Please welcome Executive Director, Investor Relations, Ford Motor Company, Lynn Antipas Tyson. Welcome, everyone, especially those of you joining us on the webcast, and also those of you who came out on a Sunday to experience the products. I think the Raptor R jump was the favorite, yeah, I think, for those of you here. I just wanted to go through, run a show for you, and also show you Safe Harbor. If we can cue the Safe Harbor slide, please. Perfect. You saw it. Now we can take it down. Let's go to the agenda for today, especially for those of you who are watching the webcast. The formal part of today will start now and go through 11 clock. That will include one hour of Q&A for the analysts who are in the room. We will have a break in between. Again, those of you on the webcast can take a break then. We will go off the webcast and have a networking lunch for those of you who are in the room for 90 minutes, and then we'll reconvene to do the breakout sessions. Each one will also be webcast. Just to let you know, all information is going to be archived on our website. Again, we welcome you to Dearborn, Michigan. Thanks. A legacy is not born. It is built, guided by a purpose, fueled by belief, underpinned by the willingness to adapt as the world around us changes. That's why we're refounding our company. It's how we will compete and win. Focusing on our customers, driving innovation, creating experiences. Making vehicles that move to the heartbeat of our digital lives. Writing software for the businesses that power human progress. Harnessing data to learn from every drive you take and making the next one better. This moment in history will define us. It's a time to develop. A time to revolutionize once again. They say we are all about legacy. Well, maybe that's true, because the plans we make today drive the legacy of tomorrow. Please welcome President and Chief Executive Officer, Ford Motor Company, Jim Farley. Well, good morning and welcome to Ford, and thanks for investing all of your time with us. When you're visiting Ford, you're surrounded by history. In three weeks, our company is gonna be 120 years old. Right across the street is The Henry Ford Museum, where my grandfather went to school. Down the road is The Rouge, the cradle of the Industrial Revolution. Bill Ford works one office down from me every day. We work for all of you and for the next generation and then the one after that. Some say history shows that companies like Ford can't win in the era of technology and new competition. There's too many legacy issues, too much resistance to change inside the company. Over the past two years, this team has confronted each of those very real challenges head on. We created a compelling plan. We've been relentless in building a world-class team and tackling the biggest problems that face Ford and our industry. A new culture is taking root, one that demands focus, collaboration, and excellence. The history that matters now is the history we are making now. Two years ago, we laid out the Ford+ plan. It was a here we go moment in creating a Ford that thrives at the intersection between great vehicles, which won't change, innovation, and rapidly deploying software. As you know, one year ago, we announced plans to reorganize Ford into three customer-facing businesses, Ford Blue, Ford Model e, and Ford Pro, to drive speed, focus, and accountability. This year, we started to actually run our company with this new structure. Today, we'll take you deeper into our strategy, into the big bets we're making, different bets than some others are making. Most of all, I hope you come away with a better understanding of our strategy and the potential for Ford to create tremendous value for both our customers and our investors. Everything we're doing is centered on our educated view of what customers want and expect, what they will love, actually, in this new era of connected and digital vehicles. If I fast-forward a few years, great vehicle design, great performance, quality, they're gonna be table stakes. The shopping and buying experience is gonna be simple and delightful. Your car's integration into your digital life will be seamless and rewarding. The improvements to the vehicle, constant and ingenious. EV charging must be fast, reliable, safe, and easy to access. Sending electrons back to the grid or running your house will be as normal as flipping on the AC in your house. Advanced data, predictive failure of components will catch most vehicle problems before they even happen, or at least before they become serious. Think about a plumber whose van never breaks down. They know 2 weeks in advance if they need to change so much as a wiper blade. Repairs and upgrades will be handled over the air or by remote service teams. Here's what's most exciting about that future. Your vehicle will get to know you and your family or coworkers. Customers will choose the tech features they want just as we do the apps on our phones. Imagine a beautiful Ford vehicle sitting in the Farley family house, driveway, depending on who gets behind the wheel, the user experience is completely customized. No surprise to you, I would probably go for 0 to 60 in 3 seconds with very aggressive regenerating braking. Unfortunately for my kids, probably Led Zeppelin off my phone. My wife, Lia, might choose 0 to 60 in 6 seconds for a relaxed drive and twice the range that I want with CarPlay and Sheryl Crow. For my daughter, Grace, streaming One Direction would pop up instantly, and if she's driving, I better be getting an automatic text message every time she breaks the speed limit. At night, back in our driveway, the vehicle's cameras, the microphones, the lighting will provide an extra layer of security for our house. As we move to this future, brand strength will still matter, and we are fortunate to be stewards of one of the greatest brands in the world. I hope you felt that yesterday when you were jumping your Raptor or drifting a Mustang because Ford is an American original. They're not many anymore. It resonates in a way, that way around the world. The Blue Oval badge is at home with work trucks or an $800,000 supercar. Police cruisers, Mustang GTs. Ford's comfortable in the Formula 1 circuit of Paddock, as is us being comfortable at Moab. We're as comfortable on a fashion brand or a vintage T-shirt. The opportunity we have now is to elevate the Ford brand and introduce ourselves to millions of new customers who may have never considered a Ford. To evolve and offer services and experiences that people don't wanna live without. Now, unique and compelling nameplates like F-Series and Bronco and Mustang, they create buzz and provide a platform. Here's the main point. Features that stretch horizontally across the brand, safety and security applications, partial autonomy like BlueCruise, productivity and predictive failure like Pro Telematics, those will be the difference makers. Okay, Farley, how should I look at that as an investor? The fact is, auto valuations have been constrained for decades, and Ford has been stuck in a box. The industry is crowded, it's mature, and to stand out, we let complexity overrun our business as we tried to be all things to all people. We poured capital into fresh sheet metal in every segment, cycle after cycle. We jockeyed against our competition over slivers of share in markets where growth long ago stagnated and where demand evaporated every time we had an economic downturn. Well, this is a new era. We're playing the game differently, and we now have new tools. We set our sights squarely on the things that we do better than anyone. Trucks, large SUVs, commercial vans. We're accelerating our use of low capital derivatives, like you saw yesterday, to keep our products fresh and improve returns. We're simplifying our offerings based on how we know customers actually use their vehicle from data off the vehicle. Then we eliminate waste that are permeating our companies for decades. We're now using software and data as a catalyst to create more value for our customers and offer personalization without complexity. Most importantly, we're using services like BlueCruise and charging for our Pro and Telematics and prognostics and predictive failure and safety and security to add value to our customers throughout their lifetime with the product. That gives us two things we've never had. Number one, it gives us profit streams that don't dry up in a downturn. Number two, it gives us a chance to grow. I'm not here to tell you that we're undervalued. You'll make your own decision. I'm here to say that as we execute Ford+ plan, we have a massive potential to create value with a higher growth, higher margin, less capital intensive, and more resilient business. A 10% adjusted EBIT margin by 2026, it's not the end goal. It's a waypoint. It's a milestone on our journey. We have much higher ambitions as a team, we're gonna show you the bridges today so you can track our progress. It starts with our commitment to customers to deliver world-class quality in every segment we compete and to close the cost gap to the best in our industry. To do that, we've launched a Lean discipline operating system that reaches into every one of our plants we operate, every part we buy, every engineer that releases the part. Kumar will get you very specifics about the Ford Blue, and especially around cost and quality. The peel and pricing power of Ford Blue lineup is stronger than ever. I don't think people really understand the opportunity we have with Ford Blue. We believe our combustion and hybrid business is more durable than other automakers because our iconic products, consumer profile, and segments where we compete are unique. You will see a relentless discipline in capital allocation and brand management as we leverage Ford Blue to grow, profit, and cash flow. Bottom line, the business is stronger. It's strong, it's growing, and it's gonna be that way for a while. We'll take you inside Model e, which is focused on 3 mission-critical priorities. First, developing incredible EVs and software platforms for all of our vehicle businesses. Number 2, launching a new consumer experience with our dealers. Number 3, building our industrial system to deliver millions of EVs super efficiently. Doug will take you inside our plan to build an indescribably great second and third generation EVs that none of you have seen. We say indescribable as a team inside the company because these vehicles will be platforms for endless innovation, and I believe offer features we can't even imagine yet. I never expected to use my iPhone to measure my sleep, and it isn't much, by the way, but this is exactly what's gonna happen to vehicles. The embedded electrical architecture, all the software that we design, the cameras, the sensors, the microphones, the speakers, they're gonna open possibilities to software developers in areas like partial autonomy, safety and security, and productivity for Blue, E, and Pro. Now, achieving the vision comes down to 2 things: how deeply we understand our customer, and how quickly we can iterate with that knowledge, with the data off the vehicle, and deliver better and better software and products. We're gonna make that virtuous circle tighter and tighter and faster and faster. I can't wait to show you what's coming, like a Ford electric truck that's a technology tour de force that will transform the job site, or a 7-passenger SUV that's like your own personal bullet train. We're matching these vehicles with a modern and simple customer experience that starts with 1 major breakthrough, non-negotiated price. Our dealers can be a competitive advantage as we work together to lower distribution costs. We're gonna reduce physical inventories dramatically in Model e and deploy a new marketing model that focuses on loyalty and customer communication and building a community rather than spending billions on TV advertising and broadcast media. All this relies on building an industrial machine that can produce 2 million EVs a year in just a few years from now. That includes our diverse battery technologies, comprehensive raw material plans, and vertical integration strategy. When our new second-cycle EV truck comes online in BlueOval City in Tennessee, it will be the most efficient built pickup truck in the planet. When our new LFP battery plant in Michigan begins production in 2026, we expect it to produce one of the industry's least expensive batteries ever. Lisa Drake will tell you more. Let's talk about our secret weapon. Maybe not so secret anymore, Ford Pro. This is one way to look at Ford Pro. Ford Pro today is a $50 billion revenue business. That would put Ford Pro by itself in the Fortune 100, just below the likes of John Deere, a great company whose market cap is twice Ford's. Deere earned that valuation by capitalizing on that same intersection of hardware, software, and services while providing tremendous value to their commercial customers. The Deere plan perfectly describes our master plan for Pro, it won't be one easy to copy as some other automakers think, because as Ted will explain, we are starting with clear global market vehicle leadership across multiple work sectors and vocations. We have unmatched physical dealer network and deep collaboration with upfitters. It would take a decade or more to get even close to what we have today. Taken together, this constitutes a wide and very deep moat for us at Ford Pro. We're gonna integrate digital and physical experiences that maximize uptime for our customers, accelerate their productivity, and lower the cost of ownership. A superior distribution system for Ford Pro and higher software attach rates, which we're already seeing, will drive revenue and earn loyalty. I'm especially pleased for you to get to know the Ford team better during this event. The competition for talent is very real, and for the first time that I can remember, it feels we are absolutely winning at Ford. People with rare talent can work anywhere they choose, and they're motivated for the chance to change the world and put their own mark on history. Fortunate for us, some of these incredible leaders have been drawn by the opportunity to revolutionize the automobile at an iconic company like Ford. With this new talent, combined with the best people at Ford, we now have a team I have dreamed of working with for my entire career. Later today, our CFO, John Lawler, will bring it all together with the financials and assumptions that support our investment thesis. I didn't wanna miss the chance to speak directly to our valued investors. I said earlier, Ford has been stuck in a box with thin margins, weak growth, and low valuations. You've been in that box with all of us, and it's now time to break out. Over the next few hours, you will see a new company come to life, a company our investors deserve. We intend to create unprecedented value through both share price growth and shareholder distribution. That's why we developed Ford+. I wanna end by thanking all of you for your time, the most valuable thing we all have. Please enjoy the day, get to know the team. With that, I'd like to invite Kumar up to the stage. Thank you. Ford Blue is a global industrial powerhouse with iconic vehicles. We're the number one selling pickup manufacturer globally. F-Series is the number one pickup in the world. Maverick is America's number one small pickup. Explorer is America's all-time best-selling SUV. Mustang has been the world's best-selling sports coupe over the last 10 years combined. Last quarter, Bronco outsold Wrangler at retail. All of this is enabled by 1 of the freshest lineups in the industry. The average age of Ford Blue's portfolio is 4 years. The average age of our truck portfolio is just over two and a half years. Globally, between this year and next, 60% of the Ford Blue product portfolio will receive a major or moderate level of freshening. The resiliency of our product portfolio in the face of EV adoption is remarkable. Broncos are coveted off-road vehicles. They go places where you're unlikely to find chargers for EVs. For those who want the range assurance of an ICE and lower emissions, we have Escape and Corsair plug-in hybrids and F-150 and Maverick full hybrids. We expect the strength of this portfolio will deliver Ford Blue low double-digit EBIT margin by the end of 2026. Ford Blue is also the industrial heart of our company. Over 60,000 hourly employees build approximately 13,000 vehicles every day in 16 assembly plants around the world. Our manufacturing skills have been honed over 120 years. Kentucky Truck builds Super Dutys, Expeditions and Navigators. Our team installs the right engine and transmission into the right chassis, mates it to the right body, and a brand-new vehicle rolls off the assembly line every 37 seconds. Delivering great products and having great operations isn't good enough. We have a lot of growth opportunity, and we must turn our cost structure and capital efficiency into a competitive advantage. We estimate that total Ford costs are about $7 billion higher than our competition, and most of that sits in Ford Blue. Closing this gap will yield higher margins and free cash flow to fuel the enterprise growth. Ford Blue priorities are very clear: improve quality, reduce costs, grow revenue and profits. Let's start with growth. The strength of our portfolio makes Ford Blue a growth business. Our vehicles are iconic. They've become part of our cultural fabric. They have a huge, loyal, global, and multi-generational following. We have Mustangs for on-road fun, Broncos for off-road adventures, F-Series to get all kinds of job done, Explorers and Expeditions for long-haul family trips. We're attracting new customers. Over 50% of Bronco and Maverick customers are new to the brand. Iconic nameplates like these helped Ford grow its US market share by almost a full percentage point in 2022. Global Ranger sales grew 20% in the 1st quarter of this year. Demand continues to outstrip capacity for our key vehicles. In the next 10 months, Ford Blue will increase its capacity by over 160,000 units. We will further strengthen our portfolio, and we will use several levers to improve our returns. We're developing derivatives. We're broadening our hybrid powertrain offerings. We're increasing our share of accessories and parts sales. Let's start with derivatives. Many of you experienced the breadth of our portfolio yesterday, including the derivatives. Derivatives are emotional products that are also highly capital efficient. We created the high-performance off-road truck segment with the F-150 Raptor. We've since expanded it with Bronco and Ranger Raptors. We deploy relatively low investment by deriving these vehicles from existing vehicles. These vehicles have about 80% commonality to the base vehicle and deliver 2-3x the EBIT for each $1 of invested capital. We have the Tremor family for our pickups. Timberline provides more off-road capability for our SUVs. Bronco has Raptor, Everglades, Heritage, all developed for different customers. That's just the start. There are several more chapters in the Bronco story yet to be written. We will be disciplined and efficient as we invest in these derivatives. We will focus on growth segments where we lead. These vehicles are an expression of our customers' passions and lifestyles. These are not commoditized vehicles. They have serious pricing power. Our customers also love to customize. The U.S. accessories are an $8 billion industry with very high margins. Ford Customer Service Division, or FCSD, will unlock this growth potential. Our accessories are Ford tested and covered by our warranty. Let's take Bronco as an example. It's a canvas for personalization. If you see a Bronco bolt, it means you can replace the part being held by that bolt with a more personalized part. The average Bronco owner spends $1,700 on accessories at the time of purchase. We plan to expand this over the ownership cycle by doubling our market share for post-sale accessories to 20% over the next 3 years. Speaking of FCSD, today, FCSD captures only about 25% of the post-warranty service. We plan to increase this to 40% over the next 3 years. We will add service capacity by lowering warranty repairs and also add mobile service capacity. An effortless customer experience is key to growing the service business. This year, we'll add over 2,000 mobile service bays to the entire enterprise. We'll come to the place of your choice and perform light service like oil changes and tire rotations. We already offer pickup and delivery to Ford and Lincoln customers in 16 countries. We will pick up your vehicle, service it, and bring it back to you. The margins on our service business are robust. FCSD will thrive well into the future as ICE begins to decline, because we'll have a car park of millions of vehicles around the world for years to come. Another growth lever is software. Over the coming years, Ford Blue will benefit greatly from the software being developed by the Model e team. Of all the OTA updates we've delivered to date, more have landed on ICE F-150 than any other vehicle. Close to 40% of all BlueCruise-capable vehicles we ship this year will be delivered to Ford Blue customers. Clearly, lots of opportunity to grow. Because of our unique portfolio, we are less exposed than our competition during this EV transition. Truck customers travel long distances. They tow very often. They will buy our ICE and hybrid full-size trucks until EV range with towing improves and a broader charging network emerges. Mustang customers look for that unique gas-powered experience, both on the road and on the track. Outside of North America, Ranger is our hero. Over 70% of Rangers are sold in markets where the local infrastructure does not support significant EV adoption in the near term. Trucks, off-road, and performance segments have a longer runway. ICE volumes will clearly decline as EV adoption increases, and we embrace that reality. We think this will begin for us post 2025. The pace of EV adoption will vary by segment and geography. Europe and China are transitioning faster than the US, our biggest market. We expect strong US ICE and hybrid sales well into the next decade. Let's talk about how we're reducing our share of that $7 billion cost gap. Let's start with quality. We've set very specific and time-bound goals to improve. For vehicles like F-150, Super Duty, Bronco, Ranger, Transit, we're targeting to be best-in-class by 2025. For the rest of our portfolio, the target is for each vehicle to be in the top quartile of their respective segment by 2025. We're addressing the three key root cause areas for improvement: engineering, manufacturing, and supply chain. Let me share some examples. For near-term quality, we made meaningful changes to our recent Super Duty launch. We began our software testing before we even built a single vehicle. We identified and resolved bugs faster. We hit bug peak earlier and dramatically reduced the chaos of late software changes. We increased the number of launch vehicles we evaluated. Hundreds of drivers drove millions of miles in launch vehicles. We tested and held vehicles for quality verification three times longer than the prior launches. To address long-term quality, we've improved our durability testing. We're changing a lot of our testing regime from test to standard to test to failure. We used to test key vehicle systems to a certain standard that was correlated to real-life usage. Once the system passed that standard test, we stopped the test. This process works, you could miss the opportunity to increase the system life even further. What if failure was just a few cycles away when we stopped the test? For these key systems, we test until it fails. We find the eventual weak point. We can then eliminate it and prolong the vehicle life even further. Early data shows that these changes are working. Lessons learned from Super Duty are now a blueprint for future vehicles. These process improvements will lower our warranty and recall costs. This will improve Ford Blue's contribution margin and EBIT margin 1 point by 2026. Let's talk about material, commodities, and logistics costs. We are attacking waste on current and future vehicles in three areas. First, the health of our supply base. Second, just the pure cost of our parts. The third is complexity. We have some chronically inefficient Tier 1 and Tier 2 suppliers. Post-pandemic, suppliers shed labor, depleted critical skills, reduced buffer stock, causing unstable supply. Unstable parts flow from these inefficiencies disrupts our production. This causes waste for us and for the rest of the supply base. We have worked with more than 125 key supplier sites to stabilize their operations. We've established ongoing monitoring of key indicators like quality and supply flow. If the present supplier is not on a path to a permanent solution, we're resourcing the business. Semiconductor shortages have also driven production instability, resulting in premium material and logistic costs. We are working every day to improve this. Addressing the supply-based instability will improve Ford Blue's contribution margin and EBIT margin one and a half percentage points. Next, part cost. Our team is benchmarking competitive designs and collaborating with suppliers to reduce part cost. I wanna share some tangible examples. Modifying material on exhaust manifolds, mounts, and front rails will deliver $35 million in annual savings. Simplifying Explorer wiring complexity from 500 main harnesses to 14 lowers cost by $7 million a year. Eliminating a cable designed as a manufacturing aid will deliver $11 million in annual savings. There are hundreds of examples like these. So far this year, we have identified over half a billion dollars in annualized savings and are working every day to increase that number even more. These design actions, plus others, including expected commodity cost improvements, will contribute an additional one and a half percentage point of margin to Ford Blue by 2026. In total, these actions will deliver 4 percentage point improvement in EBIT margin from contribution cost. Now, let's turn to Blue structural cost. W e are reducing labor and overhead, depreciation and amortization, engineering, and SG&A costs. For example, storage, shuttling, security, and repairs of incomplete vehicles cost our manufacturing almost a point of margin last year. We will eliminate this waste as we improve the supply base stability. Complexity reduction improves both our quality and material costs, but it is also critical to improving our structural costs. Less complexity means fewer parts. Fewer parts to engineer, fewer parts to tool, fewer parts to test, fewer parts to sequence. It means reducing engineering, facilities, tooling, and manufacturing costs. Over the last 2 years, we've reduced the number of orderable combinations for Explorer from over 1,900 to 23. For Expedition, from over 800 to 32. We've done this without losing sales or share, and in the process, made ordering a vehicle online much easier for our customers. The space adjacent to our assembly lines is limited. High-complexity parts must be sequenced in warehouses near the assembly plant. By reducing our complexity so far, we have identified 85,000 sq ft of floor space that can be freed up to enable further insourcing