F,F.PB - Earnings call transcript Q2 2021

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Operator

Good day, ladies and gentlemen. My name is Holly and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Second Quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. At over I Executive to Investor Instructions] turn like Director [Operator Relations. call the Lynn instructions] this would time, to of [Operator Antipas Tyson, it you. hand Lynn to

Lynn Antipas Tyson

measures Welcome are Jim our Quarter Holly. Thank our Company's John CEO, Farley, Ford Also Chief With today references. most Marion Call. Credit. our Financial Today's some GAAP President Second non-GAAP Ford comparable of Harris, Officer. you, the discussions to me XXXX to and of These the CEO is reconciled earnings Q&A for Earnings are appendix Lawler, and Motor in U.S. include us deck. joining

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will the Farley. to call Jim over Now, I turn

Jim Farley

But Ford. do Put strategy thanks us future on simply, Early things, could and time. One focused the an experiences, finance Thank things new gets investing improves experience industry's building richer We're everyone. Plus in software a our plan better and our adding our second customers detailed like distinctive software, experience uptime capabilities customers, lot the upgrades, for charging customers over investors. ago, we with our iconic our a on better that Hello, in delivering our and you, our accelerate best for talents, services will captive and over-the-air our critical excellence, now customers, Company. Ford new committed that X for new for and over manufacturing we're Lincoln relationship we to always-on vehicles, months appealing commercial businesses is We're today. the create uniquely time our and joining and value Lynn. products our and data-driven Ford productivity Ford that X that for the more. And foundational quarter, really strengths, and for products, our only and we're

and and strengthen further and our is forward we're market. also and electric and And introducing means Argo the required to our transforming auto with significant while potential. batteries and launch build expanding goods fundamental human people most the high-volume, to design resources also Powertrain investing line-up growth AI, Plus to vehicle well-positioned electric Ford we're future capital autonomous world-class to delivery operations compelling, industry's components. with But business addressable

the quarter. year-after-year, the returns to environment in of the were like to strong execution quarter-after-quarter, regardless challenges is with from some solid second confidence headwinds your Despite delivering that the semiconductor unique we which external we face commitment shortage, many Our did earn with Ford. of

we're making cost, focus pricing you And high-volume other the the that certain could new was of beginning the SUV intense It generated Ford. than our new per of annual tell this now mix. also right orders a June, most we Porsche We gallon there's Taycan, gets And great the pickup, development with the enrich can product stronger. in for team E-Transit alone reservations our Plus. EBIT. Model primary our by electric sufficient, Always the our I remarkable. was dealers and of Mach-E and to to the means, similar XX,XXX emotional priced those U.S., has to products capacity F-XXX miles Y starting working rigorous it's and $XX,XXX, value XX%. a not battery to Tesla has XX our less to more the regularly business almost new deliver our quarter. at Audi around and XXX,XXX is The the interacting distinctive clearly Great which those customer the to upcoming past Driver and demand XXX,XXX interest of next later are Performance, The break and that working is increase critical constraints me Lightning we create now get customers of developed on ahead team, Bronco new segments we recognized reoccurring models. five, of and Ford is hardware SKI the a for things products far the pur And The product required customer large already the services, ago. from on product And battery Chem, lineup of round software have capacity Intelligence new customers our against of hot and than and the LG Ford products to taking our electric Vehicle to for reception Oval managed Mustang The And skillfully in vehicles. EVs, also updates a initial lot shipments and to In offers optimistic Blue about clock though, we're advantage been we for then proprietary customer connected We selling strength and to portfolio. already room climbed for that Innovation customers in manufacturing over outcome city the for come hybrid and early And of the to vehicles Ford. experience Ford. we actions teams XX% II year. too exceeded the year. only we like year to at our the now launches our on and increase have and have are fulfill this projections. streams. F-XXX years drive The declining units. this And is these Electric and Bronco first Our with stopped unleashed We're stack best orders. positive from well deliver XX% few from testing Year and Car including Maverick, to started we red recently Lightning We're EVs after small, Bronco the are named Mustang building our are revenue customers' the second XX called capabilities, e-tron. Mach-E,

our all competitors can do it their of vehicle. of for do in Some for the almost modules we entertainment our systems, it

activation of FordPass, are into the Mach-E like us Mustang over the number opt example, now XX%. who services customers For rates, Connect

- to to XXX,XXX XXX,XXX than this by will vehicles now updated we year-end. and expect by have million capability vehicles the data real-world And the more meet over-the-air have we needs. are XXXX, the this from And top real-time We is our road mining this point. OTA we year. just XX To the around on better vehicles most vehicles these world. important customer me,

all meters our beyond phased large to week, Argo help also And commercial Ford commercialization Argo the $XX of help depot executing in demonstrate expand at XX with those how of and now new Driverless us of will Vehicles we've from distance opportunities. acquisition and planning an global charging be announced will for the and month, the vehicle of For reached network. introduced to data identified Ford autonomous Last most to We're services already, to In Lyft This scale longest Pro we transportation range Last from scale excited scale XXXX. TNC example, we XXX focused technology ability I'm business, a of the we EVs. billion sensing we Ford's deploy cost By F-XXX example deployment detection dense driving. that is Pro warranty seen, networks. which expect our on. experience believe on other from Mach-E accelerate in to This about are we're collaboration safe grow electric front, multiple collaboration into driven lead Mustang from urban EVs billion now. customers. building fleet and and our Argo highway Ford manufacturing Lyft, you've by million at avoidance It's customers what or best-scaled out between 's first building cost effective the the efficiencies the industry focused industry's enable deployment to Ford connect on are Argo, lidar Electriphi really on just as areas out the commercial XX commercial TNCs designed dark offer will object adoption. will mobility, this, that offering vehicle in Lidar, for XXXX, which and we the

the we'd expectations on Now, let year, of which quarter, second quarter, expect planned loss situation. In reports then the a rest give update volume before John lose XX% for you semiconductor and the . said our in in an we on our the the me of to implied about [Indiscernible] April,

