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Ford’s Q3 production will be better than Q2: Kumar Galhotra

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Kumar Galhotra, Ford Americas & International Markets Group President, joins Yahoo Finance Live to discuss Ford deepening its commitment to manufacturing EV trucks in Michigan and outlook on the chip shortage and EV space.

Video Transcript

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ALEXIS CHRISTOFOUROS: Ford Motor Company is taking the next step in bringing its own electric truck to consumers. Pre-production models of the Ford F-150 Lightning have started rolling off the line at a plant in Michigan. Ford's president of Americas and International Markets Group Kumar Galhotra is here now with some details for us.

So Kumar, first off, congratulations. The electric F-150 Lightning hasn't even gone on sale yet, yet demand is so hot, the company is already expanding production. Tell us exactly what's happening at that Michigan plant today and the investment that Ford is making there.

KUMAR GALHOTRA: Yeah, thanks for having me. We introduced this vehicle at this very site about a year ago and started taking reservations. And demand, the reservations, have far outstripped what we were originally planning on building. So seeing that kind of interest in the vehicle, we immediately started working on breaking constraints both in our factory right here at the Rouge and in our supply base.

So today, we're happy to announce that we're investing $250 million incremental and creating 450 incremental jobs in southeastern Michigan over three different plants in this area to meet that demand. So our capacity now will be about 80,000 units out of this plant, all F-150 Lightnings.

ALEXIS CHRISTOFOUROS: That is definitely a sizable investment to try to meet this demand. When can we expect the truck to hit dealerships? And also, give us an idea for what preorders are like right now.

KUMAR GALHOTRA: So we priced the product very, very aggressively. It starts at under $40,000. It is a lot of fun to drive. And as all of our trucks, it's Built Ford Tough. And it's extremely capable. And you can also power your house with it, in case you expect a power failure of some kind.

The truck we're building-- I'm in the plant right now. We're building pre-production vehicles as we speak. And it should start getting to our dealerships around spring of next year.

ALEXIS CHRISTOFOUROS: And you say it's a starting price of 140,000, or is that it sort of really blitzed out, Kumar?

KUMAR GALHOTRA: No, starting price of under 40,000, 39,9-something.

ALEXIS CHRISTOFOUROS: Right, OK. I'm sorry. I misheard you. I don't know if other folks did too. But that sounds a lot better and a lot more accessible for folks. So starting at just under $40,000.

Talk to me about some of the challenges. I mean, you're trying to get this truck out there during a pandemic. You're dealing with a global chip shortage and supply chain hiccups. What have you been experiencing while trying to produce this truck?

KUMAR GALHOTRA: Yeah, so this year for overall production has been very challenging, not just for us, for the entire industry because of the wafer shortage that's led to the chip shortage. So we have an unbelievable manufacturing and materials planning and logistics team that is working 24/7 to get as many wafers and chips as we can and then, more importantly, deploy them in the products that our customers really, truly need.

So that is one challenge you mentioned. The second challenge, of course, unfortunately COVID continued. And sometimes, the two intersect. For example, there's a chip supplier in Malaysia that didn't experience the chip shortage per se but was hit with a substantial COVID outbreak. So when the two intersect, it causes more disruptions for us.

But we're managing through it very well to the best of our ability. Third quarter production is going to be better than second quarter. And in the middle of that mix, getting the vehicles that our customers really want to our customers, we're also protecting our lunches, like this one. This is a very important launch for us. And we are doing everything possible to get the right chips to this vehicle line so that we can keep the launch on-track for spring of this year.

ALEXIS CHRISTOFOUROS: Now, a lot of people questioned whether or not truck buyers would trade in their gas-powered workhorse, if you will, for an electric pickup that needs to be plugged in every day. By the looks of things, by the looks of the investment that Ford is making, you're pretty confident that the answer there is yes, they want an electric pickup truck.

KUMAR GALHOTRA: Absolutely. So we know our truck customers very, very well. By the way, we had similar skepticism from a lot of folks when we launched the EcoBoost. People were telling us that truck customers only like V8s, so the EcoBoost may not be successful, yet it was incredibly successful. And I think we're repeating a similar transformation here.

Truck customers are very, very savvy. They know the electric motors can provide great torque, which they value. And as far as charging goes, it is actually quite simple. You simply go home and plug it in. So it actually takes less time to do so than to fill up your tank. And you leave your house every morning with a, quote, unquote, full tank. By that I mean a fully-charged battery.

And if you are going on a longer trip, it can get up to 80% at one of the high-speed chargers in less than 20 minutes. So it's extremely convenient. And I would argue that the proof is in the pudding because the reservation numbers are so strong for us that, ever since we launched it, our team has been working on continuously breaking constraints so that we can satisfy the demand. So yeah, the truck customers are ready for the F-150 Lightning.

ALEXIS CHRISTOFOUROS: Yeah. The last number I saw was 150,000 preorders. Is that accurate?

KUMAR GALHOTRA: 150,000 reservations, yes. So we've been taking reservations. And at some point when we get closer to production, the customers take that reservation and convert it into orders. And we expect a majority of those reservations to convert into orders.

And we followed a very similar reservation system both for our Bronco launch and for our Mustang Mach-E launch as well.

ALEXIS CHRISTOFOUROS: Yeah. There's a lot to look forward to here in, certainly, the fourth quarter but in the spring of next year when this truck and the Bronco are going to hit dealerships. Kumar Galhotra, Ford's President of Americas and International Markets Group, thanks so much for being with us.

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