for cost reductions. Later this year, we will introduce the new F-150. We removed over 2,400 parts from the bill of material for this truck. This reduced material and logistics-related waste. Also reduced engineering, tooling, depreciation, and amortization costs. Our capital-efficient derivative strategy, complexity reductions, and the benefits from greater cost absorption by Model e and Pro as they scale, will lower Blue's structural costs by 4 percentage points. Let me end with how I began. Ford Blue is a vibrant global industrial powerhouse with iconic vehicles with a lot of runway for profitable growth. We will get more efficient with our manufacturing operations. We will improve our carbon footprint. We will design flexibility into our manufacturing system to ensure we can serve our customers with ICE and hybrid vehicles. We're improving quality, reducing costs, improving our mix, growing our average revenue per unit, increasing profits, and generating cash. By the end of 2026, Ford Blue will deliver low double-digit EBIT margins. That is the strength of Ford Blue, an efficiently run business and an industrial powerhouse with an iconic product portfolio. Thank you. Now let me welcome Doug to the stage. Good morning. Good morning. Good morning. It's a real privilege to be here and talk about some of the really cool work that's going on in Model e. I'll start the Model e story actually with a Ford Blue product. Ford Blue makes some really amazing products like the Expedition. If you're hauling your whole family and a boat to a remote location, way away from chargers and paved roads, this is your product. There's nothing better for that job than an Expedition. Model e isn't trying to play a zero-sum game with Ford Blue. We're building white space products that couldn't exist with a nice powertrain just as Ford Blue will keep making products that would be compromised without one. We are investing in really targeted applications where today's technology for EVs is already great, and we're succeeding. Half of Lightning customers, and even 2 and a half years after launch, 60% of Mach-E customers are new to Ford. These are different customers who are using their vehicles in different ways. Ford's generation 1 was a scrappy endeavor, low investments, really small teams, and pushing against a large organization that hadn't really endorsed or embraced EVs yet. I wasn't here when these products were developed, but when I saw them, I was impressed. They're not just great first-round EVs, they're great products, period. They're part of actually why I came to Ford. If this is their first generation product, imagine what can be done in the future. Ford went way beyond just taking products and converting them into EVs. The best example is the F-150 Lightning. I told you about customers being new to Ford, but what's really staggering is more than half of Lightning customers are new to full-size trucks. This is a really big deal, and it only happens if you've redefined a product category. Ford knows trucks, and they started by making Lightning a real truck, built Ford Tough to do real work. But when you engineer an EV with the capability to do this kind of work, you also get a truck that's mind-blowingly quick. Hopefully, you got to experience that yesterday. This is a real work truck that accelerates like the best sports cars. That's a different proposition. The Mega Power Frunk is a really big deal as well. It's about the size of the trunk on the best-selling sedan in the United States. You get your lockable, weatherproof storage, and you get a truck bed. This becomes a different product with different trade-offs. Pro Power Onboard provides all the power you would need for anything you can put in the frunk or anything you can bring to your campsite. In the bed, Pro Power is a lot more than just a bunch of wall plugs. This has a 240V power source capable of even charging another EV or running a work site and doing it with no noise and no emissions. Finally, Ford was also first with intelligent backup power. You plug your Lightning in to charge at home, and if you lose power, your truck can immediately switch over and run your house for days. A few years ago, back in California, I installed a bunch of Tesla Power walls in my home. If I had waited, I could have had the same backup capability, and I would have gotten a truck for free. I have friends at Apple who told me they bought a Lightning because it's the only EV where they can fit their child seats 3 across in the back. We're attracting new customers to this segment and to Ford because this really is a new product category. Our Gen 2 products will take a lot further. We'll invest in Gen 2 only in places and segments where we know we can win and where we know we can do something differentiated and where we're gonna deliver great stuff and great products to the world. Starting with a full-size pickup that goes to the next level and a 3-row SUV. Our Gen 2 products will be unlike anything customers have ever seen. That starts by not trying to be everything to everyone and make every possible flavor for every individual. As Kumar told you, that's not really what customers want anyway. Because of the connected data that we now have access to, we're much more informed on what customers want and what they don't value than any time in history. We take that information, and engineers and designers focus on a small number of very discrete configuration, and they optimize systems instead of components one by one. They pursue excellence for a specific customer and how these customers will use an EV. Those of you who were at some of our events have seen Project T3. Project T3 is our next electric truck, and the complexity goes so far on this new project that you'll be able to count the buildable combinations on two hands. That covers both Model e's retail customers, their Ford Pro commercial customers, and commercial customers. When we commit to this kind of focus, complexity falls off in a way that completely changes the company. Kumar told you a little bit about it, but the operational impact is profound. The inventory feeding the plant as you saw, the sequencing, everything that has to feed an individual snowflake of a product down the line. Service parts we carry, changeovers that suppliers have to do, every one of these, and a whole bunch I didn't mention, have costs associated with them. They're unmeasured, and they get forever lost in the system. The biggest benefit is what we can do with the product with that focus. The Project T3 stands for Trust the Truck. This is a truck people can trust not only to do work, but they can trust it in the digital age. It's fully updatable. It'll be constantly improving, rapidly learning from the moment it starts down the assembly line, its computer is alive and communicating with the factory, until years after it's been a part of a customer's life. Jim called this product a Millennium Falcon with a back porch. That's a great description of what this thing will be. We're not gonna show it to you today, but it's a badass product. Our Gen 2 three-row, which is also coming in 2025, will be equally groundbreaking. Think about a family that wants an affordable EV with amazing experience for road trips. We could have converted an Expedition into an EV, but it wouldn't have made for a very good EV, and it wouldn't have made for a very good Expedition. You'd have to put a really big battery in this vehicle in order to get just 300 miles of range on the highway. About 150 kWh of battery. That's a big, expensive, and heavy battery. Instead of capturing the unique and great things that we could do for an EV, this product would have been a compromised solution for a customer that Ford Blue has already got covered with a great product. That's not what the team did. There's a bit of an arms race in the industry to shove bigger and bigger batteries into large EVs to try and make them like ICE vehicles. T he real battleground in electrification is about efficiency. Efficiency is like God's work. When we really understand the physics around energy loss in an EV, we optimize it rather than compromise it. When we set out to build our Generation Two three-row, we started by changing the way we think about the tires with lower rolling resistance, squeezing every little drop of propulsion system efficiency out, optimizing everything in computer simulations. We took a bunch of mass out. We lowered the ride height. We changed the aerodynamics, and the result is a different product. It's a three-row family vehicle with 350 miles of range that can still cover 300 miles when you're cruising at 70 miles per hour. It's got a battery that's 1/3 smaller, lighter, thousands of dollars less expensive. With the same amount of scarce battery raw materials, we can bring our product to 3 customers instead of 2. Those 3 customers are gonna get a new and a better product. As Jim said, we call it a personal bullet train. It's beautiful. It's unlike anything in the segment so far. It'll be affordable. It'll be longer, sleeker, quieter vehicle with amazing size and features of an interior space. We've engineered the battery and charging. Not only can you travel those distances on the highway, but you can stop for less than 10 minutes and pick up 150 miles of range. This obsession in EVs is more than engineering. It's like a religion. The teams have put together these little pocket cards that say, "What are the trade-offs of efficiency? How much do I get for every little piece of weight that I take out of the vehicle? What do I get for better tires? What do I get for more efficiency and propulsion? It takes more, though, than great products to really win customers over, particularly new customers to Ford. It takes a buying and ownership experience that's way beyond what we do today. We know that most customers would enjoy the buying process a lot more if they could skip the step of negotiating on price. Starting in January, Model e customers will have flexible purchase options online, in the store with transparent pricing that they don't have to haggle over, and remote vehicle delivery and later pickup as well. These better experiences make customers more likely to build a relationship and choose the same dealer again. There are benefits to the dealer. Customers also want to get their dream vehicle, not settle for what's on the lot. Soon they'll have far more options available to purchase through their dealer from new retail replenishment centers. These centers can hold a couple of weeks of inventory and deliver the right vehicle in less than 10 days. With how we've brought the complexity of our lineup down, we can cut the system inventory in half to 50 days. Our dealers are freed as well from negotiating with customers to sell what they have on the lot, and that's happier customers, but it's also fewer discounts. We want each of our Model e dealers to be a trusted partner for new EV customers who want to see and learn about these new great products. We've talked about how electrification changes the product and changes the business, but electrification isn't the biggest transformation going on in the auto industry. It's not the limit of what we're trying to do in Model e as well. Model e is intended to bring tech and software to the center of all ICE, hybrid, and electric vehicles across Ford Blue, Model e, and Pro. With software, these aren't just vehicles, they're products, but a very special kind of product. A vehicle is a space which we can design and curate in ways that no other space in your life can be. We can place the screen in exactly the right place for the experience we're designing, not have to deal with the fact it could be in your lap or it could be on the wall, or it could be sitting on your desk. We can put cameras in precise positions inside and outside the vehicle. We can put our speakers and our microphones, more importantly, at exactly the right points relative to where we know the people are going to be in the space. We can change the lighting, and we can control the experience all the way from how you're sitting to what the air quality is and what the air temperature is. This goes way beyond what you could do with just a device with software or even a smart home. They're all different. This opens new experiences. We start with how we connect the vehicle to your digital life, and we do that with media, music, and games, but we do it in exciting new ways, leveraging that space. Our music experience, for example, should be so great that a family says, "Hey, there's a new Billie Eilish album out, so let's go out to the car and listen to it." We'll use the space to connect you to the outside world as well, not just isolate you. You'll be able to connect with video conferences, bring people along on your trip virtually where they can see what's going on both inside and outside the vehicle. The vehicle can be a remote presence. It's a guardian, a security camera, an alarm system, a weather station, or it could even be a mobile mailbox. We wanna make these experiences so great that you could take the wheels off our products, and people would still wanna buy it and have it in the backyard. It will have wheels, and as we work towards this future with more and more autonomy, when you can eventually take your eyes off the road, all of this investment in those experiences, we can start to bring to people while they're traveling. These digital interior experiences are really just the beginning. Products we make are not living rooms. They are moving, working robots, and our software ambition goes way beyond, deep into how our products move, how they collect data, and how they support people who are gonna use them for real work. We call them unimaginably great products because the best things we will make are the ones we haven't thought of yet. If you wanna design for things you haven't thought of yet, the only way you do that is with a platform, a platform on which our creative and technical people are gonna build their future. Platform thinking has been around a long time in the automotive industry, but it's generally been based on underbody structures, engines, transmissions, things that take a long time to engineer, require lots of capital spending and long lead times. This is a very, very different kind of platform, and it's one that still really isn't understood that well in the auto industry. You can start with the electrical architecture, and you'll hear a lot from the industry on this. You can find all kinds of block diagrams all over the web. Less wiring, less connectors, these are generally the things you'll hear people talk about, but it's not the most important part of the platform. The most important part is the software. Ford, despite the challenges we have in existing vehicles with industry-standard, supplier-controlled digital platforms, Ford has made a huge amount of progress in moving into the new world. Back starting in 2019, Ford made a commitment to put a modem in every single car. That must have been quite a leap of faith. With it, we're learning from connected data, and we're making better, more informed decisions. We've already started improving the customer experience. 11 million OTAs over the past few years to add capabilities, enhancing existing ones. We want to focus on a few key areas with this software where we know we can make a big impact on customers. Connection with people and data in your environment. Productivity, particularly in Ford Pro, but everywhere. Safety and security, then autonomy. While we're just getting started with the vehicles we have, just imagine what we can do when we control the platform. We're building our next-gen platform, software and hardware, for all Ford vehicles, it will launch first on our generation 2 Model e products in 2025. When that happens, all of a sudden, a new world of possibilities opens, a new world of businesses like L3 autonomy. In the breakout session, I'll tell you a lot more about this platform, we're not waiting until then to start delivering software. Ford Pro is our tip of the spear. Ford Pro Intelligence launched us into the pro-productivity space at the beginning of last year. BlueCruise we launched almost 2 years ago, long before I was here, it transformed the experience for customers in light or heavy traffic on divided highways. Our version 1.0 was Consumer Reports' top-rated ADAS in the U.S., it's the first hands-free system to actually gain regulatory approval for use at highway speeds in Europe, not crawling around, stop and go below 40 km per hour. BlueCruise is the first place where we're in the software business, with its success, we're now putting BlueCruise hardware in every single Mach-E, whether the customer ordered it or not. With no selling or marketing support, just on the strength of the product and word of mouth, we're already at a 20% take rate. We have an even bigger opportunity with the other 80%. We now have the confidence to install BlueCruise hardware on 500,000 Ford Model e Blue and Pro vehicles next year, even in some cases, the customer doesn't choose to order BlueCruise upfront. What we're seeing is revenue that we think could be $200 million a year in high margin across the business, which doesn't even include future activations or extensions. That's just the start. As we build out our next-gen platforms, we aspire to deliver L3 autonomy to as many customers as possible. When you can take your eyes off the road, everything changes. My finance and business partners tell me that this is a different kind of revenue. They use these words like accretive to margins, less cyclical than vehicle sales, as Jim talked about. It's revenue to grow without fighting for vehicle share. We're gonna do this kind of software in a different way, in the Ford way. Ford is about democratizing technology. That's the history that you're seeing and hearing about today. We wanna design our software for our customers and their specific use cases, not our internal technical experts. We wanna give customers capability, but not complexity. We want simple products, but products that are never patronizing. I'll talk more about this in the breakout session, but this all starts with people. Fantastic teams composed of the most talented and passionate people in the industry that combine decades of experience building this company with new skills and perspectives from other industries. This team that we're privileged to lead is led by senior leaders on my staff on design, on product, and in technology that I believe to be the best in the industry. We're now building third-generation teams and projects, and they're gonna deliver breakthroughs in products and platforms that go completely beyond Gen 2. We'll keep going, and we'll never be satisfied, but that's okay because this is what we love to do. Now, I came to Ford because it's the opportunity to be best of both worlds, to use technology to create these unimaginably great experiences and products, but the ability to leverage a proven capability of a legendary team with more than a century of scaling and delivering products to millions of customers. To show you how that part of the team is bringing to life the Model e plan, here's Lisa Drake. Thank you, Doug. To put these incredible products in millions of driveways, all we need to do is build the largest greenfield complex in Ford's history, transform Ford existing plants all across the globe to produce our EVs, build five new gigafactories to produce batteries, hire and train thousands of workers, secure multiple contracts for lithium and nickel, that's for starters. Fortunately, we have 120 years of industrial know-how at Ford, and we will lean on that, and we've learned a lot about building an EV industrial system just in the past few years. Luckily, vertical integration is in our DNA. From 2022 through the end of 2026, Model e will grow from just under 100,000 units to well over 1 million. When you add Ford Pro, our total capacity will approach 2 million EVs. We are wasting no time, already increasing production in our first-gen EVs. That starts most recently at our Mustang Mach-E plant in Cuautitlan. Our quarter 1 volumes were down because we shut down the plant to expand the production capacity. We built a new paint shop, a new battery pack center, a new final assembly, and we were back up building customer units in just 8 weeks. By the 41st production day, we had doubled the previous hourly production. Lightning will undergo a similar shutdown this summer because we will nearly quadruple its annual capacity. Speed counts in this business, especially for time to market for our next-gen products. Ford's standard of manufacturing excellence is to launch and hit full operating line rate within 55 days. We built the capability to do this through decades of innovation and manufacturing, taking on some of the industry's biggest challenges, like the introduction of the aluminum-intensive F-150 a few years back. Now some of the most radical innovation in our final assembly process will happen next year at our Oakville complex in Canada. We will introduce a production process called Zero Faults Forward, it takes advantage of our new fully networked product capability that Doug talked about to self-test and communicate issues to the operator right on the line. We can continuously update software to the latest levels throughout the entire production process. We get to have some fun with self-driving in manufacturing too, as the vehicles will be able to move through various stages of production and testing without a driver. We can leverage this autonomous vehicle technology both indoors in the plant and also outside of the manufacturing facility. This is gonna help us increase throughput, reduce our overall space requirements, and of course, enhance safety for our plant workforce. We expect to scale this capability faster than others because we have the best of both worlds, with the vehicle electrical architecture and the manufacturing experience to pull it off. Converting our Oakville site allows us to start producing EVs about 2 years sooner than if we were to have built a new plant. We already have the land, the buildings, and we have a proven workforce in Canada that's ready to roll. Of course, we're building a greenfield site too, the Tennessee Electric Vehicle Center at Blue Oval City. Tennessee is the home of Project T3, the Gen 2 EV pickup that Doug talked to you about. Our Tennessee Electric Vehicle Center will create more than 3,200 new jobs, and it takes another significant step forward in manufacturing innovation. We'll have 0 mainline operators in the body shop, a 25% smaller paint shop and final assembly area versus our Dearborn truck plant, and more than a 60% reduction in the labor to produce the battery packs versus our F-150 Lightning today. A few examples about how we did this are behind me. The team's using autonomous mobile robots for material handling in the body shop, as an example. Laser-guided closure installs for the doors and the hood. In addition, we'll stack the bodies coming out of our paint shop vertically to take advantage of the volumetric space in the building, and we'll shrink that paint shop footprint 25%. We'll have all of the connected and autonomous manufacturing capabilities, as I mentioned in Oakville, in Tennessee as well. When it opens in less than two years, the Tennessee truck plant, which can flex to a production capacity of 500,000 units annually, will have nearly 30% less labor and overhead cost per unit than our high-scale ICE F-150. Bottom line, scaling quickly, taking full advantage of our digital product capability, coupled with our manufacturing strengths, is a really big part of the foundation for our industrial plan inside of Model e. Let's talk about the battery plants. We've announced five vertical integrated plants globally. The first two in Kentucky and Tennessee are on track to open in 2025. We've learned a lot from our current generation EV experience on what it takes to scale battery capacity with quality. Ramping these facilities will define our EV launch curve. These are massive facilities, 1,000s of pieces of equipment, and really deep raw material value chains. 2 of those raw materials I'd like to talk to you about briefly. We've sourced about 90% of the nickel and the lithium that underpin our capacity targets, and today, we're announcing lithium agreements with 3 of the top producing major global suppliers, Albemarle, SQM, and Nemaska. Nemaska is a joint venture backed by Livent and the investment arm of Quebec. These are some of the largest lithium producers in the world with the best quality, existing capacity, and IRA compliance. Our plan is significantly de-risked with these agreements versus relying on investments in junior producers or smaller entrants who are still in permitting or extraction and processing development. While these majors give our plan stability, we're also investing in U.S.-based development projects through agreements with Compass, I oneer, and ESM. We all need to continue exploring reserves, developing extraction technologies so that we can further diversify the industry. Ford will certainly continue supporting that development. Quickly on nickel. Companies like Huayou have made breakthroughs in nickel processing. One of those processes is called HPAL, high-pressure acid leaching. That process converts lower-grade nickel ores that were previously considered waste or at best may be suitable for stainless steel applications to something called MHP, mixed hydroxide precipitate. Their process does this very economically and with very low carbon emissions. Producing battery-grade nickel sulfate from this MHP instead of your typical Class 1 nickel feedstocks, saves hundreds of dollars per vehicle. Investment in processes like HPAL is growing rapidly. Ford moved early last year to combine this technology with the responsible mining practices of Vale, who is an ESG leader in the mining space. The nickel from this arrangement will be used by the second BlueOval SK plant in Kentucky to produce cells for a lineup of Ford Pro commercial EVs. That plant will have 45 gigawatt hours of capacity, meaning this lower nickel will provide close to $200 million in annual savings. If you didn't catch it, we have an entire cell plant dedicated to Ford Pro EVs. All of those commercial vehicles will qualify for the $7,500 tax credit. Let's talk LFP, which is lithium iron phosphate. We're building a dedicated plant in Marshall, Michigan, that will be owned and operated by a wholly-owned Ford subsidiary, which will produce battery cells using world-class LFP technology. It will produce a single cell design that allows us to flex capacity between multiple products, and it will run at world-class productivity levels only seen on a few production lines to date. Since we announced this plant in February, we've already found efficiencies to increase its capacity to 42 gigawatt hours from the originally planned 35. When the plant begins production in 2026, we expect it to produce one of the least expensive batteries in the United States. Just to note, our LFP volume will make up roughly 15% of our portfolio in 2027. It's also important to know that we're working hard on our NCM, and we're on track to deliver a 30% cost reduction in our NCM chemistry and packs from the launch of the Mach-E in December 2020 to our Gen 2 products in 2025. We understand the challenges ahead of us, and we know that this is not going to be easy work. It's pretty exciting to see the significant progress the team has already made. BlueOval City Construction is on track and equipment is being installed as we speak. Global battery plants are hitting their schedules and well underway. Workforce development is moving ahead, and no one knows the American manufacturing workforce better than Ford. It's really rewarding to see our teams building the curriculums and the training centers for the workforce of the future. We just showed you our progress on raw materials, and we're super focused on our plan, and we have a world-class team to get it done. With that, we'll begin our 10-minute break, and then Ted Cannis will come up and talk to you a little bit about Ford Pro. Thank you. Craneway Construction is a woman-owned business. We handle anything from the ground down to get a site ready. 