Overall, products, the permanent optimize than up through strong Renesas, because demand, Navigating we supply. due constraints the In now fluid, ramp changes and half. Ford of leveraged delay is to important us first the these those one in situation model chip of signs half expected. at led effectively profits. seeing our the pent-up growth in quarter, to in did spring-loaded and flow third has Ford. second first in managing our but the suppliers, red-hot in half, for are fact, the demand We're of chip in business improving now to exposed we make uniquely We and our after the to of beyond the key chips better that improvement revenue of remains especially

We What stocks. We're mean? are strategy. emphasis just low go-to-market placing on that greater bank, does sales not modernizing build-to-order our

configuring have but also customers customers, dealers, vehicles and We operating and for number fewer possible, it's not of learned in lots ordering increase online. with But vehicles better that, the their significant only is on driving a Ford. yes, we're

cost. better bank. and our have we the industrial reduce systems demand complexity using inventories, lower real order This in visibility our So to order allows an us simplify incentives, to

For more our customers, upside want. they get quickly that vehicle is they the precise

into Now, I Q&A. made this doing speak. hope right now X chain, we Relative supply as to We're isn't we we the the get changes. theoretical. it notable

tier-procurement heavily are transparency. a no relying structure on longer First, for we

components, critical align now components. on semiconductors exchange electronic and for engaging more We key are with integrate such to and roadmaps, directly, closer in fabs the information, points transparent supply our designs can demand. know-how example, of as for their With with better technology and we [Indiscernible] into relationships

forecast to And Second, chain. supply we're for and critical of vendors and changes Risk obstacles providing third, sourcing sources. are comprehensively like dual actions as stockpiling which Ford. applied all case can being becoming so interchangeability requirements. our longer-term more rapidly well, we These critical single are design semis, mitigation at in larger our our include technologies bill are the portion parts better they in of scanning accommodate of material including new a batteries, understand to

levels at our joint competitive called results our And over now batteries like electric cells battery supplies EV and critical BlueOvalSK, vehicles. take cost helping the to us secure venture to the for outlook. us and demand performance arrays, pending through SK with will Innovation, John given I'd our turn and quarter to for new of produce really Our

John Lawler

Thank Jim. you,

as our to want plan. industry-wide we how squarely reiterate into quarter, capital stronger making, see I the and key from outlook, we're year. business delivered that metrics saw decision it's COVID-related even you'll focused quarter that semiconductor on our share as key we every for And Ford the takeaways manufacturing first So allocation, our we're full-year delivering constraints. heading everything describe second results, do the positioned And automotive last as across Year-over-year, including and Plus I our of XXXX. the we several shutdowns overlap better-than-expected given we performance improved Jim said, in financial

we for comparison, on picture our a trajectory accurate more more and in are more those environment, focusing present true of Now, sequential appropriate. we're think this

chips more team's sequentially, our mix profit and launches, wholesales XX% incentive We profitable from down allocated with spending our While orders, disciplined vehicles. revenue new and were customer optimized management. to and

of and addition, this wholesales, us year, second revenue, In strength and a our bank profit the ability of of performance to improvement our confidence order more in balanced gives the sales including in half wholesales drive in share. sequential

to lower and X.X to of a costs. continued billion. FinSimple, performance why commercial Ford services Ford deliver up Outside the revenue America, consolidated more Plus. geographic we and So strategic like a of which despite with asset and Pro and On adjusted Ford enabling as, continues with by were X.X EBT charging. delivered to adjusted trajectory year-over-year basis, as underlying of let's financing And semiconductors vehicles, and respectively, demonstrating to the record of improve bundled example the prime our it's driven quarterly billion well XX% Credit service EBIT through for focused XX% margin critical footprint, provides North X%. wholesales And impact that's and turn of our of portfolios, results. And launch is that's product a our EV new strong

weapon of us. And so example another a Credit being it's strategic for Ford

Now, wholesale due decline XX% the shortage. to regions. posted the America semiconductor in North sequential to turning a

our Now, poised efforts are track. a sold compared we remains to as stabilizes America constraints, exited drop in but sequentially, year-over-year, declined transformation shortage billion. a for by with has delivery. bank focused new a Cologne, On Ford mainly by turnaround of billion units next EBIT driven Romania. customer imports. seven year a XX%. up investments spring, for restructuring of new stepped the the E-Transit clearly in vehicles North The to strength key aligns In in electrification, demand. or the order than operations Europe, improved America, commercial Pro, capitalizes a region as our focused on to semiconductor South in ordering [Indiscernible] caused supply Outside on when And vehicle with X.X our where up passenger the basis, models from EBIT of in managed a track. semiconductor aggregate, new all-electric more wholesale up continues with come, and on we was rebound for sequentially is million nearly we America, manufacturing including In XXX North year-over-year the including Europe the center Europe vehicles We and EV portfolio, our U.S. ago. commercial second customer and with our X launch more times the future quarter light customers on

