CEO Strategic Update Ford Motor Company | October 3, 2017
Jim Hackett | CEO Ford Motor Company
Our solid profits allowed us to distribute over $15 billion to shareholders since 2012 Billions $15.4 Supplemental Dividend $1.2 Anti-Dilutive Share Repurchases $2.7 Regular Dividends $11.5 $3.5 $2.7 $2.3 $1.0 $0.6 $2.4 $2.4 $1.7 2016 2017* 2012 - 2017 Average 2012 - 2015 * Assumes 2017 regular dividends of $0.15 per share per quarter 3
We have grown the business but have fallen short of our 8% automotive operating margin goal Automotive Revenue (Billions) Automotive and Volume (Thousands) Operating Margin Automotive Revenue 8%+ Target Wholesale Volume 6,651 $142 6.1% 4,866 $104 6.7% 4.6% (0.7)% 2009 2016 2009 2010 2011 2012 2013 2014 2015 2016 4
Jim Farley President, Global Markets Joe Hinrichs President, Global Operations Marcy Klevorn President, Mobility Bob Shanks Chief Financial Officer
Five principles we need to act on: 1. Ford will prepare for disruption by becoming fit 2. We will be in the vehicle business – moving both people and goods 3. Our vehicles will be smart and connected 4. These smart vehicles will thrive in a new transportation operating system 5. We will evolve to capitalize on new business opportunities within this transportation operating system 6
Since the Great Recession, our industry enjoyed strong demand… U.S. Industry Volume (Millions)* 17.8 17.9 16.8 15.9 14.8 13.5 13.0 11.8 10.6 2008 2009 2010 2011 2012 2013 2014 2015 2016 * Includes Medium and Heavy vehicles 7
…and we achieved record levels of profitability Ford Adjusted Pre-Tax Results (Billions) $10.8 $10.4 $10.1 $9.3 $8.9 $8.2 $7.3 $ - $(7.3) 2008 2009 2010 2011 2012 2013 2014 2015 2016 8
We need to be able to navigate the now, near and far FAR NEAR NOW 9
A new type of clock for CEOs FAR FAR NEAR NEAR NOW NOW 10 10
A new type of clock for CEOs 11 11
A new type of clock for CEOs NOW NEAR FAR 12 12
We cannot compete for the future unless we get fit today 13 13
Our first priority is to reset revenue and attack costs 14 14
Our costs have grown as fast as revenue; capital spending has grown even faster Automotive Revenue and Capital Spending Total Cost Growth* as Percentage of Net Revenue 5.4% 4.9% 3.5% 30% 29% Growth Growth 2010 2016 2010 2016 2010 2011 2012 2013 2014 2015 2016 Auto Revenue Total Cost * Adjusted data; includes China Joint Ventures at share; excludes Parts and Accessories 15 15
We established Global Markets and Global Operations organizations • Promote better accountability across the markets • Enable more effective cost reduction • New industrial model for the next generation of vehicles • Have already launched profit improvement and spending reduction initiatives 16 16
We are reducing the pace of cost growth Automotive Cost Performance Future 5-Year Incremental Efficiencies $4 Product Engineering Billion Automotive Cost Growth $10 Material 50% Cost Billion 2010 - 2016 2017 - 2022 17 17
We are also addressing the need for a fundamental redesign of our operations 18 18
Not only one-time savings but also compounding improvements Profits Time 19 19
Our re-imagined F-Series yields great results now and in the future F-Series Progress 2014 - 2017 Share 1.7 ppts Average Transaction Price 16% F-150 Weight 700 lb F-150 Fuel Economy up to 19% + CAFE positive Next-Generation F-Series 90% manufacturing equipment re-use Remains positive to CAFE 20 20
We are regaining focus on what our customers value the most and reducing complexity Orderable Combinations Current Model 35,000 Forward Model 2,302 360 1,168 672 228 26 96 Focus Escape Fusion Explorer 21 21
We are also taking a hard look at our product development process to improve efficiency New Vehicle Product 20% 25% Development Time Change-over Time 22 22
Internal combustion spending will be re-deployed into electrification for future demand Internal Combustion Reinvest Into Electrified Powertrains Powertrain Capital Engine Spending (Bils.) Architectures 17 $1.7 $$$ 12 $1.2 29% 32% Decline Decline 2016 2022 2016 2022 23 23
Factory of the Future promises smaller footprints, faster logistics and closer customer contact 24 24
Understanding our future starts with a winning aspiration 25 25
