00:00Just a few minutes ago, we learned that Ford is undergoing a sweeping overhaul of its electric
00:04vehicle business. It's going to amount to about $19.5 billion in charges. It's also going to
00:10include scrapping its next generation electric F-series truck as it shift gears to a hybrid.
00:16Joining us right now to talk a little bit more about this is the host of Bloomberg's Open
00:20Interest, Matt Miller, and he brings along with him the CEO of Ford, Jim Farley.
00:24Jim, thanks very much for joining us. This is a major pivot, to say the least,
00:29but I think we could all see it coming because the consumer basically helped make this decision
00:35for you. Tell us what's driven these plans. Well, as you said, it was really the customer
00:42changing their decision. We saw hybrids really take off the last couple of years, like last month
00:48about, well, we had a 30% increase in our hybrid sales. We're now number three in our, I think
00:54we're 80% hybrid market share in trucks. So we saw this happening. We also saw the more expensive
01:00EVs, you know, really suffer in the market and the more affordable EVs to do better.
01:06And then the last couple of months, it really was remarkable. The EV market in the U.S. went from
01:1212% of the industry to only five. And that really, in the end, was the big decider for us. But look,
01:19we're going to 50% electric. It's going to be hybrids and E-REVs and electric. It won't be just
01:25pure electrics.
01:26So, you know, every good trader knows you got to cut your losses when you recognize there's an
01:32issue. You're doing that in this sense with the F-150 Lightning, as we now know it, and the T3
01:38project, the next generation truck that would have been built in Tennessee. But you're able to, I
01:44guess, salvage some assets. And as a result, you've raised your profitability forecast from six to six
01:51and a half billion dollars for this year in terms of EBIT to seven billion dollars. Where are you
01:56gaining an opportunity from this, Jim?
02:00Well, great question. This year, in the short term, it's really our cost of our company.
02:04Our quality is getting better, and so our costs are much more competitive. In fact, the Novellis
02:09aluminum has cost us more like two billion, but we're still raising guidance. Look, for this
02:13announcement, Matt, it's really about moving to more profitable vehicles. You know, we're going to make
02:18in Tennessee now an affordable pickup truck. I think it's going to really surprise the market.
02:24These are customers we know. Not a lot of guesswork in terms of the revenue, the cost we need to get
02:29at, and a more affordable van in Ohio. So these are going to be better investments for the company
02:34profit. And all those hybrid sales, you know, those are really profitable vehicles for us as we
02:40basically deploy hybrid across our lineup. But we're also going into the energy storage business
02:46to 20 gigawatt hour. You know, that's a big move. We're going to convert our battery plants from
02:52automotive batteries to energy storage batteries using LFP. That's also a big pivot that is profit
02:59positive for the company.
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