and position its key see ever profitable, the Audi, was Ford with the vehicles, Power's had year. improvement ranger, in Lincoln vehicles. model portfolio held Mustang new our is attained de-risked number second spot on introduced for focused strengths including luxury in of transit areas imported markets, Bronco the X commercial near sales and vehicles, years. and J.D. launch the China, premium region in I is and continue we lean for also key business our electric and with Mach-X to preparing Our Lincoln, asset-light of this highest sales, and The the of In vehicles. now Sport unseating of selected ranking. transit van in half captured quarterly satisfaction focus, XX which

of produced is launch and finally, locally, China. overall for account of the now year. In later this localized the And now for in commercial Mach-E Lincoln's sales volume vehicles Mustang of XX% mix are we addition, XX% readying

on business Our this free cash Company-wide to international to SUV. negative portfolio our X.X And delivered Ranger quarter, year. another we more second assess later we're we'll solid leveraging say group, pickups quarter and continuing have India markets was billion. Everest and in adjusted this strengths its flow with

and to a volume free working timing of expected, customer differences flow EBIT incentives. greater cash marketing As adverse allowances impact on semiconductor-related losses the related than because from had capital

distributions did X of offset the Credit with in billion Ford quarter. partial a provide

our time plan. to remained Cash growth working over The normalize and also financial navigate supply stress, in restored. invest periods semiconductor liquidity the strong, provides strength XX.X in respectively. as and sheet balance is expect billion timing these quarter significant differences at to very to the XX capital while Plus ending our billion we Now, of continuing and flexibility Ford of

factors, So supplies half, increased our have of billion for the $X we assessment and with second underlying adjusted $XX Based EBIT of strength to billion. the through semiconductor now full-year our to let's between present business on the turn along other outlook to the outlook.

volume half a improvement supported second supply Now the about this our the by half, in versus XX% of in which our assumes is anticipated sequential in first increase semiconductors.

expect we to adjusted the implies than be EBIT guidance second-half first lower Our of half the year.

And to so help on we've we of earnings our page a bridge with And XX presentation. provided this. included that

tailwinds, Headwinds, the that for around Relative we see and production a market headwinds expect factors increase an volumes. color contribution through pressure provide me higher in let to about So see to of X margin. right? this. coming costs and volume-related little X bit in of on billion we We favorable

expect expense about year-over-year. We with we costs $X product almost modernization, billion, billion including Relative out half expect structural are in down we the about in higher half-over-half. to new commodities to experiences, up connectivity, up consistent to laid be second million expected investments May, launches. what that in X.X customer XXX in Warranty be still costs, to IT, warranty be full-year

Credit. impacts of we in that this the lastly, the begin also the Credit have current X first half. [Indiscernible] Looking non-cash have expect Ford a we releases of quarter. values decline XXX gain to it's first gain market important by into non-recurrence heading to we and on run at rate reserve billion And million And our booked the also that also dynamics, Based as auction in note we XXXX. had we Ford normalize non-repeat to about

from increases an and X free full-year availability. working also target as flow second in to favorable expected cash increasing anticipated X by supported capital billion, production adjusted chip to We are half our the improvement

underlying we the XX% XX%, the strengthened sheet mobility. our the financial Ford new operating ample leveraged us Now, of plan, are the our including result in business we one cash to flexibility trajectory product history continue to in We the a as continue services and balance in strongest are Ford we implement lineups range of our got and plan. at so cash to target results towards And those Ford. growth, better resources, looking and invest Pro, path in business. on the improve, and in conversion in to as see EVs; continue confident our Plus conversion, We're to to which our a momentum our excited build the and connected provides of XXXX, a

the I'll to it open questions. hand it to up over So operator for now,

Operator

Our instructions] Johnson, [Operator line from comes of first Barclays. question the Brian

Brian Johnson

couple a of got [Indiscernible] questions.

First, a thinking for little of to we stronger half read year bear any typically If first Is take Ford. X.X in half through is exit bit of the ahead just also but billion, housekeeping. rate but your the of mind that there 'XX. XXXX? for the half second

John Lawler

Hi, Brian. Yeah. Thanks.

business. I think in is the way the got we see strength we've performance underlying our it of that

into We've know right? we As stronger, also the get launching Bronco is XXXX, We're head product got to we Lightning that F-XXX next year. just going lineup now.

next we our all had that rate a we on also manufacturing that we've year. Maverick get vehicles of And more our year. should other expect to have of line full this new We in vehicles

next the next s. we in few strength headwind we year. see heading into But product what into see year So also do heading a line

losses -- be to we our see down. our shouldn't then normalize well. Ford more we that see and values auction credit reserves Credit, And we and we coming should because our that run as rate expect credit normally we see, normalized that's to

next also being in also see Again, year. we're We've as year our continue got going to increase as we some should launches the we pricing next coming moderation. Ford year our industry, got next across portfolios. that in volumes stocks product And Plus higher see increase the new commodities plan. well. to see invest We We've and

as So that into we well. head we next continuing year see as

some are be X% then underlying into the there trajectory headwinds, continues And So, we business way and margin to on XX. that the the for see EBIT XX positive. with but strength of to our that, continuing