100% of our fleet is through Ford. Vestas is the largest producer of wind turbines. Our fleet in North America right now is about 1,850 vehicles. Across the U.S., we have about 2,500 company vehicles. Anyone who manages a commercial fleet knows that it can be very demanding. Making sure that our fleet is running effectively, making sure maintenance is done in a timely fashion, that our vehicle uptime is as robust as possible. What sets Ford Pro apart is having that all-in-one accessibility. The mobile service is extremely convenient for us. Getting the newer vehicles into the fleet is going to enable us to have a lot more data. Being able to provide us data to make better decisions at our company has been extremely beneficial for us. I was raised in a family of eight kids. We all worked hard. For me to see Ford Pro kind of have that same mindset of working hard every day just makes my job easier. Please welcome CEO Ford Pro, Ted Cannis. All righty. Ford Pro was born out of Ford's leadership in light and medium duty trucks and vans, and our long history of serving both commercial and government customers. As you saw in the video, our customers are businesses of all sizes. They're trades like construction workers or plumbers, landscapers and electricians. You may not have noticed them or the trucks, but our vehicles are all around you, driven by the people who make up the backbone of our economy. Nobody is serving commercial vehicle customers like Ford Pro. We are a trusted partner who understands their complex needs, and we cover every industry and every vocation. Ford Pro has the widest and most flexible range of vehicles of any brand, and we'll have the freshest lineup. We have built relationships with hundreds of thousands of customers. Most of them are small businesses and municipalities, not just a couple last-mile delivery companies. Our customers don't just want a great tool to get the job done, they also need physical service to keep them running. With the addition of software and connected data, we can help them solve some of their biggest challenges, like uptime, safety and security, lower total cost of ownership, and increasingly, environmental sustainability. Technology is driving a paradigm shift, and Ford Pro is uniquely positioned to integrate new digital solutions that build on our strong foundation of vehicle leadership and our unmatched support network. We truly offer a one-stop shop of work-ready vehicles, software, service, charging, and financing solutions that make running a commercial fleet simpler and more productive every day because Pro stands for productivity. We already have a powerful business in both North America and in Europe, and we're going to make it even better with new growth opportunities, increased margins, and reduced cyclicality. Let's take a look at the opportunities ahead of us. In 2023, we expect to nearly double our EBIT to around $6 billion, driven by strong order banks and for our new vehicles and favorable pricing. We plan to deliver a mid-teen EBIT margin level by 2026 as we scale our integrated solutions. We have nearly 12 million commercial vehicles on the road today, and less than 30% of them are connected with embedded modems. By 2026, we expect to grow that to around 13.5 million vehicles, and almost 60% will be connected. Today, we have nearly 400,000 paid software business subscriptions for solutions like telematics and managed charging software. Our paid software attach rate at present is 12% of our connected vehicle base. We expect this to almost increase threefold by 2026. By then, nearly a third of all connected Pro vehicles will be using our software solutions, including those powered by our next gen software platform. This will add even more value for our customers through features like intelligent predictive maintenance, coupled with the big advancements in BlueCruise partial autonomy and advanced fleet controls and other safety and security capabilities. These together, these software solutions, have the potential to drive up to $2,000 per vehicle annually in subscription revenue. When you add on non-software opportunities like connected commercial insurance, the revenue potential gets close to $4,000-$5,000. Our software, coupled with service, helps reduce downtime, and this will get better and better as prognostics and over-the-air updates grow and we expand our physical mobile service footprint. This will take our attach rate in our after-sales parts business from today around 30% to over 50% by 2026. That's the tremendous opportunity we're going after, and we'll do it by executing on our growth strategy, which will extend and deepen our competitive mode. We plan to do the following: sustain our commanding position through new product launches and freshness, strengthen our industry-leading physical service network, and leverage software and our new digital architecture to provide differentiated productivity solutions. That combination will lead to higher levels of customer loyalty and satisfaction, a growing share of wallet, and a stickier Ford Pro ecosystem that will lead and fuel our future growth. Let's take a look at each of these growth areas in a bit more detail. Obviously, Ford Pro success is built upon our diverse range of Built Ford Tough commercial vehicles, including gas, diesel, hybrid, and now electric, our newest and fastest growing category. We've built decades-long relationships with many of our customers. In fact, nearly one in four fleets in the U.S. are Ford only, more than 2.5 times as much as the next brand. In the U.S., we have the largest share of the Class 1 through 7 commercial and government full-size truck and van market with nearly 41% share, double our closest competitor. In Europe, we've been a number one commercial vehicle brand for eight years in a row with 15% share. We are seeing pent-up demand everywhere for all of our vehicles, new product launches will continue to drive our market share growth. By 2024, we'll have freshened around 40% of our lineup, including the all-new Super Duty in North America, our most important launch this year. The new model has been redesigned inside and out with unprecedented levels of technology and work capability, a 5G modem, over-the-air updates, plus more towing, payload, torque, and horsepower than any heavy-duty size truck on the market. Super Duty pickups and chassis cabs lead the markets in key segments, including mining, construction, and utilities, and have double the share of their closest competitor. It's a key driver of our profitability in 2023 and beyond. In Europe, we're launching the new Ranger, followed by the all-new Transit Custom coming later this year, and the all-electric E-Transit Custom and E-Transit Courier in 2024, which will rapidly increase our EV customer base. Transit is the best-selling cargo van in the world, and the Transit Customs for the Americans is not only the number one commercial vehicle in the United Kingdom, it is the number one selling vehicle there overall in that market. A key reason for the Transit's success is its versatility. In North America, the E-Transit offers eight configurations to suit virtually any use case, not just last mile. The complexity and use case variety in the commercial space is very different than the passenger vehicles, making our broad range of vehicles a key competitive advantage for Ford Pro. This year, we plan to expand production of the F-150 Lightning and E-Transit, already the best-selling electric vehicles in their category since they've launched. The United States Postal Service recently agreed to purchase over 9,000 E-Transit vans. Our early mover advantage with these vehicles and our trusted relationships with customers position us extremely well to win more share of the growing electric commercial truck and van market. Every customer is moving to electric at a different pace, so we will offer ICE, hybrid, and electric vehicles for many years to come, and we're guiding them through the transition. Charging is one of the greatest concerns for commercial customers. They fear EVs won't have enough charge throughout the day to get the job done. While public charging is important, the key is depot and employee home charging. Unlike others, Ford Pro is doing it all. We provide a complete end-to-end offering from infrastructure consultation to applying for regional and national incentives. Our charging software can help customers optimize energy costs through applications like split billing for employees that charge at home or in public and energy rate monitoring to determine the best time to charge. We have hundreds of customers using our charging solutions already, and we're seeing an almost 30% attach rate. Now, uptime is the lifeblood for all businesses, especially small and medium businesses. We are building our service capability to offer fast, reliable, and importantly, data-driven service that is essential to keeping vehicles on the road. We have the largest physical support network of any brand broadly distributed across North America and Europe. This map shows our service footprint in the U.S. It is a key differentiator for us, and it gives us a huge moat around our business. Our network includes more than 1,400 dedicated commercial dealerships, including 800 transit centers in Europe and over 1,000 mobile service vehicles. Our customers love mobile service because they come to you and will repair a whole line of vehicles at the same location, and they even service multi-make fleets. Over the last 2 years, we've rolled out our data-driven FORDLiive Centres that help maximize uptime for customers by cutting the time of vehicles off the road through proactive fleet monitoring and issues resolution, like expediting repairs and parts ordering. In 2022, we helped our customers in Europe avoid 300,000 days of downtime, equating to $150 million of savings or $500 a day. Another secret weapon is our deep collaboration with over 500 vehicle upfitters. We shipped more than 270,000 upfitted vehicles last year, covering every industry. They include complex body builds, cranes, ambulances, bucket trucks, and recreational vehicles, and a multitude of accessories like shelves, racks, and snowplows. We've integrated with these upfitters to drive efficient modifications with constant feedback loops. We provide convenience and speed by managing the end-to-end freight and logistics products from our plant to the upfitter, which many are located around our facilities, and then on to the end customer. We're also adding more than 100 Service Elite centers in North America, and they specialize in fully upfit Super Dutys, Transits, and medium duty trucks and have bigger bays and very long service hours. No other brand is doing what we are doing in physical and mobile service. Third, and most important growth lever for us is Ford Pro's software and digital experience. Software integrates with our physical service network and combines data from vehicles, charging hardware, and daily fleet activity into a digital interface that a fleet manager or business owner can easily access and integrate into their existing systems. Today, our software offering allows us to provide tailored preventive repair and diagnostics using vehicle history, data not available with plug-in devices from third-party providers. We can tele-doctor the vehicle and order parts in advance to speed up repair times and allow fleet managers to limit the speed vehicles can drive at, a command and control functionality, again, that plug-in software cannot do. We've created a curated system of Ford-built applications and third-party solutions that integrate it all together and can even support multi-make fleets. Our customers are already realizing the benefits of our Ford Pro Intelligence platform in productivity gains, fuel optimization, improvements in how they run and secure their vehicles, and how they manage their employees. It also saves them money. Joint research we conducted with KPMG shows that Ford Pro's integrated digital and physical services can lower the cost of ownership by up to 20%. That is a direct and measurable positive improvement to our customers' PNL. The quality and effectiveness of our software is only gonna get better with the launch of Ford's next-gen digital architecture being developed by Model e that you heard Doug talk about earlier. Ford Pro's key differentiator is our ability to integrate the software, vehicles, and services into a sticky ecosystem. While others are trying to copy the formula, they will struggle to build the digital backend, leverage our huge scale, and form these deep customer relationships that Ford Pro already has. By reducing friction for our customers, we can increase their loyalty, satisfaction, and retention, and this in turn will help us to attract new customers. We'll be able to capture more share of wallet as the economic value we provide increases. This flywheel effect is the foundation for our long-term growth, powering our market share expansion and driving a portfolio of products, services, and solutions. Before I conclude, I wanted to speak to the more resilient business model that we have. We're building that's less cyclical than traditional automotive. This is because we're expanding our revenue pools beyond the vehicle itself and extending it across the whole vehicle life cycle. By 2026, we expect nearly 20% of our profit will come from these new high-margin annuity-like software and service revenue streams that are just nascent today. Jim made the comparison to John Deere earlier. They made a similar push into software and a one-stop-shop services as Ford Pro a few years ago. Our next generation architecture will unlock the full potential of our software-powered connected vehicle ecosystem, just like Deere is doing in precision agriculture. No one serves commercial customers like Ford Pro. We have a huge competitive advantage. One, it starts with our strong relationships with hundreds of thousands of customers in North America and Europe built up over decades. Add to that our trusted portfolio of industry-leading commercial vehicles with all new models and an expanding electric vehicle lineup. Add the largest physical service network of any brand with mobile service vehicles and specialized dealerships staffed by thousands of specialized technicians and our connections to hundreds of upfitters. Finally, it requires building an integrated vehicle software and charging platform, leveraging data at scale, which is going to unlock even more value for our customers, more productivity, more uptime, more sustainable operations, and lower costs. This gives us a deep moat around our business that is getting wider every day. It is not replicable by pure software companies, and for new EV players, it would take them 7-10 years and substantial capital to create. What you should take away from this is Ford Pro is building a high growth, high margin, and resilient business. We have generated an EBIT margin greater than 10% for the last 2 quarters, and we think we can expand it to the mid-teens by 2026, even as our EV mix grows. That is the power of the Ford Pro ecosystem. Thanks a lot, and I'd like to turn it over to John. At our last Capital Markets Day, we introduced our Ford+ plan and our investment thesis to all of you, highlighting the key pillars of our plan, which leverages our foundational strengths plus new enhanced capabilities to drive growth and create value for all of our stakeholders. Fast-forward to today. Over the last two years, we've developed proven capabilities in each of these critical areas, grounded in disciplined capital allocation and focused on value creation. This year, we took another leap forward by standing up our new customer-focused business segments. This provides an unprecedented level of transparency and has the potential to transform the way investors value the sector. As you've seen today, our strategy goes way beyond simple sheet metal and nameplates. Ford is different, we're deeply committed to unlocking the powerful customer benefits and value creation made possible by the connected, fully networked vehicles and a lifetime always-on relationship with our customers. This is a winning strategy. Let's take a look at some of the pivotal decisions that we've made since we launched Ford+. We de-risked our global operations by exiting manufacturing in Brazil and India. We streamlined our European operations to focus on our leading Ford Pro business and growing EV portfolio. We leveraged our iconic vehicle portfolio to develop new, exciting ICE derivatives like Bronco, Raptor, that are both very profitable and incredibly capital efficient. We wound down our investment in Argo and redeployed those key resources to focus on leading L2+ and L3 autonomy, which we believe is the nearer term, higher growth, and more profitable opportunity. Finally, we monetized almost our entire investment in Rivian, generating proceeds of over $3 billion. This is more than double our initial investment. We used a portion of it to help fund our supplemental dividend in the first quarter. Now, this discipline and willingness to make the tough choices is driving real improvement in our operating performance. Last year, we delivered a record $9.1 billion in adjusted free cash flow, most of which was generated by our automotive business. Now, this is in stark contrast to prior years when adjusted free cash flow was driven primarily by distributions from Ford Credit. Now, we know we still have work to do in China and Europe, we know the playbook: asset light, leverage core strengths, and key strategic partnerships to drive efficiencies. Before I cover our expectations for each of the segments, let me frame how we're thinking about capital allocation. Our strategic priorities are grounded in disciplined capital allocation that will drive growth and create value for our shareholders. Improving operations, free cash flow generation, and a strong balance sheet provide tremendous flexibility and ensure our calls on capital are fully funded. Importantly, over the last couple of years, capital has increasingly shifted from restructuring our global operations to funding our Model e and Pro businesses. For Model e, this includes a greater level of vertical integration as well as a new distribution model. For Ford Pro, this includes investments in industry-leading products like our all-new Super Duty and E-Transit, as well as investments in software and services. Our balance sheet remains a priority. In fact, since we last were together, we've taken significant actions to both strengthen and improve the efficiency of our balance sheet, reducing our interest costs by about 200 basis points or roughly $500 million per year. All of this is done to create meaningful and sustainable value for our shareholders with an adjusted return on invested capital target of about 20% through 2026. Now let me frame the numbers and provide additional context regarding what the team has shared with you so far today. Overall, our Ford+ strategy delivers a much more robust business model, one that collectively drives higher margins, lower capital intensity, lower cyclicality, and importantly, higher growth. One of the benefits of our new segmentation is you can see exactly what's happening within each of our businesses, and gauge their progress we're making each quarter. In our view, this is the only way to provide real transparency and accountability by business segment. Anything else masks what's really going on under the hood. Now in Ford Blue, we're targeting an EBIT margin in the low double digits, about 3 points higher than in 2022. We expect lower volumes as we shift out of smaller vehicles like Fiesta and Focus in Europe and other commoditized segments. These units will be more than offset by improved mix from our high-demand, higher-margin products like Bronco, F-150, and Ranger. Overall, we expect lower net pricing on ICE vehicles as industry volume and average transaction prices normalize towards pre-COVID levels and EV adoption grows. Now, this bridge reflects Ford Blue's focus on reducing costs, which Kumar detailed. Specifically, contribution costs improved by about 4 points, driven by several key factors, including material, logistics, and warranty, along with lower commodity costs. Structural costs also improved by about 4 points as our investment profile shifts to EV and Blue focuses more on its efficient capital investments around derivatives. As Model e and Ford Pro grow, this provides additional leverage as they absorb a greater portion of our overall cost structure. Moving to services, which we define as parts, services, and accessories, as well as new digital services. Growth here contributes another full point of margin supported by the scaling of BlueCruise. Importantly, post 2026, we assume margins in Blue will start to decline as the industry shifts to electrification, and that continues. Obviously, no one can predict exactly how it's going to play out, given our unique strength in trucks, we believe our ICE business will be around for a long time, continuing to generate free cash flow and returns. That was quite a moat Ted showed you, and we have every intention of making it deeper and wider. Ford Pro, we're targeting mid-teen EBIT margins by 2026. Volume and mix drive the margin growth, with Pro capitalizing on its leadership position as our commercial customers transition to EVs. We assume improvement in industry volume along with share growth in both North America and Europe. As industry volume and supply chains normalize, we expect net pricing to decline by about three points. Pro will also benefit from many of the same cost actions that benefited Ford Blue, structural costs will grow in line with higher volumes as we continue to invest in a growing portfolio of EVs to serve our commercial customers. Services will deliver about another point of growth, reflecting growth in telematics and charging, as well as the expansion of Ford Pro's dedicated network of commercial service points. In fact, by 2026, we expect Ford Pro's digital and physical services to account for close to 20% of the segment's total EBIT. We think looking at services as a percent of EBIT is an important measure because it's a true reflection of the higher-performing, more resilient business model. Simply looking at large software and service revenue numbers, it doesn't tell the whole story, since not all revenue is created equal. This is especially true in retail, where as we've seen in other technology businesses, we expect some portion of the revenue to ultimately commoditize and become diluted to margins. Now turning to Model e. At the teach-in, we showed you an EBIT bridge that highlighted the key levers the operating team is using to deliver our 8% margin target. Today, Doug and Lisa shared insights that support that target. Going forward, we will use our standard EBIT bridge to share our progress. Our target of 8% EBIT margin by the end of 2026 translates to about a 49 point improvement in margin compared to our 2022 results, with 54 points of the improvement attributed to volume and mix. This reflects the continued volume and scaling of our first generation, as well as the launch of our second generation products beginning in 2025 that benefit from lower costs and higher margins and are EBIT positive in the first year. As you would expect, net pricing falls as EV volumes increase, which is partially mitigated by lower distribution costs. We expect an improvement in contribution costs as we continue to refine design and other cost efficiencies and benefit from lower commodity costs, which is about 6 points on the bridge. Disciplined investments in our new EV products and expanding industrial footprint drives a 10-point increase in structural costs. This drives significant scale benefits in material and logistics, as well as manufacturing, engineering, and G&A costs. BlueCruise and other digital and physical services will contribute about 20% of Model e's EBIT by the end of 2026. We expect this opportunity to grow significantly over time, especially with the launch of our L3 technology. Model e is a unique opportunity for us, one that redefines the legacy business model and delivers new high-growth businesses. How does it all come together? Let's look at our company target. I hope you agree that if you look at just this bridge, you're missing the complete story. That is the progress we're making on each of our business segments, which serve different strategic objectives and will otherwise get lost in our consolidated results. Our plan delivers a 10% adjusted EBIT margin by 2026, an improvement of about 3.5 points over 2022. We expect volume and mix to contribute about 5 points of margin, with our wholesales increasing by about 30% from 4.2 million units to about 5.6 million units. This assumes normalization of industry volume in the supply chain as well as share growth in EVs. This growth rate may sound large, but let me explain and give it a bit of context. Last year, the last time we saw U.S. industry volume, roughly 17 million units, which is what we're expecting in this timeframe, was in 2019. In that year, our wholesales were around 5.4 million units. We've taken a very pragmatic approach on net pricing. As you can see from the bridge, our improvement in volume and mix is almost fully offset by lower net pricing as our industry trends normalize. Contribution costs account for about 4 points of margin improvement, supported by the cost actions on material, logistics, and quality that you heard about earlier today. We also anticipate favorable commodity costs, especially for batteries, aluminum, and steel. While structural costs will be higher in absolute dollar terms, they decline as a percentage of revenue from 20% to 14% over the period. Over time, the allocation of our structural costs will shift. We will see lower structural costs in Blue and higher costs in Model e and Pro as they continue to scale. I hope you can see that we are in the midst of a historic transformation. While the 10% margin is an important target, as Jim Farley said, it's just a single stop on our journey to reset the run rate of the company, which sets us up for the next 100 years. I want to touch on the art of the possible for services and potential impact to our