Our vision for the future Ford Motor Company was built on the belief that freedom of movement drives human progress. It’s a belief that has always fueled our passion to create great cars and trucks. And today, it drives our commitment to become the world’s most trusted mobility company, designing smart vehicles for a smart world that help people move more safely, confidently and freely. Smart Vehicles in a Smart World 26 26
27 27
People have passion for their vehicles 28 28
Vehicles can enable technology with passion 29 29
It is more than mobility… it is mobility with passion 30 30
There are many more choices for where we play and how we win WHAT IF A CITY MOVED WITH THE RHYTHMS OF ITS INHABITANTS? ELECTRIFIED VEHICLE INTRODUCTION OF FULLY POPULATION INCREASES AUTONOMOUS SAE LEVEL 4-CAPABLE VEHICLES EBIKES WIRELESS CHARGING CROWD-SOURCED DYNAMICALLY- ROUTED SHUTTLE SERVICE 31 31
There are persistent forces that will help us make the choices to move from Now to Far THE CITY OF TOMORROW, DECADES ADVANCED, HIGH-SPEED MASS TRANSIT AND DECADES FROM NOW. VEHICLES ROUTED AROUND PEDESTRIANS AND EACH OTHER SIGNIFICANT POPULATION OF FULLY AUTONOMOUS VEHICLES PARKING CUT TO ALLOW RE-USE IMPROVED WALKABILITY 32 32
Focusing on strategic choices 33 33
Investing now in the understanding of use is the gift that will keep on giving 34 34
Recent advances in deep learning are breathtaking 35 35
Deep learning will help us understand vehicle interactions to optimize autonomous vehicles 36 36
Environments will actually communicate to the vehicles 37 37
There will be a variety of propulsion choices but electrification will become more common Global Industry 2017 Global Industry Outlook 2030 Internal Combustion Engine (ICE) Hybrid Electric Vehicle (HEV) Battery Electric Vehicle (BEV) / Plug-in Hybrid (PHEV) 38 38
Advanced propulsion systems need to offer passion and intimacy 39 39
City of Tomorrow Video
Smart Vehicles in a Smart World AUTONOMOUS ROAD USER VEHICLES CHARGING CONNECTED DYNAMIC VEHICLES SHUTTLE INTEGRATED FARE REAL-TIME TRAFFIC MANAGEMENT MANAGEMENT MULTI-MODAL INCENTIVES TRANSPORTATION (DISCOUNTS, TRAVEL, SOLUTIONS VOUCHERS, ETC.) PERSONAL TRAVEL SMART ASSISTANT APPS PARKING REAL TIME TRAVELLER INFO RIDE SHARING BIKE SHARING Source: Deloitte 41 41
Flexibility and partnerships enable agility Ford Microtransit Transportation Fleet Dynamic incl. Customer FordPass as a Service Digital Services And more… Management Shuttle Non-Emergency (incl. ride hailing) Medical Transport Solutions Management Notifications And more… Telemetry Telemetry Payments Inventory Analytics Partner Mapping Identity Routing Vehicle Device Data Solutions Core Services Cloud Connectivity and Big Data 42 42
Connectivity Non-Emergency Medical Transport Chariot FordPass and Digital Services Platform
Evolving our portfolio to optimize returns Utilities Leverage regional strengths Play to Win Commercial Vehicles Build on leadership: F-Series, Ranger and Transit Leadership Cars Profitable subsegments and value partnerships Smart plays Powertrains Simplify and partner ICE and diversify electrification Pivot to BEVs 44 44
Accelerating pure electric vehicle portfolio • Profit driven • New Zotye BEV MOU and other alliances • New dedicated BEV team - Team Edison • Expanded BEV line-up post 2020 • End-to-end business model change from design through ownership • …more to come 45 45
On-track for production ready AV business • Business model driven: People, Goods, Content • Human-centered design • Argo AI: On-track with scalable and production ready tech • Max utilization: HEV, commercial durability, flexible vehicle format • Expanding tech and future commercial business partnerships 46 46
We are redesigning our industrial model for smart vehicles in a smart world Today Tomorrow • Machine Learning Deep Learning • Artificial Intelligence • 3D Printing Data Lean Manufacturing • Virtual Factory • Capital Manufacturing 4.0 47 47
BEV product simplification yields floor space and capital efficiencies Current State – Final Assembly Future State – Final Assembly Benefits vs. ICE • 50% reduction in footprint PRE-DELIVERY TRIM / CHASSIS / • 50% reduction in capital PRE-DELIVERY investment CHASSIS • 30% reduction in hours per unit Open Space for Battery • Flexible tooling / process TRIM Assembly and fully scalable and BEV Power Components reconfigurable to support increase in demand 48 48
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