Brian Johnson

modernization. shortage due think a maybe year, just on or investments up, in something for And that focusing headwind Is loaded to Okay. you was planned billion management that how back-end XH follow about but from new do chip the X.X that? this

John Lawler

place But in. that need planned, well experiences, coming activity, launches IT with the also costs that's the Well, to investing we experiences of that's experiences, was the vehicle. in user due put [Indiscernible] launch Part as vehicle to for digital the we're in the advertising. as, connectivity, with customer the

to our continuing build out Plus we're to Ford So plan. invest

Jim Farley

slowing doing modernization not we're down situation; fact, the we're in And because our chip the of opposite.

Brian Johnson

Jim, of but for new for customers sense how order the shaping Okay. look mentioned, Maverick. that segment. many Lightning what's are, also and up F-XXX the And those the question And for the of as and to Bronco Ford, Any maybe at a you as you [Indiscernible] book

SUV example, or So due the for Lightning the features? storage buyers charging migrating the to the to or bi-directional

Jim Farley

Put truck X our with simply, ICE for to we've important faster coast. are Ford, to BEV bank full-size pickup. of is people new over feature our way trade question. out little indicates Almost maybe on large are are Great which what to Lightning the XX% assumptions. move a index than is order because very in about learned are optimistic seeing very who it bit going X

and who learned as half of Lightning, are to we're customers BEV. These them really are BEV, vehicles. And truck large more industry is segment. is truck customers they the would what of new are like -- say new to are that the a What is to so to excited conservative It's they me interesting to some for customers. not they silhouetted is so very portray they're what these would F-XXX but to for Ford, new I largely seeing, move customer. kind are than bank pickup And order far full-size the aren't we've really

Brian Johnson

Thank Okay. you.

Operator

from with Research. comes Lache question of the line Wolfe Next Rod Instructions] [Operator

Rod Lache

I first you the gave answer to to question. that everybody. wanted clarify just Hi Brian's

about that X and kind be for of the going -off what a half, happens what beyond. lot think XXXX billion a bridging in us is, to here is into I to and So think fair at of X to point back from you're want billion understand people annualizing to

level assume run think investment some that number? of from should pricing about of improvements you're benefit rate improvement you of how for the in working the run on? that rate? that international Bronco, some Is moderation did already warranty that the for we of of kind And in incremental Maverick, So the

John Lawler

Thanks. Rod. Hi,

the So net costs manufacturing in other for the we the the of there volume production factors. and half, second show market net number

So what we the coming moderation are fourth the to year, half is we pricing should fact assuming second in in the we in quarter, to some that that see particularly volumes the in start up see due a of stocks inventories and bit.

So particularly we quarter. into and Bronco the half, running that have it that now. the for built is that up do just now, getting something And number now XXXX, fourth when -- in comes launched up second is then to

As Maverick, next Lightning we hefty year. FXXX launching Jim have they're bank order said, And there. a then

So be even strong our to next is going year. portfolio stronger product it's today,

And to so the that see as contributing we run well. rate

X% as being trajectory So the that than towards margin walk business. I we XXXX talked to definitely we and Markets the hit. the 'XX think Day, stronger Capital about coming out of EBIT we XXXX of plan

Rod Lache

just to really your about and what from sevenfold And ever think a interesting on known little thoughts going a comment just very positive, actually the changing volume units sold, not was those what vehicles you magnitude a what for can us are customer Obviously, bank this that actually bank don't actual it's order that could of secondly, actually Because way perspective? order bit but land means what on what about year just your and pricing? that? I any long. tell means the increase number in talk that Maybe dealer for you really lots the ago we've are was

if that big boost seem significantly quickly. lots a that leaving really not anytime would soon it So very it's reason incentives they're

Jim Farley

online? our those Thank And been Put at order know significantly dramatically retail reduce supply our on you industry low wasting we benefit complexity day are based order deliver the between the supply. There on our for don't order difference just bank requires costs to our crisis well. order across an of move Rod. was With after our you for I XX our maximum X I money put gives company. It an bank really as XX our -- reduce more than going where are in less incentives, now simply, massive us of days' XX,XXX had day deal incentives. magnitude month. It based to financial bank It think we're XX where. days. XX, Lot And big many and to order units we're of risk to we in I That don't there's But XX years, wasting. XX,XXX people at know Ford a years. way committed way years reduces change here stakeholders the and system the much much for XX, was keeping Ford, Sure. to quickly. just how were X looking the we pressure the units. about we're our we all system. U.S. at I on an the in thousand [Indiscernible] order know allows going to It that. making to mentioned. in this I've order both you, inventories industrial dealers system money system, will for to supplies, have We're us

there So to approach. you system ones. go-to-market place put about new of the that to love and to high try but have to new hard are move us I'd in been enablers more lot you give it, a I'll this to talk

Rod Lache

everybody. Thanks, sense. Makes Thanks.