company. Towards the end of our plan, we will launch the new electrical architecture that Doug had highlighted. This has the potential to increase the amount of services we capture on each vehicle we sell, further reducing the cyclicality of our business model. As you heard from Ted, for Ford Pro, these solutions have the potential to drive up to $2,000 per vehicle annually in subscription revenue and up to $4,000-$5,000 when you include non-software opportunities like connected commercial insurance. If we look at total company, we have the potential to drive software subscriptions of $1,500 per unit and annual recurring revenue for features like BlueCruise, safety and security, as well as productivity solutions for our commercial customers. The potential for connected insurance is another $2,000 per unit, assuming a mix of two-thirds retail and one-third Pro. The point here is not the exact precision of these numbers. Rather, it's about that with the benefit of our new electrical architecture, our TAM will grow, encompassing things we can't even contemplate right now. That will further reduce the cyclicality of our business model. I believe our Ford+ plan can create unprecedented value through both share price appreciation and shareholder distributions. Higher share prices driven by improved business performance, free cash flow, and increasing investments in new growth opportunities that should expand our multiple over time. We'll continue to target distributing 40%-50% of free cash flow to investors each year. This includes a regular dividend that is stress-tested and sustainable through the cycle, supplemental distributions like we paid in the first quarter of this year, and anti-dilutive share repurchases. Overall, we are targeting top-quartile automotive return for our shareholders every year. This goal has been embedded directly in both the objectives and compensation targets of the senior leadership team. Let me close with this. Jim said earlier he wasn't here to tell you we're undervalued, and I'm not either. There's a reason automakers have been trapped in the box on the lower left, defined by low margins, low multiples, while best-in-class industrials have outperformed the market. Turns out that trying to be all things to all customers isn't a great business model. It drives complexity, capital waste, especially when you have a host of competitors all trying to do the same thing. You've seen today that real change is underway at Ford. Each of our three segments has clarity and focus on one thing, efficiently delivering value to the customers that it is uniquely capable of serving. Each is a steward of capital, each has a stronger investment thesis than Ford itself has had in decades. As Blue, Model e, and Pro execute their unique strategies while leveraging the many advantages that come from being a part of the Blue Oval, you'll see this transformation play out real-time in the metrics that distinguish best-in-class industrials from legacy auto OEMs. We've talked in detail about how we're eliminating complexity and driving cost out of the business, these actions will drive improvements in our EBIT margins. We also talked about the market-leading vehicles and compelling low capital derivatives Ford Blue is developing and the disciplined where-to-play decisions that Ford Model e has made. This lowers the capital intensity of our business, and you will see this improvement as you monitor our CapEx to EBITDA ratio over time. Today, you heard about the traction we're getting with BlueCruise and how we're using software and services, particularly in Ford Pro, to deliver real value to our customers through ownership lifecycle. This not only improves their businesses, but ours as well through higher margin recurring revenue streams. Over time, this creates a business model that is more resilient and less cyclical. Again, you will see this in the contribution to EBIT margin coming from growth and services. Lastly, you've hopefully seen that we are not the Ford of the past. We are new, more focused, with true growth opportunities across each of our businesses, including a vibrant and a resilient ICE portfolio, a thoughtful, targeted, and growing EV business, and a powerhouse in Ford Pro. All of these will unlock value made possible by connected, fully networked vehicles and lifetime always-on relationships. Jim opened this morning reflecting on Ford's history and our chance to make history once again. I hope you can probably tell that this is personal for all of us. 33 years ago, I had a couple offers when I came out of college, and at that time, I chose Mustangs and F-150s over soap and syrup, and haven't looked back since then. I've worked on three continents in just about every finance and general manager, management job that you can imagine. My family and I owe everything to Ford. It's hard to describe to people outside Ford, how much this team wants to win. If you would have asked me 5 years ago, I didn't see a way past the automotive grind that this industry was. Today, this is a different Ford. The shift we've seen at this intersection between automotive excellence and connected technology, it's really unbelievable. You can walk across the street to the museum and look at the Wright brothers workshop, steam engines, broadcasting microprocessors, you name it, and think about where you would have liked to have been when all those breakthroughs started to come along. Well, there's no place I'd rather be than here at Ford in this moment. I truly believe we're gonna make history again for our customers, the people in our plants, our dealers in every community, and for all of you, our investors. Thank you for being with us on this important day. I'm gonna be on the end. Welcome to Q&A. For those of you who are watching on the webcast, we'll be ending at 11:00 A.M. the Q&A session, and then this group will go and have lunch, and the webcast will start again at 1:00 P.M. with our breakout sessions. We do have people in the room who have numbers, and if you raise your hand, we will call on you. We do have a lot of people in the room, so I hope you can limit your questions to 1 or 2. You'll have ample time with the leadership team at lunch and during the breakout session. Before we start, Doug, I just wanted you to clarify something that you had mentioned in your pitch about the timing of our electrical architectures. Yeah, there were a few questions about all three. Our next generation architecture lands in 25. That will be our building block and our foundation for that. As much as I want it to, we're not gonna deliver L3 in 2025. It's just, too ambitious an undertaking, so we have to lay the groundwork, but you're gonna have to wait a little longer for L3. We have some exciting steps in between. Way exciting steps. Yep. Okay, thanks. Thanks for qualifying that. Why don't we start in the front row and move our way back? We'll start with John. Hey. John Murphy from Bank of America. I'll ask two, hopefully, kind of quick ones. There's a lot here that has to do with beyond the point of sale, right? We know there's a lot of revenue and profit opportunity there historically, and there's a lot more potentially over time with subscriptions and services as Ted is kind of highlighting on the pro side. You have partners in distribution, and dealers that make a lot of money off of that, and there's a lot of folks in the aftermarket that make a lot of money off of it and a lot of folks in service outside of what you guys are providing right now on the fleet side. I'm just curious how you work with those partners to get after that revenue and how that revenue will ultimately be shared. Because there's an argument to be made that they really have a closer relationship with the customer than you do over time. How do you benefit those folks so that they help you more? How do you rationalize it? I noticed in cap allocation, there was 5%, I think to like, to market efforts or something like that. It looked like it was sort of a dealer rationalization plan, maybe. You know, just trying to understand how this is gonna work, because a lot of it is gonna, you know, impede or sort of compete with some of your existing, your distribution partners as well as maybe enhance their opportunity. That's the first question. Yeah. Thank you. We have about 10,000 dealers around the world at Ford. We think it's gonna be really different between retail and Pro on the software go-to-market. We're in the early stages of learning about that. I would say we're in the first inning. It's very clear. I talked to John May at John Deere a lot about this. It's very clear on the commercial side that we can't rely on our partners to sell software. Actually, because the fulfillment often on the Pro side is physical service, like prognostics, think of predictive failure, you know, they're gonna fulfill that. It's really critical that they're involved in the software sale. On the retail side, it's a little less clear to us. We're experimenting right now with different models of what's the best way to sell software for our retailers. I would say the jury's still out what model is gonna merge on the retail side. I would say the company, if the poetic answer is Ford on the retail side should be doing a lot of the selling on software, actually, the jury's out about our capability to do that. It requires a completely different capability at the company. On the dealer side, they're closest to demonstrate BlueCruise. I mean, that moment when you click the button and take your hands off the wheel is a really scary moment you can't do in a call center. We think the dealers will play a key part. Will it be more to do testing and understanding how the features will work, like we see in Apple, at the Apple stores on software? Or will they actually be the ones doing the selling? On the retail side, it's unclear. On the pro side, it's definitely clear. You like to say anything 'cause you're going first, Ted? Yeah, for, you know, we're visiting a lot of dealers. We're in a middle of a 25 city tour right now and 6 countries in Europe as well. It, you know, it's a lot of new for them. There's a lot of pull from the customers. If they had a vehicle robbed or an employee not working or fuel missing, they have a business need. You have a lot of pull from the customer to get solutions, but it's also a lot of training for us, and we compensate the dealers for making that linkage together, customer, us, and the dealer. I think just visualize, like we said, visualize the industry 5 or 10 years from now, where we have to set this up now. There's gonna be a lot of customization. There'll be a lot of OTAs and improved software, safety and security, productivity for retail as well, and BlueCruise, all sorts of different kinds of software coming at the customer. We really believe that a physical place where the customer can understand all that and customize the software is, like, super important. And the industry, no one has figured that out yet. Do you wanna say anything? I the reason why I'm taking a lot of time to answer your question, it's really 'cause it's a really important question. We're not sure of the answer yet. Yeah. I guess maybe just to follow up. When you think about the $3,500 opportunity you highlighted in the, in the total bridge, and I think yours was $4,500 plus, which you said. Yeah. might be as much as 5,000 plus, I mean, where is the capture of that? I mean, 'cause as this business is transforming over time and rationalizing things and creating, you know, opportunities for growth, that's the incremental profit pool and opportunity. Yep. Mm-hmm. I mean, and you have these partners that may step in front of that or you might have to share with, right? I mean, not that you're, you know, you compete. Like, capturing that is really key to getting to the lack of cyclicality or, you know, less cyclical business and a more profitable business with higher returns. If a big chunk of that is to those partners or other folks, then you're still creating the hardware point of sale and not benefiting from this lifetime opportunity with the consumer, right? That connectivity is the dealer right now. I'm just trying to understand, like, how, where that ultimately- Yeah. gonna get shared and where it goes away. Those numbers is what we think we'll capture. That's what we'll capture. Okay? Yeah. To be really clear. Okay. No, no question about it. That's what we think is coming to Ford Motor Company. Okay. There's, you know, no one's ever done this really outside of John Deere, Cat, and other people, so how it is get implemented at the retailer is still unknown, I would say. That's what we feel we absolutely deserve. Just remember, I should say this, we have 600,000 software subscribers today. Great. Excellent. It's not a theoretical thing for us. Yeah. John, one thing you said was you saw the donut, the capital allocation donut, and you saw the amount that went to distribution. That's not for a huge dealer rationalization program. We're setting up vehicle holding centers to make speed quicker for E, and so there's capital in there for the inventory. Got it. Great. I'll pass it on. Close to you right there. Go on. Hi, Ryan Brinkman from J.P. Morgan. Thanks for taking my question. I see that you continue to reiterate the 8% EBIT margin target for the EV business by the end of 2026, which is great, but wanted to ask about that in light of the recently increased price competition in the EV market. Have you maybe found additional sources of savings, or do you have increased confidence in the products helping drive the anticipated tailwind from volume mix, which looks to be by far the biggest opportunity in the bridge? Do you expect to maybe compete in, you know, parts of the EV market that are less subject to price competition or expect that price competition to eventually settle or normalize? I saw in the walk that you're expecting less headwind from net price in Model e than in Ford Blue, which seems, you know, different than the existing trend or, you know, what are the drivers of your increased confidence in this profitability target in light of the fact it was established prior to the intensification of EV price competition? You want me to start? Yeah. Yeah. You know, we tend to look at the EV space as a monolith. It's not, right? We wanna talk about Mach-E all the time, and we do, because the prices did come down. We've been pretty consistent over the last two or three quarters talking about the fact that that segment's gonna get commoditized. What's not really resonating, and we've talked about it, is we've increased our prices on Lightning significantly by more than $10,000. If you think about what Doug was talking about and the segments we're going into, those aren't segments that are gonna commoditize. We're gonna create products that are uniquely distinctive and different. Yes, two-row crossovers is competitive. Yes, there's been price competition in there. We're not gonna follow pricing down at all costs for share relative to margin. We think we have a way to manage this, and we think that our products being distinctive and unique in the segments that aren't commoditized, which we've proven with Lightning, is where we will be able to manage this more efficiently than what you would think if you just looked at Mach-E or that two-row crossover segment as the defining element of how pricing is gonna unfold for the segment. That's helpful. Thanks. Then lastly, can you talk about the strategy in China or what internal targets might you have or what might you expect from the operation there over time? It sounds like you're focused on, you know, finding a profitable niche, so I wouldn't expect a market share target. Does that mean you're driving toward a certain level of EBIT or equity income or return on investment? How are you thinking about China broadly, and is there a timeframe you have in mind for getting where you want to be? I think it's gonna take a few years. I think we've said what we wanna say about China. It'll take a few years for us to get the business to where we want it to be, just like we've done in Latin America and in India and so many other parts of the world that we've, you know, reoriented our business. I think the metric that may surprise you that you didn't ask about, 'cause everything you did ask about are really important to us, we wanna put less capital at risk in China, but the metric that's gonna be really key is to export from China, too. We really believe that our commercial partner there is really good at creating products, and we have an amazing distribution network around the world for commercial. If we combine those two, we have an incredible opportunity that we've never had in China, really anywhere, of having affordable commercial or electrified commercial vehicles globally. I... You know, we don't wanna go into our China strategy any more than we have. Thank you. I'm gonna go right there. Yeah. Great. Thank you. Dan Levy, Barclays. Wanted to first start, John, if you could maybe just clarify on the CapEx. In your pie chart, I think you're looking at 60% distribution. It looks like it's 60% to CapEx, if that's correct. I think the implied numbers based on what you might be looking at for profit is something like, you know, anywhere from $8 billion-$9 billion annually of CapEx. If you could just clarify that. That's a slight uptick, but I think we've seen from some of the other players, like, a very large uptick in their CapEx plans to underwrite a lot of this growth. Maybe you could give us some context on the flow of CapEx and why sort of a slight increase is enough to fund this very large transformation. Well, part of it is, as Doug explained and Kumar explained, we're more efficient. We're gonna be much more efficient with our capital. We're 8-9 this year. It will uptick again next year. Think 10-11, in that range, as we continue to roll out, right? Lisa went through all that we're investing with our footprint, et cetera, the new products that we're developing in Model e. It, it comes back to that $50 billion. We're comfortable with that number, and the team is working every day to drive efficiencies in there. 8-9 this year. It'll uptick again next year, and then we'll talk about where it goes from there. John, can you just clarify what goes into the $50 billion? 'Cause it's not all CapEx. No, it's not all CapEx. There's CapEx, there's expense, and then there's investment in our partnerships, direct investment in the JVs, et cetera. Great. Thank you. Then as a follow-up, wanted to just clarify the view on volume, which sounds like you're looking for volume to increase back to sort of 2018, 2019 levels. I think at the time, this was a very different Ford, what we've seen since then is much more of a focus on a rationalized Europe, asset light in China, asset light in South America and some of the other regions. Maybe you can help us reconcile the views of what seems to be a much heavier focus on mix, I think that seems to be a very central part of the story today, versus going forward with, you know, asset light as well. Yeah. We are getting out of some of the commoditized vehicles, right? Fiesta, Focus, et cetera. We've made that decision, which is a good decision for our overall profitability. Go back to 2019, 5.4 million units, 17 million unit industry. We think we're gonna get back to 17 million unit industries. We have in our plan rationalization on pricing coming down in Ford Blue, as we, you know, break through the supply chain barriers and, you know, customer affordability comes back into play. We think that'll normalize. Then you grow to 5.6, and what that is, that's growth in EVs, and it's growth in our derivatives. Kumar said he's adding 160,000 units of capacity, but on higher margin vehicles where we have pricing power. That's how all that works together. 5.6 million units we think is reasonable in a 17 million industry in the U.S. and in Europe. Um, so- If I could just clarify, you know, Jim, you've mentioned that the volume side, the CUV area is just an incredibly intense area. At what point do you decide that some of the segments you need to basically pull back on, sacrifice a bit on volume, and skew even more heavily towards mix? Thank you. Yeah. We've already made kind of that decision. Yeah. I mean, we've been working on this next generation product for a couple years now, and we saw it coming like a freight train. I mean, if your EV strategy depends on a two-row crossover right now, you better have the cost of a BYD to compete. You know, we knew that freight train was coming. 1/3 of our volume marquee is in that segment, so we feel it, and we've already reduced the cost by $5,000 by the end of this year. You know, that's not sustainable. You can get that in the second generation, but the third and the fourth generation, it'll become smaller and smaller, in terms of how much you can get out of the product. From our standpoint, we made that decision. We made intentionally the choice to go after conquest customers, but in segments we really know, which seems like a bit of a contradiction. How can you go into the full size truck EV market but go after conquest customers if you're a third of the ICE market? What we found with Lightning and E-Transit is that there is a group of customers who don't look at Ford today or may not even look at full size trucks today. If you could change the product to a new category, then you can get incremental customers. Then when you do the math of your competitor's bet, it's clear that most of them are not betting on those segments. That's the math we did a couple years ago. It's a mix, it's a mixed math. It's not a volume math, but there are large segments. you know, the full-size truck industry's been 13% of the U.S. industry for as long as I've been in the U.S. industry. Lightning comes along, and half the people have never bought a pickup truck. Could it be 15% or 16%? Maybe. Because some people wanna put 3 car seats in their electric vehicle. I think we've been extremely precise about where we wanna compete because we knew the pricing and the overcapacity would come. We've been in the industry a long time. We know that pretty much everyone bet on two-row crossovers at the same time that the ICE had the pricing premium. By doing that, everyone arrives at the market at the exact same time with the same product written with 20% more pricing than a sedan. That usually doesn't work out. Can we come the front row here? In the middle, Adam. I have to stand? Okay, thanks. Hi, Adam Jonas, Morgan Stanley. First just a clarification for the Model E volume targets by exit 2026, Model E specifically. What's implied in there to support that 8% margin, which, the 8% margin, by the way, apples to apples to Tesla, probably better than Tesla when you, when you think of, when you exclude China and when you exclude the dealers, which, you know, stacks the retail. That's pretty punchy margin. Curious the volume here. Matter of fact. It's over $1 million. You know, $1.2 million, around there, $1.3 million. Is that as a, as an exit, as an annual run rate on the exit? Yes. Okay, thanks for that, John. Just there's a lot of people in this room who are thinking, you know, going head to head with the Chinese and Tesla, even if you're not directly going so much of your volume on the two-row crossovers, it's kind of a, in this environment, a pretty easy way to destroy billions and billions of capital over a three or four year period. Has the management team and the family considered funding the EV investments in any other way besides using Blue and Pro? Thanks. Not as of yet. We don't really see ourselves competing directly with Tesla and BYD in our second cycle product. That would be maybe your characterization, but it's definitely not ours. I don't see how there's a large size 3-row crossover industry in their indigenous markets. It seems like actually the opposite is the case. Seems like they're going down in price. That's not our strategy with the 2nd cycle product. We feel really confident about our approach, and because the competitive landscape, we feel, will be quite unique. Now, ultimately, the company has to be cost competitive with the best. In the EV side, it looks like those two companies are among the best. You could put Geely, maybe SAIC, Changan in there. There'd be some others that you would put in there. Ultimately, that is the core capability on the cost side. We believe going into those segments, Adam, and then that are underserved, where customers actually will pay more for software because the way they use the vehicle is different, is actually a quicker answer than to just try to get to the very lowest cost in the lowest cost segments. See, I think we keep framing the change in the company as electrification, but that's not what's going on in our eyes. It's Pro Power Onboard in the front, which is as cool as 0-60 in 4 seconds. It's for us, it's the Pro software and integrated services and the retail BlueCruise and new safety and security software that no one's seen from Ford yet. That's the big change for the company. It's actually outside of the four walls of the physical hardware. That's what gets us excited. That's why in the second cycle, we wanna go to segments where customers use the data and the software more intensely. Even retail customers. Having a personal bullet train that goes 300 miles at 70 miles an hour is like safety and security, BlueCruise, like, those software items are perfect for that kind of vehicle concept. I think the way we look at it, Adam, is that we aren't just gonna race. We have to be competitive on cost ultimately for the EV components and the platforms. Really what we wanna learn is the fitness cycle between getting data off the vehicle, changing the software, shipping it back to the vehicle, getting tighter and faster and faster. That, to us, is as important as anything. Why don't we come right here in the second row? From the front. Thank you. Rod Lache from Wolfe Research. I appreciate what you've been saying about the revenue opportunity, focusing on emotional products, services that people value. I do wanna ask about EV costs, because we are hearing just so much innovation in the industry, and at a speed that we've never seen before in this industry. Things like open box manufacturing, containerization of software so that you can port things over to multiple different vehicles, solvent-free battery manufacturing. I'm hoping that you might be able to just talk to us a little bit about in this mid-decade period, what are the benchmarks that you see for the industry in terms of batteries and vehicle manufacturing? How far away do you expect to be in that kind of timeframe for Ford? In terms of benchmarks, obviously, Tesla's done an amazing job of being the first company that really started from a clean sheet and designed a product around ease of manufacturing and cost. But ultimately, a big part of when we talk about excellence is that we don't look just at competition because you're always looking in the rearview mirror. It's four or five years ago or even more. We're taking inspiration from the limits of physics from other industries in terms of how we keep pushing ease of manufacturing, an obsession over removing parts, removing steps, removing complexity. There's so much to be done