in a very integrated way. I'll ask Doug to respond to how- Sure. The second part of the question was around recruiting and is Model E a way to attract new people to the company? Absolutely. We have some really great people here. We have a lot of really great people here. I've been in design reviews on high-power inverters where I've seen ideas that I've never seen before. I'm really excited about leveraging all of the folks here that maybe haven't had that focus that we've talked about and the ability to start running with those and implementing them. To attract the very best people, particularly in areas like software, we do need a different way of working and a different environment and the flexibility to do things like remote work. That is a key part of Model E, is to give us access to the very best talent. On the first point, there's a principle at Ford that runs through the place when it comes to change for our employees, our union partners, is we will be transparent, we will be thorough, and we will be inclusive, and there won't be any surprises. That's how we approach these changes at Ford. Thanks, guys. Our next question is going to come from the line of John Murphy with Bank of America. Good morning, guys, and thanks for all the info today. It's very interesting. You know, Jim and Doug, you kind of alluded to this but haven't gone into it in detail. You know, what the impact of increased connectivity will mean. I mean, obviously it's an overlay to, you know, Ford Pro, Blue, and Model E. I'm just curious, you know, how you think about that in the 2026 targets, or is there an opportunity beyond that to massively increase lifetime revenue and profit of sort of the whole product portfolio? Because I mean, there are some thoughts out there that, you know, as you increase connectivity, you might be able to double or maybe even more, your lifetime revenue and profit opportunity. Yeah, how I thought about it. By the way, John, we have your Raptor here, your Bronco Raptor. Just let us know where- I'm looking for it. you want us to deliver it. How I think about it as a CEO is that we have enormous marketing costs in our industry. One of the biggest opportunity beyond quality improvements is going to be to use connectivity to deliver customer experiences, many of which won't cost much for the customer, in a way that they become so thankful with the experience after they buy the vehicle, that we will have much higher loyalty than today, and that will dramatically reduce our marketing costs. The early innings would suggest that the big subscription revenues and opportunity and upside are in Ford Pro with telematics, fleet management, energy management. ADAS on the retail side. Maybe I'll ask the team to make any more precise comments. The top of the house, we can clearly see the pricing power for these software experiences in ADAS and Ford Pro right now. I think Ford is completely uniquely positioned to take advantage of the software opportunity in Pro. Doug, how? Yeah, Jim said earlier in the call that we're gonna build products we can't even imagine. Software is such an important part of that. When you open a box of a consumer electronics product, a phone, you expect all of a sudden to be able to do a whole bunch of other things. It's not the end of your journey to take it out of the box. It's the beginning of the journey. Our focus in Model e is to build really incredible platforms, hardware and software platforms, that have clean interfaces and high flexibility, and then we can develop incredible applications on top of that for Pro, for consumer, and some of them we won't even think of at launch. Our customers will help us figure them out by being connected to them. Software is the key to creating things that we can't imagine. Great platforms that we can build software on top of are how you do that. How, you know, your team came up with the idea of Pro Power Onboard and other features, you know, hardware features in Lightning, what did that tell you? Because it's been such a hit for us on our trucks. What does that tell you about using that as a metaphor for the software opportunity that Doug talked about? Yeah. It's this idea of the products getting better with over the life of ownership, and it's coupling innovative hardware solutions like exportable power with the software changes. You know, onboard scale is another great new innovative feature that we're launching for the first time to the market. A couple of things I'll underscore to build on Doug's comments is one is software is scalable, and it's much less asset and investment intensive to do that. Secondly, because these products get better over the life of ownership, and especially on the EV side where you no longer have to make in-cycle investments for regulatory emissions improvements because there's zero emissions, we can really rethink our whole product freshening cadence, and that's gonna allow us to be even more investment efficient. A lot of opportunities here. to answer your specific. Go ahead, Kumar. I was just gonna add one more thing about connectivity. You mentioned earlier we have a huge opportunity in our post-sale prognostics business. Connectivity gives us a huge opportunity to be able to constantly monitoring the vehicle and understanding where fault is about to occur and allow the customer to come in or do an over-the-air update. It's gonna be good for our business in reducing warranty costs, and it's great for the customers to avoid failures because we can watch them before they even happen. John, we're on the eve in our Pro business of designing a vehicle because of the software and hardware platforms to actually predict failure of almost any component that would take it off the road. Imagine being able to promise to our Pro customers that you have 100% utilization of that vehicle, and if there's anything that would threaten that you can do something before it happens. The power