Operator

Bank Our John of Murphy, America. from next question comes

John Murphy

order but XX% -- follow back than of hand quickly to the horseshoes also your bank, up the not, sales days wanted you That to on the XX%, Jim, to like closer normal describing you're just sounds mentioned be built-to-order, to that. -- I you're XX way getting actually sounds would and XX it days grenades. looks supply.

it that I'm certainly in partners lands? keeping high, market, to of also is dealership, your you. just helping big Ford is the selling creating you and helping new you and and out happy, the which So how the balance tight, inventory secondary the Motor story where market, then used Credit. for at how the part [Indiscernible] pricing the decide curious keep value and tightness But vehicle

fracture So you seesaw there's a on both benefit sides. get the

do should execute how land it. actually Just and out how figure you where you on this

Jim Farley

Really good question.

So the team it has try done a very on lot simply. answer of will this. work to I

XX little is will XX bit supply. be a That days to target trucks means Our higher. days

to dealers, have third local will this our it targets. of We , years. important they for for a trucks be discipline. did -- urban be [Indiscernible] is and And And truck post-financial a XXX-day supply, need for lost X could actually team. this suburban few than dealers lot trucks segments a will And about different less but the this management over community. a X that quite crisis range. We have for then Different them time,

weekly kind and at carefully operations monthly segment judgment. each the by very a look regions. where for management of That's this wiring of the review, have We we'll soft or

about But be exception process going And bank, just an that hardwiring transition. an on discussion hardwired to would a range. take can't Going relying of reducing beyond it's order operating keeping pretty certainly our order-to-delivery think a within It is is to this teams. say order vehicles, and of make I'm be gift. Bronco, tough reduction will that, for go don't think stock. we actually what to for We which way have the of management. God, system. more it I vehicles. I incentives just I to system, high the Ford of why going changes kind excited vehicles, that an to there with the Because make at other will the system all the the do like had to into moved some my when we to policy way not realized, bank and we demand us an then put We reservation a we of Ford. more complexity the that's gave And things this for launches order series Mach-E, order and system in those do and new our both

changes. going I require think it's to both

John Murphy

-- curious, seems I retail you balancing The at helpful. emphasis of dealers, there, that certainly fleet retail. of mean, on can fleet back follow-up That's an dealers, comes just the are It is current that, And your -- level, a to how versus state the affairs on Okay. is demand if you Just like talk mix.

Jim Farley

Sure, it is.

John Murphy

is forward. is fulfilled I the after the going used -- you They're current some just market. there, and in guys. auctions from mean, of it of because instead it's go days demand ordering getting

about go does we stand forward think that where So now? recovery how and right do it

Jim Farley

question. good Really

So it on the depends region.

multiple bank And and seen we're career. we're a dominant a and is back -- in brand vans. months course, orders. dramatic never months certain order talking it my commercial months in in and Of something It Europe on seeing very our of is segments. Western I've We're regions Europe U.S., even like China in in the

of commercial heavily Europe the and Duty, we're demand is for on our our mix. Super and is commercial is and bank in So strong that In fortunate very months. business extremely the kind U.S. is course, vehicles order F-XXX transit and the months focused of

commercial. for XXX% And And almost really is as very are our transit we so us quarter, balance challenging -- uttered. respectful the important vehicle you to for are don't know in commercial a We The easy vehicle that's those see are prioritize those retail F-XXX. us. for our But lines lines, we needs Super very we to customers have very those because and one mixed this carefully we're between of And and managing. to where is commercial of could it's toast -- customers. Duty,

fact, the discussions about them content now between feature we right in availability. trade-off and in In

with now? willing to customer. make We right for your and we'll about for discussing you them, even the And would balanced But for for have they vehicle. to company pushing commercial content for U.S. and in if content. are it's you us months the months the off -- to and expect discussion can call that and -- And availability the the many be compromise. have future feature and that's are that it be vehicles waiting get customers been lower take negotiation means And us we now,

John Murphy

Thank That's you. very helpful.

Operator

Our Jonas, next Morgan from comes Stanley. question of the line Adam

Adam Jonas

I did to have say, I for in hybrid. a release Ctrl+F it, [Indiscernible] Thanks. Jim, hybrid A so and great man. It's a beautiful No call in don't the I the press And far. thing. see and the word

can So on positive costed EVs, profit fully be can a When they They're for they still follow-up. early you My good. is and do that? on I profitable? dead. first, think too But do All your Yeah. And when basis, My it's be Like, a XXXX question that think contribution. not right. gone. BEVs. they're you have

John Lawler

and Mach-E Actually, line Adam. bottom Thanks, margin, on is positive the Contribution profitable profitable. today.

Adam Jonas

Wow.

John Lawler

So we've seen strong demand Yeah. that. for

to I that down. per to [Indiscernible] curve the We've We've about battery ride about technology when end the you. $XX decade. the content. got with to we we got before scale think talked for of hour got So kilowatt look and BEV the at the over talked it we've to get time, We've , pack as

of and move that today. top will hats, really and of have need on We us is tell then, such our as other I Mach-E well. you improve commonality, can the [Indiscernible] services forward. And components to to profitability we help the course, we the profitable and build as But that

Adam Jonas

Wow, type to that's for rate correct. run that incredible XX,XXX at be

and really is order Okay. about on My follow-on Jim, the huge. question, mean, always bank. I

these bank let's close you infringing That say, be Darwinian should where order technological and forces you work dancing the where -- always really the that But over or you're are consumer and given XX when dealers at talking years and XX services some but OTA. past you for go not, laws, with on changes as franchise could laws on, insurance came. out. some the Just all engage directly I freaking the to interesting since probably you're am F&I system combine the directly can the connect

and centers? message are delivery the these going to message What other What's order just them? if wonderful And your the dealers? goes the then, to units of dealers on services. then all the the direct or you're what's So to book majority, XX% your