in EVs because it's such a new industry. But Ford's good at this. They're good at it. It's, it's part of what I love about being here, is taking the new technology, which we're getting better at, and there's some level of vertical integration that's required as well, but you have to be selective about it. A huge part of this, as you said, is in batteries. The key to low cost in batteries is to own the supply chain, which is exactly what Lisa took us through. Those are the key elements, I think, are you have to start with a clean sheet on an EV and not inherit the way ICE vehicles are built and constructed, and you gotta own the battery supply chain. Yeah. I would mention just, you know, the competitor you referenced in their investor day said that their target was at 90% OEE at 40-45 second takt time. That's what we've done for years. Our standards are higher than that. You saw Kumar's presentation, that was a 37 second takt time, you know, producing trucks. The Tennessee plant, as we've stated, will be 30% more efficient on our costs than even our best truck plant we have. That's only enabled, to be honest, because we designed the factory and the product together, which admittedly we haven't done before at Ford. We weren't building new factories to be able to do that. The teams are co-located. Honestly, we set the footprint of the manufacturing facility before we even had most of the truck developed. We decided jointly between the product team and the manufacturing team that we had to get that much more efficient in square footage. Then we started to pair the teams up, and they weren't developing components. They were developing systems on the line. Then the complexity started coming out in an incredible fashion. I mean, it's just so radically reduced. In some cases, you know, there's complexity of one. That's it. When we can do that, we shrunk that manufacturing facility around that product that enabled us to get the savings that we talked about. I don't think you have to radically change the manufacturing process. You take what's already excellent, you make it even more excellent, and you do it in conjunction with the product design. Rod, I just wanna say one thing that wasn't said, which is I don't think we're ever gonna really be done. I think there's a third generation we're looking at now. I don't wanna talk a lot about it, but it's yet another leap forward. We would love to be able to figure out how to make vehicles without a paint shop. So there's always going to be, in this change, more room for innovation and lower cost, and that will go on for a long time. It's like we're back in the mid-'20s, when vertical integration became a thing in our industry, and people started to really make big leaps. Mm-hmm. We're starting the same cycle again for the industrial system. I don't know what the answer is, but I do know enough to know that that's why we have to work on a third generation. Okay. maybe just to clarify, Lisa, that 30% reduction corresponds with what in terms of, cost per kilowatt hour? Do you have a number that you can share for that? That 30% reduction is on our labor and overhead. Oh, sorry. for the full vehicle compared to Dearborn Truck ICE, as an example. could you share a cost on the battery target? No, I... What I can say is that a few years ago at Capital Markets Day, we talked about a 40% improvement. We're 30% of the way there. We've got instead of 40, we're at 30. What we also hadn't meaningfully considered is the impact of LFP on our portfolio then. If you include LFP mix at 15%. Yeah. you would say between those two. Probably pretty close. Just lastly, John, I've asked you this question before. There's a structural cost investment that you're making to accommodate the growth that you're targeting to get 1.2, 1.3 million Model e vehicles, 5.5 million for the overall company. Still, it's a big volume growth target. I know you think it's achievable, but there's also a significant structural cost investment. What is the flexibility that you have to adjust structural costs as we get out to that timeframe in the event that maybe the volumes are a little bit different and you just wanna sort of hit those kinds of margin targets? Yeah, I would say that flexibility is part of that equation, of course, that Lisa's building through. We have the ability, if the E volumes don't take off, ICE is still greater, that we can flex with him some from Blue and Pro on the ICE side. I think there's gonna be flexibility there. We're watching this. Depending, Rod, on how far out in front of we see the volumes maybe not coming in as strongly, then we can adjust what we're putting in from an installed capacity base. We do have that capability to adjust. I think it's important because Doug and Lisa were always talking about that. The other thing that Doug was talking about that I just wanted to highlight for you, for me, having been here forever and seeing this cost structure, and a lot of these folks can tell you that I'm a real pain when it comes to cost and have been for years. The thing about Doug that's different from me is, it's subtle, but you miss it, is this focus on excellence. Before, we used to always benchmark, benchmark. Who's the best? It goes back to that Wayne Gretzky saying, we are always skating to where the puck is. Doug keeps talking about defining where the puck is going to be with excellence. And that's why I have more confidence in that, because of how they're approaching it with e, both in, the design of the vehicle, the design of the battery, and then how they're bringing that together with manufacturing, so. All of that coming together as they're out in front should allow us to have a little bit more transparency if things are shifting, where we would put that in and have the flexibility to adjust. Those two things are tied together for me. John, can you just talk a little bit why you have the structural cost scaling on the consolidated bridge? Why that's important? Well, yeah, because you're investing in our growth businesses of E and Pro. For Kumar's bridge, you saw structural costs were done coming down significantly. It's really important to understand that as it shifts. Part of that is efficiency, and part of that is just the distribution of the cost between the business units. One of the things is we've got to be careful or think about how that's happening, because we have to understand that not all that structural cost and that scaling of volume is gonna be directly in our structural cost too, because we're building out vehicles and electric vehicles with our partners, and that comes through contribution cost. There's some gives and takes in there and some give and take in there. You know, as we continue our discussions, we can talk more about that when we unpack things. One subtle thing about the flexibility we should just say is the Pro structural cost investment is multi-energy. Mm-hmm. Okay? That gives us a lot of flexibility. Probably one of the most important things about Ford is that we have Pro. It's like a dominant part of our, not just strategy, but our volume and our revenue. You need to know that the investment we're making refreshing all of the products on Pro is that on the van side, we've made a multi-energy bet. We'll have a pure EV for sure, but most of the investment we're making today, like on Transit, is multi-energy. That gives us a lot of flexibility to go where customers are gonna go because commercial customers don't overbuy batteries. Retail customers do, so far. Colin? Yeah. Thanks for taking my question. Colin Langan at Wells Fargo. The Model e margin targets are a little hard to follow ’cause you have the allocation of costs. I think it'd be helpful if you could talk a bit about contribution margin, ’cause you mentioned, you know, in your last investor event that you were losing or had a negative contribution margin today. I assume to get to an 8% margin, you need something maybe closer to a $10,000+ type contribution margin. How are you walking from exiting break-even to getting something that gets you there? What are the main buckets of cost savings from this gen to the next gen? Go on. Do you wanna start? Yeah. Okay. Go ahead. Well, it starts with volume, right? Yeah. Being able to leverage the capital, and just put more products through it, and the efficiencies go way up when you do that. Even on Gen 1, I think, Jim mentioned that we've found a plan to get $5,000 out of Gen 1. Gen 2, being from the ground up, is even better. When we add platforms that give you the opportunity to build software, that's. Software has pretty nice margins. It's, it's all part of that journey and having an organization that looks at cost reduction as beautiful. If you, if you want a great example of cost efficiency being beautiful, look at a Model T. Just a continual obsession over it getting better and better after you've launched as well. Smaller batteries, less labor content, cheaper distribution, okay? When it comes to smaller batteries, I have no idea what's going on in this industry right now. All I see are all these announcements of 450-mile range or 500-mile range. There was another one today about a 3-row crossover that's gonna go electric. These batteries are huge. If you have those kind of batteries, you will not make money. We gotta start talking about the size of batteries for the range, the efficiency. The second cycle of Ford's batteries will dramatically change, as Doug said, the cost of a battery because we're optimizing for the size. We're not gonna go to 600-mile range. We're trying to make the smallest possible battery for competitive range. We're trying to get the simplicity of the product down so that we have very low labor content. We're trying to get the distribution, so we get the physical inventory out of the distribution, that we don't have to go on broadcast media and spend $500 a vehicle on TV advertising. These are the real physical things that we've designed in the second cycle product. I don't understand why everyone is still obsessed with battery size. It's like 3 years ago, everyone was obsessed at how much money they were spending on EVs, and you wanted to know, "Hey, is Ford spending enough money on EVs?" Now it's, "Are you spending too much money on EVs?" It's okay, but the same thing's gonna happen with batteries. Right now it's like, "What range can you get?" The next question's gonna be, "Well, what size battery do you need for a competitive range?" The second is a better question than the first. The size of the batteries in the second gen is really important on our cost. Did I get it right in the slides that your next gen will have a 300 kilowatt battery for 300 miles of range? That would compare to, like, a Lightning, if then it gets, like, 140 gets 300 miles. Is that part of that opportunity? What we showed you was a walk that went from 150 kWh to 100 kWh and 300 in general to 350 mix, 300 at 70 miles per hour. We think. It also depends on the size of the vehicle and the mission that you're trying to accomplish. Yeah, we think numbers like 350 mix, 300 at highway speeds, plus super fast charging is a really great combination, and we wanna push that energy even lower. The efficiency obsession isn't in the first year of the program. It goes on and on, finding every little change that you can get for aerodynamics, a mile here, a mile there. We're not gonna stop. Just to clarify, what about IRA, and is that baked into your targets and lithium prices? Do you have those going down in your 8% target? Will all the vehicles qualify for IRA by 2026? I know some of the rules change in early 2025 with foreign entities a concern and stuff like that. Yeah. Our current eligibility, our Lightning- is eligible $7,500 for the full IRA. The rest of our suite, whether it's EV or even PHEV, because we get those cells out of Holland, Michigan, have the $3,750. You know, we fully believe that we'll be competitive, and we'll be able to qualify for IRA. We're still doing some of our final sourcing for those battery cell plants, so we don't have anything to confirm. We believe that the PTC will be a nice tailwind for us, partially baked into the numbers that you saw. We have 3 battery plants in the U.S. that we announced with BlueOval SK, plus we get cells from Atlanta. We believe we're really well-positioned with the PTC with our volume. lithium. One of the little known facts of IRA is that 100% of the commercial customers get $7,500 irregardless of where the battery's from, where it was built, where the raw materials are from. It turns out that IRA for Ford Pro is a really important thing for us. Yeah. It's a differentiator. Cause we always talk about the retail. We need to consider them. A lot of our volume is Pro. On the lithium side, I think we're going to see. Yes, a slight decline, but not probably as dramatic as we've seen with some of the banks and the estimates. Okay, thank you. Okay, in the back, in the middle. Itay? Thank you. It's Itay Michaeli from Citi. Just two questions. First, going back to the art of the possible slide for 2030, with some of your businesses already expecting to see a 20% EBIT contribution from software and services, I think by 2026, where do you think that can go roughly by 2030 as your installed base grows on the new electrical architecture that you'll be launching? Second, just to clarify, how much for 2026 cannibalization are you assuming from EV to ICE for Blue in, like, some of your high-margin products like the F-Series? The incrementality we see, you know, today it's much higher as Jim's talked about, that 50-60. That starts to come down, and we think around 40% as we get through second-gen in that range. That's what we see there. The art of the possible, you know, when we look at that, it comes back to, you know, the units in operation, all of that. When we step back and look at 2030, and we look at the blended and the numbers we've talked about, you know, that's for the new vehicles that we're selling. When we unpack everything, and I'm not gonna give all the details on it 'cause I know you guys are gonna want it, we're just not ready to do that 'cause we're learning here, too, and we're learning a lot. We can see by 2030 for Ford, the revenue for services in the $10 billion-$11 billion range plus. Some of my colleagues think that's conservative, and that's changing over time because we're learning more and learning more and learning more. That's the power of this when we get out there and what it, the potential it has for the business model and the cyclicality issue this industry has dealt with. The difficulty is gonna be handicapping what gets commoditized. Mm-hmm. Some of the software is gonna get commoditized. When and which software, revenues when that happens will be a key part to handicap. Yeah. That's why we have a lot of debate as a team. Because it's not altogether clear when will hands-free level two be commoditized. Right now it's extremely attractive for customers. At some point if level two, when level three comes, maybe that's not as, doesn't have the same pricing power as today. There. Mark Delaney with Goldman Sachs. Picking up on that point around L3, can you talk a little bit more on the types of use cases you imagine L3 covering? 'Cause some companies may have L3, but it's very situational, like a traffic jam. Yeah. It sounds pretty broad. You know, the second part on L3 beyond the use case, maybe you can talk about your visibility and confidence in being able to deploy a more comprehensive L3 because, you know, we've seen L4 at scale has had a lot of difficulties. That was part of your pivot, I think, toward L3. Now that you've been working at this, if you could give us a better sense on your confidence and visibility there. Thanks. Sure. Well, to start with, we want L3 to work everywhere BlueCruise works, and BlueCruise is gonna expand where it works, between now and when L3 arrives. The key use cases that we see are stop-and-go traffic, which is really tedious and actually a cause of a lot of accidents 'cause people take their mind off of what's going on. Then, steady state cruise, long trips, in which the same thing, you can tend to get bored or sleepy, so it adds safety, but it's also... I've taken 7, 8-hour trips, and the way you arrive at that trip and how tired you are and exhausted is just completely transformational. So we wanna start by being able to do that and now take your eyes off. Gradually, once we deliver that, start expanding it past what I just said that BlueCruise can do into more and more and more areas. Mm-hmm. Downtown operation with pedestrians and stop signs and double piked, parked cars, that is the hardest possible place to get L3 up and going. That'll come last. The reality is. It's not the most valuable place we can give customers autonomy. Emmanuel? Thank you. Thank you so much, Emmanuel Rosner from Deutsche Bank. Maybe I'll be the one asking the first question about Ford Blue, essentially give Kumar an opportunity to chime in. You're targeting Ford Blue margins by 2026, which are basically unprecedented, you know, for the business or for Ford. A big piece of it comes from cost, 4 points from contribution margin, 4 points from structural cost. You've been at it for a long time at Ford, you know, essentially trying to fix costs, improve costs. How do we get confidence from the outside that you can actually, you know, pull it off this time? And in particular, are there any specific big discrete actions that you can point us to? Is there gonna be some, you know, typical restructuring, headcounts, capacity reductions, things like that we could put a number next to? Let's start with the contribution part. Quality has been an uncompetitive view. In our view, we're uncompetitive. Just fixing quality at the pace that we're fixing would be about 1% or point of that 4% I talked about. That's pretty easily calculable because we know where our competition is, we know what our repairs per thousand are, the kind of repairs we're doing. Physically, what's different is how comprehensively we're looking at quality. Quality from suppliers, quality in our own manufacturing facilities, and quality of how we design vehicles. The failure mode analysis is much more robust than it used to be. Our engagement with our suppliers is much more robust, and our assembly plans, very key initiatives to reduce the error states. To your point of we've done it before, but this time what's different is truly institutionalizing all this. What we're using there is Lean. That tool and those principles are going across every organization, PD, manufacturing. Supply chain. I'm sorry. Supply chain. Oh, yeah, supply chain also, with John's team. Like I said, we've now covered more than 125 suppliers, very, very detailed reviews of where their processes could go wrong. The second big part is our part cost. In our part cost, again, what's different is a very cross-functional level of work between supply chain, benchmarking, PD, and manufacturing. God, I 30 years ago when I first started, there's somebody sitting next to me said, "You know, we're really going to improve complexity." It never really seemed to gain traction. This year, last 2 years, have been a watershed moment for complexity in our company. We've gone from thousands of combinations, in some cases, millions of combinations to like handful. That saves in so many different areas in contribution cost, in quality, in structural cost, like we have to engineer less. In that entire process, again, providing the teams with those tools, and marketing and specifically marketing and PD working very closely, where we are reducing, orderable combinations by a magnitude that we've never, ever done before. Emmanuel, we're gonna have to take that into the lunch. We're out of time. I just want to say, I think I need to say something as the CEO about your question, which is like, "Hey, Farley and team, how do you handicap like doing this?" I think a couple of things I see that's changed. We spend Tuesday once a month on cost, material costs and supplier costs. I've been here for 15 years, never seen that even during Alan's period. Number two, the comp for the team, a large part of it will be tied to getting the best-in-class quality. We've had year-over-year improvements, which we missed, by the way, but we've never tied being best in class in quality to cash bonuses at the company. If we don't do that, people are gonna financially have a big impact to them personally. What I see differently is that cost at Ford was always something that was done to you. Now on Tuesday, I'm starting to see it to be something that we all want to do, and it's a volunteer kind of ground-up exercise. What really feels different to me at Ford after being here for 15 years is that I'm starting to see an excitement around waste elimination, not task assigned. Like the word task is starting to leave our vocabulary. That's what Ford was for the last 15 years. You got a cost task, and that's why it never stuck. That's why it was tied to the CEO. The most important thing is that the team does this, you know, on their own. I think that feels differently at Ford as the CEO. I think we have a chance to actually make it sustainable. We'll see, right? Next quarter and the quarter after that, the quarter after that. Is there anything else you would like to say? You've been here for more than my 15 years. Yeah. I think Jim's point about cost was something that was done to us. People didn't own. What Doug's talked about is, you know, excellence in the design that's permeating through not only E, but Blue as well. It's a different approach. There's a tool we have now. There's a lexicon, there's a language, there's an approach. Jim, we do every Tuesday, but the other 3 weeks in the month on Tuesday, Kumar and I are doing deep dives with Doug and Lisa and the rest of the leadership team driving costs because we know this is our biggest issue. Quite honestly, Emmanuel, we've talked about this for years. You're not gonna believe us until we start delivering it. Correct. I know that. Correct. We know that. Correct. Right? Because we've told you this before. That's the truth. We have, and we haven't delivered. We have to prove it. We can talk about it, but we have to prove it. Okay. All right. Thanks, everyone, and enjoy lunch, and we'll reconvene in the breakouts at 1:00. Thanks. Thank you. Good afternoon. It's great to have you all back. What we're gonna dive in here is on software. Building a software business and putting it in the middle of our products is a pretty profound change in a company. If you're gonna play in the software business, Darwin has it right. Survival is gonna be about agility and the ability to adapt and adapt really quickly. Competing with software is just very different than competing in the traditional automotive technologies. There's no tooling, there's no factories, and as a result, everyone else is gonna move really, really quickly. You can't hack this to go fast. Writing software is hard. It takes really, really great talent, and it's different talent than the auto industry has typically had, and it takes a different kind of focus. I've been really lucky in my career to work with some digital teams that really understand how this is supposed to work and understand that software is a craft. It has a standard of excellence, and it's every bit as important as the physical work. That's what we're trying to build here right now at Ford. When we were here, when I was out front earlier, I said a vehicle can be a really great place for experiences. It would be so great that it wouldn't even need wheels to be a product. The ability to actually deliver that vision and the vision that I told you was about things I haven't even thought of yet, comes down to a couple of things, and Jim spoke about this, too. How well do you know your customer? How quickly can you learn, respond, make their lives better, and then figure out what to do next? Both of those, the learning about your customer and responding, both of them are software problems. The first problem to solve is what happens when you put software in the center of the vehicle that's not even what the world sees at first, and that's a connected data platform. Ford has 120 years of experience with customers, but now we have 5 years of connected data, which, at least for our current customers, is probably more important than all of the rest of that. It takes the way we think to a completely new level. It's real information on how the customers use the products. It's anonymized to protect their privacy, but it's super powerful. There are some easy examples. For example, we improve service by diagnosing vehicles remotely before the customer even knows anything is wrong. We're starting to do that now, we wanna have the dealer order parts, be ready. Ted will talk to you about even taking the next step in that, which is about prognostics. We know before the car has a problem or truck or van. When it needs maintenance, we can make that completely invisible. We can show up, take care of it, get out, one of the most annoying parts of owning a vehicle can be gone, basically. If we wanna have software-based thinking, where it's woven into everything we do, that data platform is critical. It's really tempting for product companies of any type to make decisions based on ourselves and what we think as customers. I like to call it DFM, design for management. That's not how we should be designing vehicles, especially with connected data. We should meet the customers where they are. There's a really simple example, not a glamorous one, but in a rugged vehicle like the Ranger Raptor, there are mounts that connect the body to the frame. These need to be as soft as possible for comfort, but then they've got to survive really rough environmental conditions. Typical industry practice is run them at the temperature that is the worst case cold, worst case hot, design them around that, and put them in the truck. What we would do in connected data is we would actually look how people are using their trucks and what the temperatures are and how often they are at these different temperatures and how hard the loads are at those different temperatures. The team went off and did that, and they made the Raptor R ride a lot better, smoother, quieter, and they saved $1 million. Designing to specific requirements like that lets you optimize instead of compromising. The most important part of that whole story is I never knew it happened until I went out and started asking people, "Give me an example. Give me an example." This type of work is happening deep in the organization. It's not a top-down initiative. It's engineers looking for the data to solve the real problem. This is a fundamental culture shift, and it's happening all over the company. Instead of theoretical conversations about what customers want, now you hear people say, "Hey, we can know what customers really do." The data goes beyond just engineering and product development. You can actually use it to change customer communications. We know where customers use BlueCruise the most and what times they use it the most, where it's most useful. Our customer team can go out, and if they want, they can put a billboard in a location where we know everybody that's got BlueCruise tends to use BlueCruise, basically speak to