of that, the pricing power of that is unbelievable. I don't wanna speak for John as the CFO, but you know, we think we can get a very large share of that $2 billion, that enormous software opportunity. John, I don't know in your eyes how big is the prize? I think it's substantial. If you look at the business model, that just expands it tremendously beyond what we've ever had in the past. You can see the power of when you have really strong software capabilities combined with great hardware. As Doug was saying, that's what we're going to do. We're not going to provide the metrics today around what that looks like. However, what I will say is in 2023, when we start reporting the five business units discreetly with P&Ls, EBITs, revenues, margins, we'll be able to give you more of those metrics that we'll build over time to show the, each business unit progressing. We'll progressively do that as we run through this year and as we get into 2023 and start reporting separate segments. Thank you, John, for your question. Great. Thank you. Our next question is going to come from the line of Adam Jonas with Morgan Stanley. Hey, thanks everybody. Jim, thanks for making our morning so exciting. I think you're gonna see a lot of OEMs in your competition do pretty much what you guys have laid out here or something of that ilk. I had a question on the supply chain. Can you tell us specifically what Ford has done or is doing right now to secure raw materials, in particular refined nickel, cobalt, and other electric metals that give you the confidence to target over two million cars by 2026? 'Cause I mean, you know, you got like roughly 50 kg of nickel per car, depending on the chemistry, and, you know, that'd be like 100 kilotons of nickel by then. This is really. I would imagine you're at very advanced levels with the mining companies all the way up to the mine. Any detail there would be helpful. Thanks. Super important point. I'm gonna ask Lisa to answer that. We've been deep into this for quite some time. We don't have a bunch of deals to announce today, but Lisa, over to you. Yeah, you were pretty close, Adam. Not quite 100 kilotons, but in that range. I think I would start with we thought about this actually back in 2017, 2018, this isn't new for us to talk about raw materials. At the time, we purchased our battery cells, so a lot of our supply right now is locked in through those supplier contracts. They've done and we've done the due diligence. We make sure we understand where they're getting the material, not only at the mine level, but their cathode supplier, their precursor supplier, et cetera. I think for mid-decade, we know what we need. As Jim said, we don't have anything to announce today, but I can tell you, talking about external talent, I think, you know, on the back of some of these great products, we beefed up our raw materials team inside of Ford with some experts from the industry. I would call them metals and mining experts, and they're helping us develop our portfolio plan right now. Nothing to announce today, but I think you'll see something soon. Adam, just to be really clear, this is gonna cost billions of capital for us to secure that capacity. There's only so much we can do on the pricing side, probably have to use some financial instruments, but this is gonna be a huge capital commitment, and part of that $50 billion is embedded in that. Watch this space for Ford. This is a very, very critical area for us. We recognize that those companies like Ford that move on the supply chain faster than others will be part of the winners, and we will be part of that group. Thanks, Jim. Thank you. Our next question will come from the line of Dan Levy with Credit Suisse. Hi, good morning, and thank you for taking the questions. Really interesting presentation this morning. I'd like to ask about the org structure, because when we think about the different corporate functions within Ford, manufacturing, procurement, you know, marketing, engineering, Blue and Model e both need to draw on these functions. Can you just describe or talk about organizationally what the structure's gonna look like and how the different functions will be managed given Model e and Blue both need to use these functions? Yeah, great question. Just kind of imagine on the Blue side a product development team supporting that. All those ICE products, as you would imagine. A very large purchasing organization, as Hau and Lisa mentioned, buying instrument panels and seats and the normal things we buy. A sales and marketing team. All things you would imagine. Maybe I'll ask Kumar to comment. On the ICE side, that team is gonna look very different. They are extremely focused. We're gonna have a product development team that owns the platforms and the top hats for the EVs. We're gonna have a development team for all the technology platforms, as Doug mentioned. We're gonna have a specific supply chain and advanced manufacturing team that will design how the plants run and how the supply chain. We're gonna have a whole customer group that will be unique industry to support that very different experience for those customers. If you line them up, yes, some of them will have marketing. They'll have marketing, and they'll have the same functions, but actually they're very specific and specialized. Kumar, do you wanna mention what, especially what the Blue team's gonna look like? Yeah. Jim, thanks. You covered PD, how the product development, product creation would interact between Blue and Model E. You covered marketing as well. The CMO for the company is Suzy Deering. She's gonna continue to be part of Team Blue, but she will also obviously assist, because it's still the Ford Oval, assist the Model E team. Manufacturing is something you didn't mention. Manufacturing for now we have two or three plants that are dedicated to battery electric production. It's our Rouge Electric Vehicle Center. It's Cuautitlán