Jim Farley

have we're population dealers. Well, couple of going question. Great different of to a

to we're dealers the to have because to BlueCruise, bit a our are going We'll to -- say our of giving The and example. I questions urban suburban dealers really to retail customers the work for is have dealers our professional answer team, together, little carefully message different are the lot our would going on have -- is, have for and so Ford look, a we're going dealers. the rural and versus than We for them dealers. a answer them different little is our

really to new these knowledgeable customer's life. So of want the features, about That's make dealers meaningful we in very one. sure are the that the are use OTA

play service, vehicle, a second is road service, the the the The for is XXX a Service. service remote one we service. service customers condition have of That good service, thing wiring the to the cooked the loop doing have with hub work, capacity already our their and a capacity. from especially This Department their true at Service fixed of going model, is that's taking And be their ballet going and dealers. for service with to dealers, they're where and trucks on fact, vehicle of today, closed those the together the Pro. going Warranty is prognostics. the the is we're important the business. trucks data the the evolution of into us, commercial have vehicle, most the important example most Ford to in to be And between customer for business

closed and Our dispatch a That system. on loop. system has order be to parts parts the legacy dealers to

to orchestration our you would So, all our chance benefit, and say win. to is the I

retailers service, chance like targets, online that in-person Just is in a customers. win versus maybe professional to especially

Adam Jonas

[Indiscernible]

Operator

will come Wells question from of line the Langan Colin with next Fargo. Our

Colin Langan

might obviously good you brands and much never impacting at much to We've Any for so and your wait these how for you recoup share. are seen other how of sense before them of levels. that thanks long? question, Great, you could quarter. think Inventory and people concerned my taking congrats may obviously because market only switch levels it's on a

John Lawler

Yeah. It's Colin. John. Hi,

that much. So reduced our related from to so drop what completely is I think market here stocks we're seeing share a the fact

second We We lost issue. volumes chip we that the quarter. in the the have lost

we We quarter, expect and we work very run rate the that to high we're filling on focused have. turn through third this that rate, maintaining as improve orders the the

Jim continue along as As to bring we're said, our work to going well. retail orders. way And customers on to continue that

the have. So to chip we issue and volume we production see share, as a so with the good and lineup the we especially chance think the that issue we had regain we that a that quarter. strong to in and temporary have related this

Jim Farley

truck to And leadership anyone. we will cede not

Colin Langan

touch [Indiscernible] Services. Okay. on Connected

You I is out in now. Liive when out it's try going? I right monetize to that vehicles. Ford revenue you get on mean, And I of these -- do free and believe rolled rollout commercial how services? Europe that

Jim Farley

question. Great

UK in mentioned, just Spain. do we launched the So -- and we as FORDLive, Jim

far year we're we next so EU about X launch, countries to really today. of we to our charging we've is dollars have more committed had about the so X FORDLiive. Ford in excited frankly. XXXX, expect time the by to What couple We I focus and revenue the more of covered in billion be by end this years digital wish to on Pro

the we in services traditional subscriptions We high to around in quarter. couple like the of business, We revenue low and FORDLiive have like about information [Indiscernible] which telematics plus And monetization share. Electriphi at and very in The digital adding for is the for units that have our area XX,XXX telematics margins years. data customers, just unique and like a Depot charging with data tank parts under we level feel grew the that charging subscriptions services. our our fuel quart the very -- XXX,XXX about really next our high-growth for has XX,XXX

warranty. customers, is So the opportunity post upside for get our very commercial Even customers. tremendous, of we those us few

to warranty the so higher profitable closed for loop very And this payoff going is post business. of much that share real be

Colin Langan

for Thanks question. taking my

Operator

line question Brinkman next will Our come from of with Ryan the JPMorgan.

Ryan Brinkman

but X, quarter XX% it shows in twice XX%. question. up Slide my the out on I that that revenue stood think, is taking rose by for Thanks results, as where by that was wholesaled than year-over-year, your units One especially more thing much in

change EBIT from or Slide X in of just few on idea So which think questions was the revenue unit is billion revenue, in [Indiscernible] driven X.X last outlook the And a of helped growth Net can over by by volume? by correct? Is seems into half the roughly revenue for grow the see to per half and year's unit. price continuing about volume of around makes. what overall I suggests and of the Q pricing pricing revenue kind excess the that in that that do other XX% you

John Lawler

Ryan. Yeah. Thanks,

I we our saw, the We as shrink. in demand relative that think see behind that what products inventory growth. underlying very was strong we of quarter majority a pricing have. And strength the of we is to pricing had the the

little And think so would I a think about it bit as pricing, it of is there, more mix but pricing. in more I of

Ryan Brinkman

just how may we Okay, fallen incentive the environment like of some general estimates very in some made think spending might to stronger industry-wide June going be end, forward, saw helpful tracking outlook U.S., on or have inventories inventory it which bank, just you the the the function etc.? pricing, helpful. in is the also maybe driven new call products to inflationary that incentive Mach-E, Sport, order of the cetera, maybe comments in of leading and maybe light how know earlier And it hot that Bronco be Bronco, a versus incentives carryover in for decline follow-up, your what and I'm of the about in incentives. F-XXX, I a environment? as your year-over-year, then curious is et And might like think by low much the if you if spending usually decline do year-over-year, that XX% much declines

