CEO Jim Farley tells industry analysts the automaker has 'been stuck in a box'

Ford CEO Jim Farley climbed out of a Lincoln Navigator at 6:31 a.m. Monday and headed into the Ford Experience Center in Dearborn, where hundreds of industry analysts and reporters were gathering for his much-anticipated speech designed to inspire investors.

Ford executives provided highlights of what to expect from the 120-year-old automaker, ranging from where costs will be cut to how profits will be generated apart from car sales, in the first major in-person Capital Markets Day event since 2016. The program, also streamed live online for investors, ran nearly three hours, including Q&A from industry analysts.

Below is a snapshot from: Farley: Kumar Galhotra, Ford Blue president: Doug Field, advanced product development and technology officer: Lisa Drake, Ford vice president of EV Industrialization for Model e; Ted Cannis, CEO of the Ford Pro commercial business segment, and John Lawler, chief financial officer.

Big promise

"A seven-passenger SUV that's like your own personal bullet train," Farley said.

Changing dealership

Non-negotiated prices will be part of improving the customer experience for electric vehicle shoppers. Lower distribution costs for Ford means reduced physical inventories of electric vehicles, Farley said.

Different marketing view

"Focusing on loyalty, customer communication, building community rather than spending billions on TV advertising and broadcast media," Farley said. "So we don't have to spend $500 a vehicle on TV advertising."

Getting unstuck

"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. It is now time to break out," Farley said.

Weaknesses targeted

A closely watched annual automotive industry study released Monday found Ford has sunk "significantly" over the past year with its supplier relations in areas including trust, integrity and long-term strategy.

Ford plans to lower warranty and recall costs while also addressing supply base instability and factory costs, Galhotra said.

What kind of cuts are being made now

Reducing the design complexity in the Explorer, for example, has reduced costs by about $7 million a year. "We've identified half a billion dollars in annualized savings," Galhotra said. The F-150 and has also seen cuts to variations with design changes, allowing for more simplification and lower costs.

What the future looks like

"Badass," Field said.

Battery size

"There's a bit of an arms race to shove bigger and bigger batteries into large EVs to try and make them like ICE vehicles," Field said. "But the real battleground in electrification is about efficiency. Efficiency is like God's work. ... This obsession in EVs is more than engineering. It's like a religion," Field said. Later, Farley said. "We're trying to make the smallest possible battery for competitive range."

Ordering online

Data has shown digital transactions can improve relationships with dealers, Field said. And smaller inventory supplies means fewer discounts and more transparency for everyone, he said.

Blue Cruise

Ford anticipates generating an estimated additional $200 million in revenue from subscriptions for the Blue Cruise advanced driving assistance system that pairs a vehicle’s adaptive cruise control system with a lane-centering assistance system and provides hands-free driving capability. That revenue grows separate and apart from vehicles sales, Field said.

Labor cuts

Ford forecasts a 30% drop in labor and overhead costs in building its new all-electric truck in Tennessee compared with the gasoline-powered F-150 at Dearborn Truck Plant, Drake said. However, job cuts in one area don't necessarily mean fewer workers overall because they may change departments, Farley told reporters after the presentation.

New partnerships

Ford announced new agreements with Albemarle of Charlotte, N.C., SQM of Chile and Nemaska of Canada to deliver battery-grade lithium hydroxide, a key ingredient in the lithium-ion batteries Ford is using to scale electric vehicle production, Drake said.

Building software value

"We have 600,000 software subscribers today, so it's not a theoretical thing for us," Farley said.

Investor analyst takeaways

Analysts told the Detroit Free Press that the hidden secret for Ford, until now, is the strength of its commercial business. It has been hidden in the rest of the business until Ford separated the company into clear segments last year. Farley told reporters after the presentation that Ford will make $10 billion in 2023 and Ford Pro will generate $6 billion of that.

China

"It'll take us a few years to get the business to where we want it to be," Farley said.

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Supply chain

Supply chain relationships are "super, super strategic," Farley said.

Lawler, who oversees supply chain relationships for Ford, said, "We have a lot of work to do with the supply base" but the company is listening to feedback and working to improve collaboration.

Forecast on investment

The automaker reiterated its projections for a full-year 2023 adjusted EBIT (earnings before interest and taxes) of $9 billion to $11 billion and adjusted free cash flow of about $6 billion. The company anticipates EBIT of about $7 billion for Ford Blue, up from 2022, and approaching $6 billion for Ford Pro, nearly double last year, and a full-year loss of about $3 billion for the Ford Model e segment that Ford describes as its "startup" company, Ford said.

Change ahead

"Trying to be all things to all customers isn't a great business model ... especially when you have a host of competitors all trying to do the same thing. You've seen today, real change is underway at Ford," Lawler said. "We are not the Ford of the past. We are new, more focused, with true growth opportunities."

It's personal

"It's hard to describe to people outside of Ford how much this team wants to win," a dramatic change in just five years, Lawler said. The time period to watch is 2025. Big things coming from Ford, he said.

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Contact Phoebe Wall Howard: 313-618-1034 or phoward@freepress.com. Follow her on Twitter @phoebesaid.

This article originally appeared on Detroit Free Press: Ford CEO Jim Farley says automaker has vision to execute change