them at their point of pain and say, "Hey, we can make your life better right now." The connected data platform, though, bridges into customers as well. For retail customers, that's FordPass. That's our app. Whether it's your phone is a key, remote heating or cooling or unlocking the vehicle from afar, FordPass is already really heavily used. Our customers have sent over 1 billion commands to their connected vehicles using FordPass. In the commercial space, of course, Ford Pro Telematics and the ability to control a vehicle connects things back to the fleet owner, and Ted talks about just how important this is to a commercial customer for running their fleet safely and efficiently. Another fundamental ability in your connected platform is changing the vehicle without bringing it back. Everyone takes that for granted now on phones, but it's actually way harder in cars. In 2019, Ford put modems everywhere, which was a leap of faith. After just a few years, we've started Ford Power-Up, which is what we call software updates, and we've delivered at 11 million OTAs. The pace there is actually accelerating. I've heard that in the last couple of weeks, we've already done 1 million updates, so it's accelerating dramatically. We're the only traditional automaker that's actually gone in and made a major in-user interface update where we change the experience for Mach-E customers. That really great UI, which was based on what we learned for customers, what are they actually doing with the UI? What should be up front on the first surface, and what do they rarely use, and we can put back in the settings menu? We've brought that all the way back to vehicles that were launched in 2020. These customers are thrilled. They feel like they get a new car. Next, Lightning will get it. Then a really big deal is we start pushing it out to F-150s and Explorers and Expeditions, Navigators, Aviators, huge numbers of customers in our Ford Blue portfolio. About half of the updates we do are customer-facing features, things like in Model e, we improve the accuracy of range prediction. People were commenting that the car was too pessimistic on range. We precondition the battery so that as you're heading to a fast charger, we bring the battery temperature up, so you can charge at full rate. Even little things like the smoothness of a Mach-E when you get on and off the accelerator in one-pedal driving, we improved dramatically over an OTA. We didn't even make a big deal of it, but you could go on social media and say, "Wow, my car's operating a lot more smoothly." We also, of course, use it for rapid response to quality issues, and we can detect them quickly and make changes before they've really turned into big issues. This has been going on for quite a while at Ford and they're building a lot of success here, but it's really, really hard. Today, when we want to do an application for the customer, we've got to go deep, deep down into the fundamental architecture of the vehicle. The pile of parts over here that Jim was talking about, and I'd love you to, like, pile through it when you have a minute, every single one of those comes to us with software in it, software that's not written by us. It's written by a supplier, it's in there to try and control something in the vehicle, and then it comes in and gets integrated into the rest of the car. You can imagine what it's like to try and develop software on a platform like that. It's slow. Changes are really hard. You have to coordinate across all these different companies. When the team actually went out and said, "Hey, we wanna get BlueCruise now to version 1.2," which is what you got to experience, if you were on the ride from the airport, we have to change code on 7 of those different modules for BlueCruise, and 5 of them we don't even write the code for. We have to go through and do 5 separate updates. We have to do 1, wait, do a 2nd, do a 3rd, do a 4th, and the 5th one is what finally changes everything in such a way that you're ready to go. Customers have to wait longer, of course, and then you can imagine the engineering resources for teams that have to prepare each one of those updates and each piece of code. We've got to move beyond that. The next-generation architecture that we talked about this morning is changing things in a really big way. We're moving to much more of our software being in a centralized high-performance compute where we control the software, and that brings infotainment and our autonomy software also into two internally controlled modules for both the physical design and the software. We're doing things like upgrading communication buses. You need to talk over Ethernet, not just CAN. We're using high-speed connections like that. We're designing and developing a lot of other key modules in-house as well, which gives us that control over software. That also actually fundamentally changes the supply base. When we design a module, we pick the silicon. We start managing the supply chain way beyond just whoever makes that box and hands this to us. That's really, really important when there's a chip crisis. It's really, really important when you wanna get onto the latest silicon. It's really important for managing cost and quality. That's a big part of why we are vertically integrating in some of these key spaces as well. We can't just delegate our future to Tier 1 suppliers. You can hear about industry transitioning in this way, broadly, and you can go online. You can see different block diagrams of central compute plus zonal control. The really big change is not just dropping the hardware and it's okay, now we build a software platform on top of it. That's what we're trying to build right now, what we are building and will build. This will be a modern, stable, secure platform, and we will have the ownership of the critical software and all the different layers we need. Applications that used to come down and be woven all through different modules out here will sit on top of a platform where a programming interface will go between that and the lower parts of the software platform that we don't change as often, and that we can work with suppliers to get nailed down. The applications then can access sensors, actuators, and the other modules really down deep, but the applications themselves can be updated really quickly and really easily. This is a really crucial enabler for agile software development, for teams that must iterate, learn, redeploy. Again, it's something that you would expect from a phone, where you can get an app very quickly, but your updates to your iOS actually happen much more slowly. It's a fundamentally new way to think about cars. The software down deep is a different kind of software. It changes infrequently. It has to be validated. That's where you put your safety-critical software. It actually becomes even more stable in some ways than the hardware. It's kind of counterintuitive. You can spin the hardware, spin the boards, upgrade to the latest processor actually faster than you would actually go down and change this low-level platform software. It really changes the way we work. This platform first lands on our Gen 2 EVs, then it will start rolling out across Ford Blue and Ford Pro and really be the basis of how we start to build our future software business and software-centric vehicles. Platform thinking actually extends into a lot of different areas. We wanna focus a lot of these different areas into four pillars: connection, safety and security, productivity, and autonomy. When you try and develop software across a horizontal, you have to drive out complexity. This is not the traditional definition of how things are done in the auto industry. We want great human interface experiences. When we started, this shows you the kind of range of different display sizes and form factors, and each vehicle program got to pick its own. The design was completely fragmented, and every vehicle required its own design problem. Digital design was not really a discipline. It was a service you sprinkled around across the software teams. Going forward, if we want these fantastic experiences, we have to standardize. Now the programs get to pick. They get to pick from three different combinations of how we wanna set up display configurations, and then we can focus our engineers and our designers and our product people all on making these great across the different vehicles. It doesn't mean every bit of the software is gonna be exactly the same, but you leverage the capabilities of the basic platform over and over. These three will be used across every Ford, every Lincoln vehicle. We can optimize our products across the fleet as well. When you go to update, we can bring along the whole fleet. If you spread all this complexity into your installed base, you can't bring your customers along. Looking at things as installed base rather than annual sales is also a big part of this transition. How many products can we put into customers' hands that we will ship software to and that will improve over time? That's a key part of this complexity effort too, is in the world of software and post-purchase, it doesn't matter how many cars you just shipped this year. It matters what your installed base is and how many customers you can basically meet. ADAS is another one of our most important horizontals that extends across the whole portfolio. This is an entirely different kind of software to what I was talking about before. We talked about robot software. This isn't a device like a phone or a laptop. This is a robot. It moves, and the software actually controls motion of mechanical systems, from simple stuff like doors and mirrors, but most importantly, deep down into things like steering and braking and acceleration. That's what makes it possible to do autonomy. Level 3 autonomy, where you're able to actually take your eyes off the road, is gonna launch on our Gen 2 EVs, not right at the point that we land our platform, but as soon as possible later after we can get it right, and that's when you start giving time back to customers. That's their most valuable commodity. All of these experiences that we talked about developing for when the car is stationary, all of a sudden they become experiences and things you can do, including productive things like doing a video conference with work while you're moving. This is gonna be a complete game changer. BlueCruise today, even before we get to this new platform, is already a really big deal. It's risen to the top of recommendations from publications like Consumer Reports, and we can already lean on it and start using that to build the future. Connected data we looked at said number 1 reason people leave BlueCruise is turn signals and a lane change. If you experienced 1.2. One of the biggest changes is we put in lane change assist, That uptake is not only already in 23 Mach-Es, but it's gonna over-the-air back to vehicles in the fleet, and it's gonna do that starting this year. The number of times people that leave BlueCruise is now down by about 25%. We wanna keep working, so the next round of data has come in. In our internal testing, this is a release that'll take a little longer than 1.2, but we're already seeing the data that says we can take it down by 85% now. The evolution of autonomy is a journey. There's not some gigantic breakthrough where all of a sudden you can turn on L3. This learning, even though it's on our old platform, is really, really critical to us building the base of what we need to know. Suppliers can't hand you this capability. They can't do it and learn and be in contact with the customers the way we are. We will use suppliers in autonomy, but there will be key pieces of technologies, whether that's sensors or maps or things like that. We will integrate the platform. We will develop it. We need the best talent in the world to do this. Autonomy is a really hard problem. This desire to build the best team is really focused in what we did with Argo. Latitude AI is our new team. It's already up and running, and it's formed from the best and brightest minds at the former Argo AI, and they're building the technologies that will allow us to do this. When we say unimaginably great, as I mentioned this morning, it's a very intentional choice of words because a great platform is only a great platform if it's ready for all the things you haven't thought of yet. We love to generate ideas that challenge the platform. We do this in brainstorming session, come up with an idea, even if it's a stupid idea, and see whether the platform can support it. Even those ideas we know will change them 100 times before we launch them, and we'll change them 100 times more as we learn from our customers and put it out. We'll just show you some simple brainstorming ideas of what's possible instead of the relatively mundane ways you might think of. Let's start with trip planning. Trip planning, you can bring together a whole bunch of information and do things that you can't do just by tacking your cell phone on the dashboard. We can look at weather, now look at this as sort of a journey through space and time and say, maybe it's more important to know when it starts raining based on where you are in the trip. It's gonna start raining when we get to about here. Maybe we wanna know when it gets dark, not based on the time, but based on where we are in the journey. We can identify any scenic view before you get there. You could zoom in, you could see it, decide whether you wanna stop. We can keep track of where your friends and connections are, show you where they are, show you where you stop, where BlueCruise is available. You may wanna route your trip in a way where BlueCruise or L3 is most available, even if it's slightly longer. Then I mentioned bringing people along the trip. grandma can log in, get on the inside camera, and sing karaoke with the rest of the family. They can look outside the car and look at all the cool scenery that's going by. You can game, you can play games at a charging stop. Obviously, there's just many, many ways that we can do this. What about safety and security? What are some brainstorming and kinda crazy ideas around that? Let's say you have a Bronco and you go camping. A Bronco can now be your game camera. It can watch, identify, video, and record animals that are around the vehicle and around your campsite. We might see a deer and record it, so you can watch it on FordPass later. Maybe we identify that it's a bear, not a deer. We've got the capability to do that with our autonomous systems recognition, and maybe that makes the lights flash and the horn come on. Even safety and security can be a lot more than just putting a Ring camera on the front of the car, which is what a lot of people are doing out there. A commercial driver can show you really detailed examples on this, but they can lock, they can unlock from remote. They can attach very specific, workers to very specific vehicles and give positive feedback when the employee actually drives in a way that they know is safer and puts less wear on the vehicle, give them positive feedback. All of these examples, they're not unique. Given enough time, others could build these experiences out. Although with our design teams, I'd like to think they're not gonna be anything as useful and as cool as ours. What's important is that we understand what the customers are doing with this, and we use everything that we can possibly know about the customers as well as the connected data. That we can develop these features in weeks rather than months, deploy them, find out right away whether people even use them, and if so, how, and then make them better and better and better. The best features, the best productivity, the best safety and security we'll deliver are those we haven't thought of yet. Ultimately, the hardware platform won't be what differentiates. Our competitors can tear our vehicle down and figure out what kind of hardware platform we are. The key is this software platform, and that's what we have to set up to be able to move more confidently than anyone else and more quickly. I'm into airplanes. My favorite airplane is the SR-71. Designed in the fifties, still holds all the records for speed, and it was designed to spy and not get shot down. There were no defense systems on it at all, except for one. If a missile was fired at you push the throttle forward. That is really what we're talking about in the software world, is speed is what becomes your competitive advantage. Speed's the only defense. To do that, we have to set up this kind of platform and this kind of organization to be ready for the future. I have time to take a few questions at this point. There's time for one question. One? Okay. Yeah. I'm gonna camera first, so. Yeah. Can we get a mic please? I can give you this one. Yeah. Tom from Reuters. You talk about speed, right? That's the thing with software. There's a very high profile European OEM that's tried to do speed with doing software internally, and have had issues doing it. So much so that they've, you could say, somewhat capitulated and are using a supplier to provide them with level three. To what extent? We heard also from Jim earlier about how, you know, some of the ADAS is eventually gonna get commoditized, so maybe you don't make as much money off of it. If everybody's gonna have the same product, why not outsource it? You know, what exactly is it that? What is the need to distinguish yourself? Wouldn't it be quicker to use somebody else, you know? It's a good question. If you wanna have the same software as everybody else, there's no better way to do that than to outsource it. If you wanna preserve the option to have something differentiated, you're gonna have to do it inside. The other, the other piece of this is if you are starting to change your product to be different from the rest of the industry, outsourcing the software doesn't work, because of that right over there. Where they've gotta get in and now start working with your suppliers through your channels. And I have not seen with a product of the complexity of an automobile, the ability to actually outsource that level of work and have it land and get integrated in your product and integrated well. The way a lot of auto companies have tried to manage software is the same way they do supplier hardware. What can happen is what were design engineers inside the company become program managers. They program manage your supplier, who actually has the CAD and engineers and designs the product. Once you do that, you're at the mercy of the supplier. The main question of where is your differentiation gonna be? I mean, you could ask the same question of some very successful companies today. The other people have exercise services, other people have cameras. The difference is in, I think, how we connect them to our customers. People respond to really, really well-done software. They respond to companies that pay attention to latency, to beauty in the system, to ease of use, to the ability to learn and know what you want. Software can be very personalized, and people can love and be loyal to software in ways that are just as strong as hardware. It would be a complete delegation of our destiny to hand over this kind of core software to a supply base. I don't think it would be faster, actually. I think it would be a lot more complex, and we'd end up with something that we couldn't change. It would be really hard to change in the future. Okay. Thanks, Ryan. It's great to see all of you. Enjoy the rest of your day. Okay. Good afternoon, everyone. How are you? Great. Okay. I think, before we get started, Lynn, did you wanna make one small announcement on questions? Yeah. Just, during Q&A, we're gonna limit it to panelists. No talking and for your cooperation. Yep, if you could please, there will be microphones for you to ask your questions because it is broadcast, so we wanna make sure that the folks online can hear you as well. If you could oblige, that would be great. This is gonna be a little bit lighter in format this afternoon. We had a lot of announcements this morning on our raw materials strategy and our lithium deals. We talked a little bit about our EV industrialization plans and manufacturing, although, given the limited time, we couldn't go into a lot of detail. This is your opportunity to ask us any questions that you might have. I have with me some of our fantastic team members, and I will do a quick round of introductions. First we have Erica Klampfl. Erica leads our lithium team, and needless to say, she's been pretty busy the last six months on all the lithium deals. 15 years of experience in the commodity industry. Everything from commodity pricing, forecasting, valuations, and she came to Ford by way of Rio Tinto. We also have Katie Wang. Katie started at Cisco. 15 years of experience in supply chain. She spent 10 years at Apple and Tesla buying batteries and worked on iPhone, Apple Watches, and of course, EVs. A lot of expertise all the way down to the Tier 4 and 5 levels in battery cell raw materials. She leads our global battery cell and raw material team inside of Model e. Peter Wilson. One of our manufacturing veterans. He leads our manufacturing teams for all the battery cell plants and then all the battery pack plants as well. 28 years at Ford. He has helped us build 4 major plants in Mexico and China, 7 major existing transformations. Great depth in manufacturing expertise and technology. Again, he's dedicated to us on our battery cell team. With that, we wanted to actually spend most of the time. We actually ran out of time in our first session, we wanna turn it over to you to ask us any questions you might have. Again, raw material strategy, battery cell strategy, and anything around the industrialization plan. Yes, Colin Langan at Wells Fargo. Maybe to kick it off, I mean, you have the EPA rules imply about 67%, or at least the proposal is implying 67% BEV by 2032. You know, since we have lithium and supply chain experts here, do you think there's enough lithium that's gonna be available by those time frames? It's pretty important since you just locked in a lot of big deals this morning. What are your thoughts as experts on that? I'm kinda curious. Yeah. Lithium is actually an abundant material in the ground. Doesn't mean it's abundant economically and at the time frame that the market wants it. It's also not abundant in that there's not a lot of know-how or capability in the industry. Just five years ago, the lithium market was 200,000 tons. It needs to grow to over 3 million and, you know, globally to meet demand within the next, you know, till 2030 or so. The real bottleneck is time and mining lead times and development timelines are a lot longer. There's a lot more work because you are advocating the Earth. You know, you have to really plan that out. I guess my quick answer is that there is enough lithium, but at the timing that everyone wants it, I would say no. There is a supply-demand gap. In the past several years, you have seen a lot of OEMs recognize that bottleneck and go into direct sourcing the material. Those suppliers, those lithium producers, they want to be connected to the OEM directly so they can understand really where demand is going rather than sort of hearing it along the grapevine of the value chain. You know, in the long run, there could be enough lithium. It's just gonna take a long time. To grow at that pace is also pretty unprecedented for a commodity industry in and of itself. I mean, when was the last time you saw commodity growth of supply increase at 20% a clip chronically? It's not very easy. Thank you. One of the things was mentioned, actually again yesterday, one of the sessions yesterday, we were learning about LFP and how the range is actually it doesn't go down actually as much as maybe a lot of people were fearing. It was like 320 miles just goes to 270. And we heard also from the presentation this morning from Jim about how kind of the 300-mile is the sweet spot. You guys had also said that you were targeting, I believe, only 15% of the portfolio to be LFP. Am I understanding that right? Why not go higher? That's a great question. It's 15% in 2027, and we start the ramp of production of the LFP facility in Michigan that we're building right about the middle of 2026. In 2027, we're still on that ramp curve. In 2028, 2029, you're gonna see that LFP capacity really start to then peak. I think it'll be higher than 15%. My guess is probably in the 20-25% range. That was just our first full year of production, and if you know battery cell plant capacity, it takes some time to actually ramp to peak. On the lithium topic, there's alternatives to lithium too, right? Like where, they're probably still in the development stage now, but, I mean, how realistic are some of those? I would say our Ford Ion Park team does a lot of that advanced research. I mean, they're constantly innovating. I think you're talking about sodium ion is probably my guess. But we don't see that being at a commercial scale anytime before the end of the decade. Based on the first question that was asked, what we needed to do was make sure that we actually had supply capacity for not only the lithium hydroxide, but I think it's important to note some of that would be lithium carbonate for LFP batteries locked in so that we had our plan de-risked through at least the back end of the decade. You know, when we launch these gen two products, we wanna make sure that for the first few years we are not supply constrained. If there's anything we've learned about the first launch of the Mach-E and the Lightning, we were manufacturing capacity constrained and supply constrained because we just didn't understand the demand. Now we're actually unlocking that on those gen one. We've learned our lesson and now for gen two, we don't want to be in a position where we don't have the lithium that we need, hence the agreements that we announced this morning. Thanks. I'm interested in your take on the dry electrode process, whether or not you looked at that and thought about that for Ford. I guess the same question on the 4680 form factor. Have you kind of thought about that, tested it? I know it's not just Tesla that's talking about it, but some suppliers as well, maybe at the behest of Tesla. Those two things. Maybe Katie just, like touch on dry electrode. Sure. Yeah, let me start with the form factor discussion. I think there are different types of form factor. 