John Lawler

that's a great question.

see strong to continue continue the supply I you to had quarter pricing of we'll strong in demand, continued imbalance the stronger pricing you'd as and versus those improve of us right? [Indiscernible] to all between I We demand expected. And well keep above, working as think and expect. power. supply for think this products. as strong of is the short products, have long we pricing a been It's second the We the that, allowed we've combination see it's have what this

quarter the through and quarter. second the As first we've seen

little come in when the the pricing then start we'll have As to a supply quarter demand fourth year, we bit runs through this demand and we we our pricing next future. near and a relatively go we'll of see the see the year. of to we normalize. off through and some product have power for expect strength lineup see, the foreseeable that how to through But strong given see

Ryan Brinkman

Thank you.

Operator

Our line of RBC with next Capital Spak Joseph the from Markets. question will come

Joseph Spak

margin. the to that that and Good as in through frame view laid margin trend in, those to Markets the assumption out investment, time years you at even bit think investment of the there's in maybe the laid the Thanks. a targets the How or does a wanted about that you and that Capital modernization becomes later, afternoon. get return I that got positive you the to XXXX 'XX on by to a an you there's neutral maybe little out or context such Day. investments it back

John Lawler

thanks. Yes,

connectivity improve and making customer I to launches, then, are and elsewhere cost that in as driving But we reductions work our talked continue experiences X% launches that elsewhere. course. continuing earlier. Of our the walk on towards the to going there investments, These of products in these we're that's margin We've that expect course, as we with got all get make as allocations cost And XXXX. IT. for these and we're return part them. capital and the advertising We're right? also into of a reductions we new margin. on investments we're make our also business up about to in X% we XXXX,

invest we'll So certain in areas.

We see costs, material go but will we cost in should particularly et down also costs coming areas, see certain up another areas, cetera.

Jim Farley

enough I and our in doesn't that XX modernization where Company. of One autonomy. investment batteries of integration of get particular vertical Certainly attention as and area? electrification, investing on a our, the in we're billion don't think course

gets to new like where investment highlight to about general in And I it vehicles but that lost investment the just architecture. not money expensive highlight categories monetization. in but will electrification, the move to really all in but experience is in a is because really through Ford our the a updatable upgrade. a all even today's to than significant the to and want other and products fully move X go you not categories. The always This significant go electric architecture by very to want the our electrical modern often we're details, invest is digital I it modules think this know enable connected going spending I capability embedded of those whole for zonal -on transition, a very I'm Mustang Mach-E. in fully

Joseph Spak

clarify, that to in EV just bucket is you spend included so mentioned? Okay, so the

Jim Farley

Yes. Yes.

when our It a to the So and just new much also completely vehicle hardware the embedded talk system. and propulsion. tooling, more and software than its components an upgrading the we fundamental electric vehicles, engineering approach about includes the of it's electric and and investment,

Joseph Spak

fresh such as plan you there tight sort -- the the or great some it task, think its are can just the guess I'm like of with limited. more which throughout that inventories clearly bank bank, the back with the when are and an or like product lead you of get can or you interesting, like Lightning, to seems do is and into order keep your what quite wondering And -- I Okay, products mature X product X order still well-received Bronco, still to about and you're an the other is explorer that -- frankly, to the of Mach-E, like which keep inventory That the older have products lifecycle or are product lifecycle. and -- is that's you easier to balance you how also going the seem to going plans

Jim Farley

thousand all of fresh. be vehicle. But lot we doing dealers. not the Mustang would bank -- if obviously that a order more s to We'll brands. you our whole of and America, Bronco Mach-Es. say of I XX the We're and plus digital the Sure. in for stock And have our those North vehicle in sure for have ground at More keep of look will unit are this freshness

Joseph Spak

Thank you.

Operator

will line with of Philippe question next the from Houchois Jefferies. come Our

Philippe Houchois

Thank X afternoon. questions. you Good I've very Yes. got much.

we've The order what because in days XX to enable carry surprised pricing. you inventory inventory To a inventory much would've [Indiscernible] about go much be than the order one, past. that's the lower I'm and seen I'll benefit this in on sorry, actually done actually had the back that days thought levels. I bank to we've would And talking honest, of Trump first bank bit XX and to few

side. balance along when sheet, So banking sheet, lines future? And for is look I It's you And wonder Cinco you the just [Indiscernible] then products the if the you step, the U.S. better through where dealer they production. the be less the more opposite more you situation car your to companies, at but on first on the European where Credit carry days on receivables, in sheet. more balance Ford And maybe core balance finished the and proxying. look I you in XX order go guys But do think to do at those the are if can then I'm wondering a their

China, you've bit end the your industrial carrying and lot more sheet, seems balance ask, like on inventory you requirement that my If more And standpoint, capital briefly second able. in one, was because It more China. profit up from increase question. you're stalling a I would can of an which localized Industrial working first if on Lincoln, your

to You had what And are see before, the in year. a generally Chinese how next by you. Thank can China? in if of balance I [Indiscernible] EVs expected. the good maybe seems just I'm making from some difficult by you of competitors you big getting environment into on Is I'm and launched be quite the customers wondering, you for happening side before. about brands -- the there concern losses comment that love there more year in progress just was China And wondering your the not are is

