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Ford Motors is out with this latest earnings report. Adjusted earnings per share for the fourth quarter beat the average analyst estimate, but you're seeing the stock drop in after hours trading because of the outlook. Ford warning that profit may fall by two billion dollars or more this year on an expected drop in vehicle prices as well as costly new model launches, and of course behind all of that, you also have concerns over new tariffs under President Trump.
We now want to welcome our TV and radio on audiences across the globe because joining us now with more is Jim Farley, CEO of Ford. Jim, thank you for joining us today. Really appreciate your making the time. I want to ask about the expected drop in vehicle prices. Is that something that is across the board that we're seeing in the industry or is that specific to what you're seeing at Ford.
No, I think it's it's across the industry. We're seeing all around the world. You know, after COVID all vehicle prices really up, but with the acceleration of evs as well as inventories normalizing for customers and dealers, We're seeing the prices come down across the globe, and affordability is a big concern for customers.
Yeah, it certainly is, and you of course have some new model launches that will be coming up in the years to come. But in the meantime, it's a it's a matter of managing through this interim period. And during this interim period there are a lot of question marks over TIFFs. The teriffs that President Trump had planned to impose on Mexico and Canada have been.
Pushed out by a month. How does the.
Company plan to take advantage of this four week delay that was announced earlier this week? Will you be stockpiling inventory, for instance, to get ahead of that?
Well, I think Ford is among the best industrial companies. Is scrambling. We have the largest US footprint of any car company. You can imagine. We're increasing our component supplies both at the company and our suppliers, and we're adjusting both our Mexico as well as our US plants to make sure nothing crosses the border.
I think longer term is the bigger concern.
These kind of tariffs, especially in these two countries, are very significant, and if they persist beyond months, you know, we could see billions of billions of dollars of pressure on the industry, lost jobs, lots of impacts to communities and our ecosystem in the industry, and that's what we're talking the administration about and congressional leaders.
So what kind of communications have you had with specifically with the White House officials about either tamping down some of these potential terrists or assuming that Trump does go through with them, how if at all, the auto industry either could be compensated or in some way have that impact mitigated.
Well, actually, we spocus the industry, Mary myself, John Elkin from Stilantis, we all kind of said the same thing, which is four years ago, we can admitted to the USMCA tear requirements, and all companies have done their job to make sure our vehicle and components are USMCA compliant, and we ask for those to be exempt because it's a trade agreement that we all agree to. Actually with
the Trump administration, we think that that's only fair. Look, right now, this tariff has proposed as a windfall for South Korea and Japanese companies that can import millions and millions.
Of vehicles without these tariffs.
Meanwhile, we have USMCA compliant vehicles and components that are susceptible to this, which will have all this devastating impact. So what we're asking for is a reason policy around tariff that's not just these two countries, and we understand the pressures on the border and illegal drugs, but it's more comprehensive. We also have to work through CO two policy as well as tax policy with the IRA.
So what is your strategy? Then? I'm good to navigate this. I mean, this isn't going away, whether it's twenty five or something less. This specter is there's certainly a big part of the President's playbook to address the issues that he wants to resolve here. You can't just up and
move a factory overnight, Jim. So what exactly are strategizing now with your team to make sure that not only are you producing the cars you need to produce, but you're producing them at a cost that's reasonable to you and more importantly, reasonable to the customer.
Well, first of all, Ford is in a very fortunate situation. We decided many years ago to have an outsized footprint in the US. So our manufacturing footprint, the number of vehicles that we make eighty percent of our vehicles sold in the US are made here, all of our transmissions, most of our engines, so we have a really big advantage compared to our competitors. But there are optionality that
we can make. And look, we've localized a lot of battery plans and ev production in Tennessee and Kentucky because the production tax credit is there. So we're really asking an administration please preserve the production tax credit. Let's have a reasons tear for approach, and most of all, let's have reasonable co two targets that are in line with what customers are actually buying.
Do you have spare capacity inside the US right now? A significance.
No, No, we are matched out in the US. As I said, we're the largest US producer. We export more cars. A lot of people don't realize that Ford exports a lot of cars outside the US. We don't have a lot of excess capacity a little bit, and we're taking advantage of that, and that's why we're building new capacity in Ohio and Tennessee and Kentucky for batteries and these new Eviso be coming out in the next couple of years.
That's why we're investing in the US.
Terrors are clearly on everyone's mind, and that's something your CFO has made in her statement as well. And the guidance that you offer does not include the potential impact of policy changes by the White House. Once we do get the actual tariffs announced and imposed, how quickly can Ford come out with some specifics, quantify the impact and provide a new forecast. Is that something that you intend to do?
Of course, I mean, we're always transparent. I will be able to say though in our guidance we can handle a couple of weeks of tariffs. If it goes beyond that, obviously it will be billions of billions of incremental incremental, you know, profit headwinds for the company. So you know, I think the most important thing is having a productive discussion with the DC leaders, the Trump administration, congressional leaders about what this could do to our industry, what it means for US jobs.
And you know, they ran on a campaign of making the.
Auto industry stronger, and that's what we expect out of them.
As policy makers.
We have a lot of policy decisions to make in the coming year, As I said, CO two tax policy, and we believe that this administration, congressional leaders are going to back to US industry companies like four that have doubled down in the US.
Right, Okay, I want to talk a little bit about your ED business as well. The EV strategy. Clearly in overhaul mode, you're more affordable models that go further on a single charge won't really be available for two years and for it is kind of unusual on that you do break out your EV profits and your financial reports. When will you have visibility on those affordable models that go further on a single charge in terms of being able to really turn around that business.
Well, look, we made the decision.
We've been number three to Tesla in the US EV sales for three years now, we've been number two for three years, and we're also number three on hybrid, so we know a lot about these customers. We decided a couple of years ago, based on what we heard from customers, that we really needed to redo our EV lineup. So we made that decision a couple of years ago. You know, we canceled a couple models. Those vehicles are in development now.
We would rather grow profitably than grow and that's that's what we're deciding on.
So this next couple of years. We're number two to test a long.
Way below them, but we scaled one hundred thousand unit plus for a couple of years. Now we want to wait until those new vehicles come out in a couple of years. As you said, that will really transform our model ly profits. You know, they're designed differently, They're going to be manufactured different they have a different supply chain. We've really learned a lot from Tesla, from the Chinese, from a lot of people on how differently we need to design these evs to be profitable.
So Ford is committed to a long term EV strategy.
Then absolutely what about absolutely we see I was just going to say, we see the people buy evs, they don't go back to combustion. You know, they're they have very high level satisfaction with the vehicle. It's a small part of the industry in the US, only eight percent, but it's growing. But the only way it's going to grow in a sustained way if it's a profitable business for us, and that's why we had to completely redesign our vehicle and our approach.
Jim, we want to really thank you for taking time for us here on what I'm sure is a very busy after for you. Jim Farley there, he is the CEO over at Ford. Those earnings just out, and we shoull reiterate here. The numbers in the most recent quarter did beat, but some concerns here about the guidance going forward, largely because of costs and maybe some tamp down of pricing power. Those shares down five percent in the after hour straight