46, 80 cylindrical form factor is one that a lot of folks are interested in. I think it takes a different type of skill set to manufacture for cylindrical cells and also be able to assemble cylindrical cells into packs. I think that's where everyone, you know, they kinda look at different form factor to decide, you know, which path we're on. Where we are, I think we're fairly onto the pouch and then prismatic, sorry, pouch and prismatic cells. That's sort of that's where our development, that's where we put our research and all that into. It just, it's just, like, different technology options that we're choosing. The dry electro is more the chemistry portion of the battery, so that's the inside of the battery. Also, where we have gone is where we are at the beginning of our EV stage, where we're looking at the NCMs and LFPs that we are familiar with that are well-known, that can, that we have partners we can work with and actually be able to produce this. In the short near term, like we're, you know, we're looking at within a decade, this is all within the game that we're growing our EV strategy. This is the right thing. Like what Lisa was mentioning for Ion Park and other research, we are looking at different types of chemistries and different options out there, and that's probably gonna be a little bit towards later in the decade and even forward to kind of bring that. Not really. Well, not behind the curve. If you think about battery strategy, right, generally EV is growing, all the chemistry is gonna grow, continue to grow. Individual chemistry is gonna grow on its own. If the overall pie is gonna grow, maybe the percentage of that particular chemistry might change between LFP over time trading for potentially sodium and other ones. Overall, the pie is still gonna grow. We're gonna where we're setting up today is gonna set up for the foundation of our EV strategy, where the battery's coming in. As we continue to grow, maybe there's a new chemistry that will pick up and then that continue to grow with our EV strategy. You're gonna have to trade out, but your pie is still growing overall. That's, in the near term, you have to go for something that you can really prove, that's really proven that you can actually deliver today. Yeah. I'll just build on it a bit, too, that in a manufacturing process, there's a lot of different things to look at to optimize the processing. Dry is one, but the formation methods, the way that we build an array or a cell to pack in the future or even the way that we design our systems. You know, we design our systems built on our digital manufacturing methods, and we've used those methods very successfully in our history, in our ICE facilities. Also, as we've launched our lower volume battery systems, those methods that we've developed have been very successful. Lisa touched on a 90% run at rate efficiency, that's where we combine, like, all of the equipment in a facility, all the yield rates at 2% or so, and put them all together. All of those make an efficient manufacturing system. So we've really been optimizing our systems. With the new facilities that come online, we've got an even better methodology coming in for those ones. I would just add on form factor. There's a little more flexibility than I think people recognize. I mean, we launched the Mach-E with an NCM pouch, within 18 months, we're now launching an LFP prismatic in that, and we're doing the same thing in the Lightning. When there's an opportunity, we can flex if we need to. Our LFP facility in Michigan obviously won't be a pouch facility, we do have an opportunity to bet on different form factors. It's not the 4680, obviously, it's not also only pouch. Thank you. Dan Levy, Barclays. Not within the battery specifically, but maybe you can talk about some of your efforts on battery components or ePowertrain components to help drive efficiencies. Specifically, what's the level of vertical integration you're looking at? Then within the inverter, how much work are you doing there? Is there any efforts to bring any of that in-house? What are your efforts on sourcing silicon carbide? Yes. Thanks, Dan. First, let's just start at macro level with eDrives. We have huge capability just because of the fact we used to build our own engines and transmissions. When it comes to eDrives, we're converting a lot of our transmission plants to eDrive plants, and that includes in-house motors. That's a given. We've been making our own hybrid transmission for quite some time, so it wasn't new for us to actually make our own eDrives for EVs. That's table stakes. Inverters would be... that includes all the eMotors, in-house eMotors. Inverters are the next step, and we're really excited about that next frontier on in-house inverter. That also includes power module and silicon carbide sourcing. One of the things that we've learned through the chip crisis for sure is that we wanna control component supply. When we created Model e last year, we also created an organization that will now do component buying for certain components in our electrical system. Whether it's the fully networked architecture that Doug was talking about and building our own modules and controlling the component supply there, but also in our EVs with silicon carbide. I can't go into a lot more today, but I can tell you when we think about vertical integration, that's the depth of vertical integration that we're working on. Hi. It's Adam Jonas from Morgan Stanley. I wanna go to a comment that Mr. Farley was talking about battery size. I remember from the movie Wall Street, Michael Douglas on the big cell phone out east on the beach in the Hamptons and kinda looking back at that right now. When I see a lot of the battery metals forecasting, they have battery size getting bigger, which just seems odd to me if you can charge if you have chemistries that can charge faster and you have charging ubiquity. I'm curious if you have an idea in terms of, you know, where optimal battery size would be for your vehicles, whether that could be maybe perhaps lower than some are forecasting. Then I have a follow-up. My guess is it's probably lower than some are forecasting, and it's gonna vary by vehicle segment. You know, the three-row crossover that Doug was talking about, three-row SUV, 300 miles going 70 miles an hour, an ability to charge 150 miles in 10 minutes probably doesn't need a larger battery size. He showed how we're looking at that, 'cause it's really a fundamental shift in not chasing after bigger batteries for range. It really is all about that efficiency discussion. For our trucks, there might be one or two different applications, depending, 'cause our truck customers, as you know, they do varying degrees of work. Some are retail, some are Pro. LFP. LFP will play a really vital role for us because there's a certain use case for that technology, especially in a commercial application or an application that might be more cost sensitive. I, you know, I can't comment on why others are designing the way they are, but battery capacity is expensive and you don't wanna use it inefficiently. We're really training our muscle at Ford that that is the number 1 thing you have to think about, whether you're the tire engineer, the weight engineer, the aero engineer, the front-end engineer, is that it all comes down to dollar per kilowatt-hour of the size of the battery that we're putting in. That's also why we wanna take the inverters in-house, because now we have 1 step further control of the power electronics. We write the software today for that, but now we have control of hardware and software, and we're taking that design to the next level. I would think you're probably going to see maybe smaller batteries in Ford products, but equivalent performance or better trade-offs. Okay, great. Lisa, as a follow-up, if there was a superior battery technology that was provided by a competitor, would Ford rule out licensing that technology or outright buying it over time? Well, I think we did. We're licensing an LFP technology. We'll be the first to scale it at significant volume in the U.S. We're building it ourselves. It's a wholly-owned Ford subsidiary. We will operate it. That'll flow through the full $45 per kilowatt hour PTC credit to Ford Motor Company. We'll have significant scale. One of the lithium announcements that you saw, SQM has lithium carbonate that will supply the facility. We have control of the raw material value chain of that facility as well. You know, I think where appropriate, absolutely, we would. Would you draw the line at buying or licensing a technology from Tesla or another OEM? I don't know. I really wouldn't draw any lines, to be quite honest. We're at the beginning of a really big industry transformation. No, I wouldn't draw a line. Just a couple of follow-ups. Jim Erwin at McMahon Capital. I'm violating the sell side policy, sorry. Couple things, maybe this is a question on the manufacturing side. Scale, a lot of commentary coming out of Asia about good luck catching up to BYD and Tesla, you know, with the vertical integration all the way back to batteries in some degree. Can you kinda share with us your thinking about, you know, as you hit 500,000, 1 million units, you know, pretty soon... Mm-hmm. How much differential do you see from a cost standpoint and scale in terms of that battery cost, assuming kind of similar chemistries and form factor? I'm trying to get my hands around that issue, 'cause obviously those companies have ambitions to grow to much higher levels very quickly as well. Mm-hmm. That's the argument. I just wanted to kind of hear a counterpoint. Sure. The first part is when you scale up, you have to design a system that's going to run efficiently. The way that we're scaling up, we're creating systems that have multiple parallel paths, so we can assess and analyze our bottlenecks and constraints. These are things that we do really well by taking all the data and running a facility very efficiently. We're experts at that. We've proven it in the past. We know how to manage systems like that. Also the whole we're, you know, we're vertically integrating everything in the system, from the raw materials through the cell manufacturing process through the pack system. We've got control over all of those systems. You start finding things like what's the best way to buffer the systems completely, right? Our labor efficiencies. Some of our new systems that we bring on, we're using, as Lisa had said in the earlier one, about 60% less labor to run the facilities because we've been able to optimize and automate the right areas. Just 1 example, when we build our, our next generation pack systems, we're gonna be loading 1 array every 6 seconds in those packs. To do that, you have to know how to automate. You don't wanna automate just for the purpose of adding it in and You have to have very targeted methods of doing it and ones that you know are gonna be successful. 'Cause if you don't automate properly, your overall equipment effectiveness, your OEE, as we use in the industry, that's what makes or breaks you. Those are the things that we're doing within Ford to automate at scale. It was asked in the bigger session about per kilowatt cost, and I know you kinda held off on putting out a target. I did have a question, a follow-up on the material cost. I know you're securing supply with your partnerships, but you're also building in lower material cost into your midterm outlook, including in the battery cell area. Can you share with us the confidence or visibility you have in that? Not in securing supply, but in projecting lower costs because every battery manufacturer I talked to three years ago was wrong on where they thought material costs were going or at least the volatility, 'cause they're coming down fast now too. Can you share with us a little bit of the visibility and why you have confidence making that comment about? Material costs for key elements going to batteries are coming down in the next 3 years, not going up? Yeah. First of all, we have transparency and visibility now that we never had before. When we started out with Mach-E and Lightning, those are buy-sell relationships with the suppliers and, you know, you have a contract between the two. Other than indexing on some key raw materials that you do as a commercial, you know, agreement over time, you don't really have deep insight into the full value chain. As you know, there's many layers. They're marked up over different layers, and that's just not the relationship we had. We were only sourcing tens of thousands of units at the time. We made the first choice is, okay, when we really lean in now, we wanna have a JV relationship where full cost transparency is there, and that's what we now have with BlueOval SK. We have the same thing in Turkey with our JV with LG. An even step further on transparency when we own the facility and we operate it in Michigan for LFP. We're as close to a cell manufacturer as you can be by knowing all the equipment costs, knowing the labor costs, knowing the bill of materials, getting to source those bill of materials ourselves with our contracts and our Ford leverage. The level of transparency and where we play in the value chain is much deeper than it was before, which is why we have more confidence in where we know the cell cost is gonna go, because we control some of it. We don't have a crystal ball on pricing, but I can tell you know, it's probably a conservative estimate on where we have lithium hydroxide, carbonate, nickel in the plan. Those are backed up again by some of the contracts that we've negotiated and I can't give you the terms of those, but obviously we know what they are. We know, you know, whether or not there are discounts or where we are at market, and that's all baked into the, into the forecast. Transparency is key. Control is key, and that's something we talked about in the prior session. You know, we now have control of our value chain. There's lithium hydroxide, there's carbonate, there's some intermediates. Instead of relying on a cell supplier to give us what they wanna give us, we can move our material around where we need it. If we wanna flex more into LFP and use more lithium carbonate, we have an opportunity to do that. If we wanna flex more into NCM hydroxide, we can do that. If we don't like where the prices are moving and we wanna flex some of our intermediate material, we can do that. We now own that material, not necessarily our cell suppliers. Great. Thanks to Itai and Kelly from Citi. Just a couple follow-ups from some of the last few questions. First, what do you think is the right amount of range for a three-row SUV and in a full-size pickup? 'Cause obviously part of what you have to make a call on is the appropriate range, not oversize, maybe the battery relative to demand. I'm sure you're getting a lot of data from your current EVs. Then just secondly, how do you benchmark just the miles per kilowatt-hour efficiency that you're targeting in the next few years relative to what you think your competitors might be able to do as well? I think those are probably a great questions for Doug Field. I'm not sure he will answer your first one. I think those are conversations probably better for the engineering team and Doug. Any last questions? Otherwise, we did have a couple that were pre-submitted. I just wanted to touch on maybe one, and a few of you asked a question similar to this. We announced a few deals with some of the key lithium major producers today. How has Ford been able to do this? How would you look at those deals relative to vertical integration, for example, that some of our competitors are doing on their own lithium hydroxide? Yeah. I think through this whole EV transition, you've got OEMs coming into the market to direct source raw materials, and that's not a typical activity. It's, you know, for many OEMs, it's very new. You can't approach raw material suppliers the same as you would a typical purchasing agreement. You have to approach them as commodity producers. We take a supply chain approach to working with those suppliers. The other piece is that they have to build a lot of capacity. You really need to understand what their needs are, what the risks that they're taking on and just know them very intimately. You know, we take that approach. We have people in our entire team that have, you know, really deep experience along the entire value chain, so understanding these perspectives. I think, you know, our suppliers have really identified and appreciated that approach. As far as, you know, level of integration and all that, you know, last year we did announce a deal with Liontown, which I think is a good example of going, you know, further into the value chain and buying the intermediate product. The intent there was really that, you know, there's a recognition of a supply-demand gap in the lithium market and that you need to do, you know, you have to sort of enable and accelerate the development. You know, we took a position where we would buy intermediates and help solve for the refining piece as well. The way that we would approach that, you know, we know how hard it is to make battery-grade raw material products. And, you know, a miner skillset and a refiner skillset, it's very different skills. Miners don't always have those skills right away, and they need to focus on bringing the mine online. The way we would approach it is actually through partnerships with the ones that are experts in refining, that have built the capability that we've already been working with in various activities. That's kind of been our approach is, you know, through partnerships. Any last questions? We have about a minute left in the session. Hi, Trevor Young at Barclays. I was curious if you had an updated view of what part of the supply chain is, I guess, the scariest for you at this point? You know, where does the concern lie in terms of shortages in the near term and then into the long term? I can touch on, you know, raw materials. I think, you know, the battery supply chain is still so young and immature and, I think, you know, Benchmark Minerals quoted that you need 300 new mines to build to support the battery supply chain. That's kind of a scary thought. You know, and you need it very fast. You don't want to bring a bunch of mines online irresponsibly, you know, that, you know, mines that haven't done the work to make sure that they have a really robust plan around the entire cycle of their project. I, you know, that is a scary thought. Even in the U.S., if you think about it, Americans are not really familiar with mining anymore. The mining industry has, you know, dropped to, I think it's a fraction of what used to be 30 years ago. A lot of, you know, there's not the capability that exists anymore. It is scary because you need to rebuild that industry. And you need to do it, you know, responsibly, but also you wanna do it fast. I think that is really scary. That's why it's so important to really understand the need of the suppliers. They have the needs, and if we wanna develop and accelerate that development, you know, you have to recognize that risk that they also have to take. Yeah, I would say it's not necessarily a constraint because we do have arrangements, and you saw today, you know, carbonate from Chile, hydroxide from Australia, some from the U.S., some from Canada. U.S. domestic is probably what would keep me up at night. You know, we've got it from IRA compliant countries, and that solves for one thing, but it doesn't solve for ultimate closed loop recycling and reuse of this material. We want it to be close to where these vehicles are at end of life, and we can get those batteries back. You know, for me, I love thinking about the future, about we have all these dealers, and they're concentrated in the U.S. where we sell and have these vehicles, and these EVs will be at end of life there. What we ultimately, their nirvana is getting those batteries out, putting them back through black mass, back into processing capability in the United States near that, and then back into the cell plants. While there might not be a current capacity issue, and we've sourced to solve for that, we haven't necessarily solved in any of the industry in the US the full closed loop. I think that's the next big frontier that we have to take on. Hi. Hi, it's Jim. For me, I just wanna say one thing about this question. For me, what's, where the vulnerability is the geopolitics of the processing. That, to me, is what keeps me up at night. What. Notionally, what% of the processing will be done in China for lithium and nickel? Probably 80%. The agreements that we have today help de-risk us there because it will be processed in Australia, Australian hydroxide, Canadian hydroxide, and Chile carbonate. To go further than that, we really have... There's not enough that's non-China, to Jim's point, to service everybody. That's the fear. There's not enough non-China processing to service everybody, which is why the agreements today were so pivotal for us, because we've been able to manage our lithium supply chain now without necessarily relying on that processing in China. We can't scale it. It won't scale for everybody, and it won't scale forever. And it's certainly not domestic. At some point, all of that has to be domestic to close the loop. Okay, thank you very much. I'm getting the wrap-up sign here, so I really appreciate it. great questions. Thank you all for attending today and yesterday, driving the products. I really appreciate it. Thanks, and have a good evening. My name is Wanda Young. I'm the Chief Marketing and Experience Officer for Ford Pro, and we're happy that you're joining us for this breakout. We're gonna dive in. We're gonna get into a series of questions, and then we're gonna have open Q&A as we move through the questions. I'd like to welcome you, and then we're gonna have our panelists introduce ourselves. Alex, would you please introduce yourself? Sure. I'm Alex Purdy. I'm the Head of Digital Product for Model e, which means that I help Ted make sure that all of the vehicles are fully networked and develop software applications for Pro customers on both the vehicle and in the cloud. Hi, everybody. Muffi Ghadiali, General Manager for Ford Pro Charging. My team's responsible for hardware, software, and services as it relates to Ford Pro Charging. Ted Cannis, CEO of Ford Pro. I'll just add a little bit. Alex and I have been working 2 years now. Alex also spent some time at John Deere, sound familiar, in precision agriculture and the similar sciences, leveraging a lot of that knowledge and 2 other folks on the team. Muffi Ghadiali here, if you might remember, we acquired his company 2 years ago, Electriphi, that was dedicated doing commercial charging for all sorts of customers, not just Ford, obviously. He had previous background also at ChargePoint, doing their DC charging, we have a longer history in this space than most are in a lot of tech space. Wanda is on the team for similar reasons when she came from Samsung, but she'd also launched ESPN to ESPN+ as we are trying to move a business into the digital place. Similarly, when she was at Walmart, rolling out digital and social media across many thousands of stores, some of the same challenges and opportunities that we have linking physical and digital properties. All's part of the plan, I would say. That's right. All right, here's the way we're gonna facilitate this. There's 3 topics. We're gonna bounce around. We wanna make this interactive. I'm gonna funnel a few questions over to the guys, and then I'm gonna bounce out to the audience. We're gonna have a lot of interactive dialogue. Okay? Number 1, I wanna jump into software and innovation. Let's talk a lot because you know that there is a lot of change happening. What we talked about yesterday, some of you went through our garage and interactive experiences. We talked about what Ford Pro is doing across software, charging, innovation, all of the applications that are helping drive our platform forward. This is gonna be a key differentiator for Ford Pro. As we talk about the quality and effectiveness of our software platform, this is really going to set us apart. Model e is a center of excellence within Ford Pro. Alex, I wanna jump over to you. Help us understand how Ford Pro Intelligence as a platform, we've got a lot of connected vehicles that are offering telematics, other applications and services that use the data coming off the vehicles that are helping vehicle health and our customers keep their vehicles on the road. It's gonna get a lot of, it's gonna get exponentially better. Yes. Help everyone understand what does this mean for things like uptime? Yeah. The next generation platform that Doug talked about is tremendously better. One, it's integrated. It has a wide variety of sensors. It has centralized compute, has low latency over-the-air updates. It has the ability to do remote prognostics and diagnostics, and a modern software stack and architecture with layers of abstraction between hardware, middleware, and application layers that allows for fast and secure deployment of applications for our commercial customers. You know, we're not waiting for that next generation of architecture to continue to build this moat that Ted talked about. We're delivering a number of features even just this year, things like in-vehicle driver coaching, fleet start inhibit, and speed limiter that we know are gonna have really material impact on our commercial customers' profitability. We are gonna continue to focus on areas like safety and security, productivity and ADAS that we know are gonna eliminate and lower costs for our commercial customers, eliminate downtime, and give fleet managers more control of their operations. Ted, jump in on that. Sometimes people may not associate what are the business benefits. You know, commercial customers, they're gonna pay more for some of these new enhancements. What's ultimately the business benefit for the customer? What's that gonna mean for us and our financials? We'd love to hear questions from you guys as well. For me, one of the easiest things is to look outside our business completely and think about your home. If you're at home and you've started to go into the digital world, you've got a Nest, and you're adjusting the thermostat, you're controlling it when you're on vacation, different rooms, different. You're saving money, and you're also becoming more sustainable. You might have a Ring in front of the house, a camera that's monitoring people who deliver packages, things going on for security. They tend to be bolt-on additional pieces of equipment that you put in there to do a service safety and security. I have a sprinkler system that's good with taking information from the cloud about the current weather, so it's doing water when it needs to and not doing water when it needs to. Again, saving money, using cloud-based information for control, et cetera. Lighting. Goes on and on. That's what we're doing with these vehicles. If you're a commercial business, that is your day every day. You're trying to save your utility bill. You're trying to reduce fuel costs, manage your employees, your fuel costs. All of that is what we're doing with an integrated suite. For them, therefore, it's a real. It's just like your business. They got Excel spreadsheets. They file taxes. They know what they paid on fuel because they're deducting it. They have this information. They know how far they drive. It's not a guessing game like retail, if I might wanna use this. You know what it is. That's what makes it a lot easier is to do a business proposition that works. I wanna go back to something that Jim said earlier. Alex, you mentioned John Deere. You were at John Deere. I think it's really instructive for everybody if you think about how do we have a corollary. You were helping develop the digitization of their business model. You know, take us through something like that. There was a change in services, the before and after of what was happening there. Give us the same corollary for our Ford Pro business. Help everyone understand what's coming in this