John Lawler

take the capital. will I Yes. working

going see order what us industrial build. where know the see is actually simplifying we Now, we it bank exactly we'll we're helping system because the to

that reduce working to like things use and that capitals. working So we're to actually simplify trying and through now

the on think then I we've have use is it impact. It to working it We working a the if down capital. supply. supply. And What in seen So anything, would day the opposite around would increase past drive XX-day capital.

across reduction. a vehicle be substantial. it's do that day, the different as XX different see so we of lines. And, XX-day that'll course, So

a do in we that day see back the supply. substantial So pull as

Jim Farley

remember, is And [Indiscernible] issue just so the of cross-border Europe, not Ford in Europe, small. in Europe just

and manage stock. of centers ways We don't have holding system to the lots have one in implement It the U.S. we time We evolved to over plan and that country.

And hovering In has think $X.X intention we're very team from launched XXXX. that important Lincoln is not models. as and tremendous made Ford now billion localized those profitable, a -- was our John the China, I it getting was around said, I slightly only just below for So time handle we in that. we're way. there. in is, We is Lincoln breakeven China. a loss now to progress in

recent plethora we're it's And to So brand like whole just today. America in a North a doing phenomenon. we're vehicles, about launch new of

So seeing the full have the we're list, these launch localized, America, Mustang over out we play of on like it and just I a couple what the be all new and North on eve we're years. and freshness, of go will can Mach-E of that long next vehicles, will in the Evos, then

profit for our So important very is China plans.

our our as in be Thanks. industrializing one. vehicles has major a story now job we And situation I done China. the Mach-E, it's tremendous We're it's now in speak. And and think commercializing and sales Mustang improving the growth and going stabilizing just cost, a first to team the

Philippe Houchois

Thank you much. very

Operator

the with And day our question Dan of come for from the Levy Credit Suisse. final will line

Dan Levy

Thank Good you in. for me squeezing Hi. evening.

might situation still you do longer into good you're might best it a and or recognize ball supply-constrained very until long how was sense is wanted supply just there resolved, early fully shortage chip deeper and the you on on fluid First, or But guess to constraint year no some as anyone fully as XXXX. by be have lasting next and the that your something think for do -- crystal your ask by production longer that's much take this I else's.

the baseline expectations just So around that.

John Lawler

won't need [Indiscernible] of running anybody this. Yes, see think capital, have year, feel Dan through to good in that, We we that, we know think next year. first we into that the until chip woods later suppliers, is for do us here. through coming really I for my things I telling one see we've we it the increasing we're that the as comfortable and bleeding as think feel But can discussions of this see I supply really cetera. they're those release they're So mean, as they're is of et We But reallocating guess year. this the where with automotive out the this had before is good on I could part issue a

Dan Levy

we on clearly that presumably Great. headline the just includes understand. of second versus number part this the function EV. ICE gave that ICE, U.S.. remain also It down. I in is that, sales the know right BEV. I you're from ICE assume to investment is And is while. extremely of a strong reallocation maybe just But billion some ICE think could are that the And case but XX now deemphasizing market, question for I means and and a coming you

increases could -- beds? outgoing ICE potentially as that the some So ice vehicles to mix comes to you what should on you that especially we it of pivot possible expect margin start negative as on a from some margin into Is for of down? ICE issue actually as the we and vehicles, the run investment

Jim Farley

a the how Obviously, know capacity good Generally question. XXX is of that We demand XXXX. It's will certainly speaking, our happen. , could shift. Yeah. gigawatt don't guess XX% [Indiscernible] by

And But for the transition And to Company. Company. important support, government a is think be so need well, that we making I have patient. I today you strategy have agility much -- right say, a happen XX% of on this I know very than for So skill infrastructure is all become as buildout. to we a and will lot think we're the we going busy is lot the higher -- depend

with X number inning is Mustang, first We're X months. we're next number the vans sports in we're far, that So of the pickups imply 's with one X in would Ford car in all F-XXX. electrifying those transit, in number X

the demand actually is expected. so far, we And higher than

pointed BEV Europe, you regions. don't we know in but know So get into in happen. But in happen. China, especially expansion level. offering phase all the that it's the product time. at of handicap And to with it's a capital at policy and a say. lot over the accelerated BEV The what's hard more going going support adoption We I next s, to what's government has hard to say, those government's as don't to

making isn't very our The general answer, most -- those question. more that's enough. industrial that's kind system, our of components, the to improvement because spending, for answer is think that's focus necessary and know on where and It our the of our competitive our enough key we and I of how our manufacturing, a think agility important vehicles, management but I we're others. vehicles I the thing vertical it's the integration energy. than money we're the execution putting much our don't agility and profitability our your of BEVs different of electric and and know and profitability

Dan Levy

That's helpful, nevertheless. Understood. thank But much. very you

Operator

Thank you. And Ford participation. this for Quarter that, Motor thank Company's the your concludes with Second like Call. to XXXX you We'd Conference Earnings

disconnect. You may now

Ford Motor (F) 29 Jul 212021 Q2 Earnings call transcript