in Mexico. Those teams will continue to be part of the overall manufacturing team because we wanna maintain one manufacturing system. We'll also report metrics to Lisa because Model e team needs to be taking all those learnings from manufacturing in real time. We've thought through every single position. Manufacturing over time as volumes shift, more and more plants become battery electric specific. They will, of course, be part of the Model e team. Sales and distribution, you mentioned earlier, we're going to have a very seamless, transparent, awesome experience for our customers on the Model e side, and we're going to build those experiences and those standards with our dealers, so the Model e team will have that team that will work with the dealers. I won't go into every single position, but we've gone through each position and thought through where it makes sense to have them dedicated to one team or the other, and where we're going to have teams that serve the entire enterprise at the same time. We'll lift and shift part of the organizations and build new ones for Model e. Model e will have the enterprise connectivity, all the advanced ADAS systems, the electric propulsion, all the tech planning for the company, the EV specific customer experience, all the EV platforms, also the EV product programs, our digital e-commerce for the electric vehicles, the Ion Park battery team will be part of that. We'll have, of course, the EV marketing team, they'll be doing a lot of pricing. We'll have an EV quality team, a human interaction team that will also be serving Ford Blue, a specific supply chain team that Lisa mentioned, a advanced manufacturing team that will set up the design of these EV plants, and that will get bigger and bigger. Our research and advanced technology team. That gives you a flavor for what Model e will look like, and that will be quite different than the Ford Blue team. Hau, any final comment here? I think you guys covered it. Okay. Thanks. Well, we come to the end of our Q&A session. Thank you very much for dialing in. I really appreciate it. It's a big day for Ford. These changes are significant. It's not the first time Ford Motor Company had to reimagine its future and form its own path that's different from other companies. The bottom line is this. We have the opportunity to blow people away with amazing products in the second and third inning of this digital transformation for our industry and to completely reinvent the experience of owning a Ford. Is this about winning? 100%, no qualms. We wanna beat the old players. We wanna beat the new players. Thank you. For those of you who wanna hang on the line a little longer, we have a short video that sums up our announcement today. Please be safe, everyone. We're announcing one of the largest transformations in the global automotive business, full stop. We have a lot of positive momentum. In many ways, Ford is on a roll. We have this opportunity of a lifetime. This will be a really big change and modernization of the way we're gonna do business. We've decided to create two separate auto businesses, Ford Blue that'll focus on our internal combustion engine vehicles like Bronco and F-150, and Ford Model e, which will focus on connected digital vehicles. We're taking the best of Ford, and we are unleashing it. It's gonna enable Ford to outperform both those legacy automakers who aren't doing this and the electric vehicle competitors who don't have our assets like body engineering and large-scale manufacturing. Why now? This is the single biggest opportunity to change, to win. Ford Model e will take a clean sheet approach. It will empower innovation and deliver a breakthrough electric vehicle portfolio, but do it at millions of vehicles of scale. Model e will be responsible also to develop software and technologies that are delivered to all parts of the Ford enterprise, not just EVs. There's connectivity on top of it, bringing services and experiences to our customers on a regular basis, making their vehicles better. To really create something that's breakthrough, that's gonna differentiate Ford and Lincoln and create another century of prosperity for our company. Ford Blue will build out Ford's vibrant portfolio of internal combustion powered vehicles. Bronco and Ranger and F-150, Super Duty, Mustang, those vehicles aren't going anywhere. I want to emphasize that. We are going to invest in internal combustion engines. Ford Blue is gonna be the profit engine of Ford, delivering the lifeblood to fund our future. We're going all in for our customers. We're creating insanely great vehicles. It's really about the best of both worlds. These two separate businesses come together, and we get to harness the strengths of both. The Ford Blue and the Model e families of vehicle brands, they're gonna strengthen each other. The capabilities and technologies are gonna flow from one to the other business, and that's just not possible for our competitors. Ford Blue and Model e will be supported by Ford Pro, Ford Drive, our mobility business, of course, Lincoln brand and Ford Credit. To sum it up, we're all in. We're spending $5 billion on BEVs in 2022. We're increasing our overall capital allocation to BEVs while also continuing to invest in our iconic nameplates on the ICE side of the business. As we do that, we will sharpen how we allocate capital and what we expect in return. The stakes are high, but so are our ambitions. A 10% company-adjusted EBIT margin with more than two million EVs, which is 1/3 of our global vehicle volume within four years. What I see in the eyes of my teammates, from the factory floor to the C-suite, everyone in between, is that they recognize that it's time to change at Ford, that Ford has an opportunity like it has not had for almost a hundred years, but it will require change. If we embrace that change, the company's future will be sustainable, and that gives us all purpose.