lineup that's going to be similar so that we can take a similar exercise. Yeah. The Deere transformation obviously was tremendous. It digitized the farm but more importantly than that, it changed the habits for what buyers were growing, what type of equipment mattered. It changed economics for OEMs. It created incredible, powerful economies of scale. We needed big data elements to be powerful, to be able to prognose things, and our solutions got better and better and better. Over time, because we had these economies of scale. At Ford, we've done extensive primary research, and it suggests that we can have an equal kind of payback opportunity, you know, 4 or 5 times for a customer on some of our solutions, creating valuable propositions for customers that drive up their profit and loss statements. You know, we have really good information to suggest that even with today's architecture, we can have tremendous productivity improvements. Something like 44% reduction of idle time, 70% reduction in parts or gear theft, and a 40% reduction in energy costs. I can prove this to customers with their own data. I can show them their data and prove it to them, and when that happens, we're able to extract value. It can be pretty transformative. All right, let's take a pause. I'll jump out to the audience based upon what we've had so far as conversation. Who'd like to jump in? microphone here, please. Hey, yeah. We can hear you. Wesley Brooks from HSBC. Talking about this, I guess the value you can add, and how do you think about pricing that value? You know, I know the agriculture guys often, like Deere, would take a third of the incremental value or 50%. What are the limits on how much of that value you can take and where you are today versus where you can meet? First of all, obviously we're looking over the life cycle of those costs, like a SaaS business, like you would. In this case, most of our competitor, in fact, all the competitors that matter, are not OEMs. They're big companies that are in the software-only business. There is pricing out in the marketplace that we add. Now, if you're a giant company, big fleet, just like in vehicles, you can get better pricing. Generally, there's established pricing, and our product is competitive. It's super competitive 'cause we have the embedded modem in the vehicle, so no plugin device required to get the extra signals, and we can in-integrate it into our service backend, which you couldn't do with the other plugin device. We have advantages that the third-party software guys don't have. The model holds up pretty itself. The main variable cost is, of course, cell phone costs. It's pass-over GPS signals. There's nothing else there other than the cost to build and construct, and we have the scale. Because we are so big in the marketplace across our vehicles in this space, commercial and full-size vans and trucks for both government and the commercial business, we can scale that software very, very well across all the business units. Great. Thank you. That was a great question. All right. Anything else? Ryan or Itai or Tom? Who's first? Microphone goes to the- Itai. Thank you. Itai. Just the last question. Ted, to that point, how many more parameters can you extract now and on the next electrical architecture versus some of those third-party competitors with the plug-in solutions? I think the key thing in here is one of the things even right now, where we're going to more is command and control over the vehicle. That is the big differentiator. If you have a third-party device, what OEM is gonna let you in there to control the speed and capability of the vehicle for thefts through the security wall? Where others can make a descriptive thing, like you guys experience our vehicles, the nagging in-cab coaching, and you can go back to the office, and they say you went too fast. In our case, we can set the speed limit. You will not be able to drive the vehicle more than 5 miles over. You will not, at certain times of day where the vehicle is located, be able to operate the vehicle. If you say, "I only wanna work from Saturday to Sunday on the weekends," it is not operable. Because we have control over those settings, driver assist settings, you cannot turn them off. We've got them a certain way. Some drivers like to get rid of their driver assist settings if it's an employee driver. That's a big difference in the competition. Where we're going is the integration of all that equipment. If you imagine a cell phone, you say, "Well, I'm gonna have a plug-in device for the camera and a plug-in device for the gyrometer and a plug-in device for the accelerator hanging with cables." That is what the industry is today. Plug in everything. In the next gen, they're all integrated. You don't have to get double the cost of the hardware. You don't lose them during service. You don't have the wiring and the quality issues. They're all integrated, all on the platform, and not a bunch of third-party applications done by the supply base in AD modules. You have control over the software, so you can make the changes and new functionality immediately. Night and day. All right, I'm gonna keep us moving. I was just curious. Sorry. Let's hold. Let me just grab the microphone so that everyone can. We can pipe that into the stream. Ryan? Thank you, Ryan. Ryan Brinkman from J.P. Morgan. Thanks for squeezing me in. I was just curious, like, how much of the business model is kind of taking a Ford-created, more standardized fleet management software solution and bringing it to small businesses that don't have any fleet management system and, because you can amortize the cost they couldn't afford to create their own solution versus maybe a larger business where you're creating more like a customized approach for their needs? Right now it's primarily smaller businesses. How can we do that, which is great for us 'cause there's hundreds of thousands of them, and we know them already from the dealerships in Europe and North America. I saw, rolling in before this, we had, we just picked up 35 Transits in Berlin, and the guy had. They were trying to manage their GPS for billing on movement. Their service of construction was they build for the amount of movement to a site and back from the site, and they needed that. One of many, many examples. We have a lot of functionality coming through this year that takes us up where we're moving from, let's say, fleet size of 15 to 20 to much bigger. There are certain features that we needed to add along the way. They love our platform, and they love the integration, and they love the dashboards. Probably the easiest in the business. There's a few things that we need to add, and that lets us scale to bigger quickly. I'm gonna go ahead and move us forward. Go ahead, Tom. Can I go ahead and ask? One more there. Take the mic right over, I'm going to move us into charging solutions conversation next. Okay, go ahead. Okay. Yeah, just one more in software. Yep. ADAS, specifically Level 3. I would think that there's a value to your pro customers for having that. At the same time, maybe they want their drivers to know how to drive and, you know, and all that. I mean, how do you look at that as is it an opportunity or do your customers not want that? I think there's what we're seeing, I would say, is a couple different viewpoints. Some small businesses with less legal liability, they would love to be on the 401 or some other city in the traffic and not... If you ever see the vehicles coming into London, the stacks of Transits coming into London to do work, plumbers, et cetera, all coming on the highway, just waiting in line. Perfect case for even the BlueCruise capabilities that we have now and launched in the U.K. Going forward, that is the big save. It's the high density. It's the same reason why certain applications that other competitors did so well in California in the first place, is that I'm gonna be sitting in traffic on employee-paid time, I can do great things. Other companies who are more litigation concerned, they need the use case, and this ties into our insurance stuff as well. It says, you've built up evidence over time that this is going to do the safety, and it's going to improve my driver's safety, reduce the collision and insurance costs. Then those two match together great. You have to have that enough data and enough proof case over time. As we go in the insurance space and we're the ones providing the data, then we have our own evidence, which is one of the reasons we're rolling out commercial insurance. Yeah, great question. I'm gonna keep us rolling so we can cover a lot more ground, and I think that it's gonna continue to drive our questions. Let's talk a lot about charging. I know there's a lot of interest here as we talk about what does our charging solutions future look like? Mufti, I wanna get you involved in this conversation. A lot is happening as our software platform is continuing to innovate, and I know that you're having a lot of customer conversations. What are you seeing out there as we talk about what innovation is happening, and what are you involved as we talk about the future of this platform? Sure. If you think about what we do right now, it's, you know, our software sits between the fleet and the utility, right? What we're doing right now is just controlling charging. We are looking at when the vehicles are coming in, when they're plugging in, what's the best time to charge. If you zoom out, really what we are building, and not to overuse the word platform, but it's a platform that sits at the intersection of energy and the fleet. This has not happened before, right? One of the things that we have going, which is a new muscle that we are building inside of Ford, is I have a dedicated team, and all they do is wake up and work with the utilities. They are going out there, working with the utilities, figuring out how we can work with them and our customers. To give you an example, as these fleets scale up, it's gonna be interesting because the load scales up on the grid as well. If you look at it from the vantage point of a utility, what they're looking for is, "Can you tell us how the fleets are electrifying? Where are they gonna show up on the grid? What's the demand on the grid? And oh, by the way, can you give us control on the demand?" Right? There's this notion of what they call demand response, is if there is a grid event, can we send you a signal, so you can turn down charging? By the way, we can give you economic value for that. This is, you know, really an example of showing you the art of the possible of what we can do. Really building, you know, first, the first step is to build a platform, get the data and the connectivity. All right, I'm gonna pause. Questions here from the audience. Charging questions. Crickets. Now, I have to tell you- That is actually shocking. Of our customers, that is their number one. That's exactly- How am I gonna do the charging? Oh, well, of course. Go ahead, Tom. Dan. Tom already had one. We'll send one back to Dan in the back. Throw a microphone to the back. We have to use the gentleman with the mic. Dan, can you catch the microphone? Great. Thank you. You know, there's a lot of dedicated charging entities that this is all they're doing. Maybe you can just clarify on the charging side, how much is in-house versus in-partnership? I mean, I know you came from a charging entity yourself. How much is in-house versus partnered with someone? What's the benefit to doing this in-house versus leveraging the resources of a charging entity, whether it's a hardware player or a service provider, that this is literally all they're doing? I'll As maybe Mufti will add on a couple. Typically, the motives are very different. When we go talk to a commercial customer, one of the three that was in the video, the charging company is trying to sell them charging. Preferably, you need a DC fast charger, $10,000 and up. Most of their time is really trying to put in the public charging network where they can make the most money. Big DC chargers, huge installation projects. Ours is completely different. I am trying to get the most efficient solution, a bit like the credit company actually, to get the customer all of their systems working. In that, most of our cases, almost all of them, you'll know the percentage, that is an AC charger that's overnight. Maybe an 80 amp AC charger that's pulling 19 kilowatts. They can charge three and a half hours, 4 hours, 5 hours, and they can balance time of day charging to do it at the lowest cost. Much different than going in and selling them a DC charger because my role is to sell DC chargers. Because we are getting the data off that software charging and we can manage the fleet, we can balance loads between the vehicles as they come in in the night. With the grid, usually they have a facility as well that they're trying to load and manage the whole facility and the chargers, and we facilitate that whole process is there. The whole planning process, because you don't put in chargers unless you have vehicles. The time to put in chargers these days, even residential, is a long time for zoning, construction or whatever the project's going to be. If it's a big depot, you're talking months and months. You need chargers, you need vehicles, you need trenching, you need permits, and you gotta work with utility. Yeah, just to build off of Ted's response, if you see the real value in charging is gonna be about the data and the software, and all of that is in-house. We have a full stack engineering team that looks at firmware on the charger, how it connects into the cloud. All of the engineering, all the roadmap is all managed in Inside of Ford. We have all of the IP and, of course, the data and the insights. I would say one other thing we do, which is pretty important. When you're bundling these together as a company, it tends to be the charger supplier, the software supplier, and the vehicle supplier. In our case, a lot of vehicles have upfits too. We bundle those together, and we're doing 100% of the customer success on the back end. If the charger is down for whatever reason, utility, maintenance issue, whatever it is, we're the last stop. The other guys, they have to solve problems. They gotta call somebody, and the same somebodies aren't working for the same company. In our cases, it's end-to-end on the back end. That's right. On the front end. All right, let's talk about the concept of what you called the lifeblood. That is uptime. The holy grail of uptime would be 100%. Vehicles are never broken. They are never down. In order to have that kind of holy grail, we would have to know 100% that every sensor, everything is working in this integrated vehicle architecture that we know that this, the vehicles would never be down, right? Alex, that would mean that this magic is coming through your world. I'm gonna throw this to you. Talk about how you would achieve that there is never downtime for our commercial customers. Why don't you describe what this future world could look like? What would it take for that to happen so that everyone would understand that this would be magic? Yeah. The concept like you described is easy to describe, hard to execute. It starts with a really clear understanding of what unplanned downtime is. Some of those issues are wear issues, like oil life, or some of those are brake issues, and they take very different approaches. The concept is be able to get lots of data off of a vehicle and be able to predict in advance when something's happening. It requires new sensors. It requires a deep understanding of which prognostics are likely going to lead to downtime issues and the combination of our ability to forecast and predict whether that downtime issue is something that's really gonna happen. It takes... It's really kinda complicated because sometimes in northern Alberta, where it's freezing cold versus southern Florida, the signals that are coming off of that vehicle look very different. Different use cases. Someone that drives 100,000 miles a year versus 30,000 miles a year, the data that's coming back is gonna give different signals. If you want a prediction with low type one and type two errors, we have to have lots of data in order to have that confidence. This is one of these areas where there's significant increasing returns to scale, where being large helps us predict an item much better. If we can predict it, I can get it serviced in advance, or I can give a customer two weeks notice. "Hey, we think this is gonna come down," and we can get out there and solve it for them. Downtime is a huge issue for our commercial customers. Imagine if you're a plumber and all of your equipment is in your van. Your van being down is not your van being down. Your van being down is your business being down. That's the kind of real impact that this can have. At Deere, this was a transformative element of the business model. One of the things in our next generation vehicles in the platform that we talk as we go to our EVs in the next world, was putting in the sensors and equipment additionally that we needed, either taking 2 or 3 different sensors to fuse them together for insights. We mapped out, here's all the top areas of downtime. Which additional actions do we need to take in the future vehicles to do this? The sensors obviously is not enough. You need a service network to do it. That's why we have this extensive service. You still need brakes. You still need to take preventive action to cause an unnecessary downtime. Why we did mobile service, just like when we were looking at the Class 8 guys in Deere. We go to you guys so that you are minimizing downtime. I know it's coming. I have the right parts in the truck. I can take them over to you, and I can knock it off the line before it ever becomes a big problem. I think a bit to this distribution question we had before, I think it's not coincidence that Apple still has Apple stores, and they're flocked with people. Ours is not just a pure software product, just like the camera and the rest of the equipment in that cell phone, but the vehicles are held much longer. You buy a Super Duty for $40,000 and put a $50,000 bucket truck on that, you're running that thing as long as possible and trying to keep it moving. So much today that happens for commercial customers is much more about reactive. What we're talking about is moving to predictive or OTA, right? When you're talking about this physical network, the way that a business customer would like to be able to run is more about being on-site or the mobile service going to them or them being able to workflow parts. That's where the future of this could be able to go, right? That way, we're removing the pain from the commercial customer's lives. Chris? Thanks, Ted. I think this morning, tell me if I got this right, I think you said that 12% of Pro customers are currently paying for software or subscription? A, is that right? B, what have you found is kind of the sticking point for that number to not be higher? Is it that the offering is not complete yet? What don't they get about it? What gets you to the 30% target that I think you had for- Yeah. 2026? Good question. A couple things. We really escalated a lot since we started, formed up Ford Pro two years ago. Like the last 18 months been the growth on. One was a change in the team, one was a change in the platform. We re-platformed the product into the cloud. We needed to make some changes in the architecture, and this is the benefit of some awesome new team members. We really improved the capability, the quality, and the functionality of that product. That got us to the fleet size of, let's say, 15 to 20. Rapid, rapid growth. A lot of the people aren't talking these, although I see a lot of replacement. I was just looking yesterday, even, Plainfield, Illinois, 80 vehicles. You know, Red Deer, Canada, some oil company. Because people are having problems with their PIDs, and they don't get all the reporting on, and they know they already have a modem in the vehicle, and they would rather buy it to us than pay for extra devices and costs. This year, we roll out a lot of features that let us get to much bigger customers. There are particular products, this is not like 2026, I wonder what's going on. Right now, this year, the second half of this year, there's a lot of new functionality coming on the vehicles. We have new capabilities like the OTA and the upgraded networks that we have on the new Super Duty and the new Transit Custom. It's new features, new connected, upgraded vehicles that offer a lot, both in North America and Europe. I guess maybe just to add, I think a lot of what Ted described was closing tech debt and getting to parity with some of our ISV competitors. What we're adding and what we're seeing this year is our ability to do integrated things like vehicle inhibit, like speed limit limiter. These are things that an ISV can never do. It is transformative. It really helps the selling story. Increasing prognostic capabilities, increasing service capabilities. Yep. I see Jim has a question. One other thing to build, we have something called Telematics Essentials, which is also free, that comes with the vehicles. It does odometer, engine idle hours, engine hours, trouble codes, and recalls. Just that, because it doesn't cost us a lot because they don't send out a GPS signal, very, very infrequently at key on and key off. Just that is offering something, and it connects them into our service platform. That's many more customers that are not in, let's say, that 400,000 subscribers. We also, obviously, are building on those customers. First, we get them there, and we can upsell them to the other product. Jim? Yeah, thanks. My question was similar to Chris's, just a follow-up, since he asked it. I was a little bit confused on 12 million vehicle installed fleet, 12% modems, 30% of those are connected. Was that the? Other way around. 30% have modems, 12% are connected. 30% have modems, and that's the 12 million vehicles, and it's probably 15 years old. Who knows how old? Many are old. Of the new vehicles, they all have modems. Mm-hmm. When you sell that new truck or new van, it's got all these great features. You have an opportunity for everybody buying a new truck to say, "Oh, by the way, let's turn on this, and here's the truck." I wanna just get a sense of what's happening with the new vehicles, the take rates, and how that translates into a $50 billion revenue. I think that's the number you threw out there for your Ford Pro. We have the number that we shared out this year. Yes. Not the $45 billion that was before 'cause we reformed the segment. What is the service revenue today as you're kinda tying into all these wonderful features? How do you project that in 5 years? I'm trying to kinda figure out how much of it is getting take rates up on the existing fleet, you know, that's already out there versus, you know, getting people to buy in on the new features. Have you kinda sliced and diced it that way, so we can look at, we have a conversation a year and a half from now saying, "We are ahead of our expectations on this metric." I'm trying to figure out. I think we're probably not gonna share where we're starting from, Jim, but I'll give you the pieces of the bridge to there, to our 20% of software and sale. Part of it is these new capabilities and features that Alex mentioned, these command and control features and other ones that we're rolling out this year. There's a wider pool of telematics features that we currently don't offer. Even with the 400,000 subscribers, we can offer a lot more of that. When we get to the connected vehicle and all those sensors and cameras are integrated, we can do even more. There's a huge pool of that. The other thing that's kind of hard to forget is in our space, when a guy comes in, let's say you have 10 vehicles and the average fleet splits 10%-15% a year. They're coming in for the 1. When they come in for the 1, I can go get the other 9, including the older Fords and the non-Fords. We have multi-make and the mobile service is multi-make and the charging is multi-make, so they come in and we put in plug-in devices for the old Fords and then. When they're coming back in, I'm going for the whole thing. It's, it's not quite linear to the number of sales, and we're getting a lot of multi-make business. Got it. Can you share any numbers with us on that? In terms of how you think internally, you went from 10% to 15% change. You gave kind of the big picture bridge, but is the software take rate that's right in front of you and you're applying all wonderful benefits of it to your customers? Just a follow-up. Just a follow-up. Can you give us that element? Not yet, but we will be. We'll do a follow-up. We'll take a question right here. I see Utah and Adam. Thank you. Hi, team. Just one more follow-up on those last few questions. Do you offer or will you offer free trials to certain fleets? 6 months, they can see the benefit of uptime, maybe give you the more pricing power into Jim's question, you know, increase the take rate further. I would ask the question maybe slightly differently. Is there some products that you might give away for free forever? There's a whole bunch of prognostics items that lead to great service opportunities, really profitable service opportunities. Might we consider giving away that feature forever? The answer is yes, we would. The nice thing about software is it's a bunch of ones and zeros. We can bundle it in many ways, and we can change it over time. We can move one thing from one bundle to the other bundle as, as something moves, and we can add to that bundle. I think we're doing a lot of experimentation around it, and the freemium offering works pretty well for commercial customers. I think our Telematics Essentials product is pretty much doing that. Low cost to us, very select features, but the features they have directly into service. We can see the benefits in service, and then it's easier upsell. I have a regular contact with a customer. They're getting value of how far my vehicle's driven a day. Some guys are surprised about the number of engine idle hours they've got, and we can cross-sell them or upsell them. We constantly are testing, does a complimentary. Complimentary, the challenge is, they don't always appreciate what they've got. If I'm getting it for free, I may never look at the software. It just came. Generally, we're pulling back from complimentary. Thank you so much for that. I wanna thank all of our panelists here because these insights have been great. I hope that it's been helpful for you to dig in a little bit deeper to the Ford Pro product set and all of our great insights here. Thank you all for participating in the panel. These have been fantastic questions. As you've heard, Ford Pro is absolutely obsessed with our commercial customers and serving them. It's been great to have you all here. We just scratched the surface today with this particular panel. We've made great progress laying out the right foundations and early adoption rates for our software and services, and these are extremely strong. The real unlock is going to come for our next-gen commercial vehicles in 2026 and beyond. We were excited to share that vision with you today. We thank you for participating. Thank you.