I’m really proud of the progress we made like in the last 18 months, but it’s maybe just the tip above the water and the low-lying fruit. We now have to get after that systematic issue and those issues that I mentioned. On complexity, we have reduced the new F-Series from 1.4 billion combinations to less than 1,000. And on our new SUVs, we reduced the customer-facing complexity by over 90%. Our QOS execution is getting better. We’re about 10% improvement in our problems at three months in service, which is a lot of progress for North America. So, the initial quality is getting better. We now have the talent, both the expertise but also the execution talent. We’re now starting to strategically source our EV components, which we now can apply to our ICE business.
I’m really proud of the launch progress we made. We’re now seeing launch spikes we’ve never seen in a decade at Ford. We are slowing down those launches, and in the case of Super Duty, its cost is $1 billion, but it was the right trade because it prevents a lot of recalls and issues down the road for the company. And we have made progress on material. We have billions of dollars of opportunity next year, but we have to deliver and release the parts, and I’m very confident that Kumar’s new organization will be able to really get after the part of the iceberg that’s below the water. That’s been a problem at Ford for decades. Thank you for asking your question, and I just wanted to take a little extra time to give the full context.
John Murphy: That’s great. Maybe I’ll just sneak in one follow-up. You know, EV demand is not materializing quite as robustly as we were expecting this year. Pricing is a little bit down. Costs are going to be up with labor. So, I mean, as you mentioned, EVs are going to become more challenging going forward. But when you think about like a program or a product like the Explorer that we have, at least in car, where it’s launching in calendar year ‘25 as a model year ‘26, and you might disagree or agree with that, but that product is coming at some point soon. That was an EV variant and an ICE variant we had and we were expecting, and it would have been sort of an expectation that maybe you would have crossed out that ICE variant and just had an EV six months ago.
But now, actually, things have switched in the other direction. You might actually cross out the EV and just keep the ICE. I mean, how are you making these decisions right now with sort of these tectonic shifts going on? I mean, there’s data. There’s consumer groups and all sorts of stuff, but they’re incredibly difficult and impactful decisions that you have to make. What is the process, Jim, that you’re going through on these powertrain decisions as you’re going through the product launches over the coming years in planning?
Jim Farley: Yes, got it. So, things are changing. You know, EVs are still in high demand. It’s just, as you said, the pricing is much lower, and there’s a lot of overcapacity in the middle of the market. For us, I think we’re – our EV strategy and our ICE strategy is to go after customers we know really well. And so, on our ICE and hybrids, very much of a loyalty target. And in the case of EVs, many of the same segments, but a conquest strategy. And I would say we feel very confident on that strategy because Ford is – has a great reputation in those segments like full-size truck or pickups or vans, commercial vehicles or three-row crossovers, but our products are not substitutional because the customers who we’re going after are different, but they are the same segment.
So, we know the use cycle really well, but the innovation will be pointing in different things. The F-150, I think, is probably the best example at Ford because we have world-class ICE. We have a hybrid that’ll probably be 20% mix. And then we have lightning and the next-generation lightning that we’re working on right now. And when you compare the ICE, the hybrid F-150 to the EV F-150, you will be surprised at how much more conquest the vehicle is executed. And we believe that innovation will give us pricing power for those EV conquest customers. The first generation has helped us there, but I think that’s our strategy. As far as the changeability of that strategy or flexibility, we certainly have choice, but as John mentioned, we’re really flexing the capital and the timing of the capital, especially around battery plants and overall manufacturing capacity.
So, we’re not changing the product strategy, but we are flexing, and that’s our bet, is that we will flex the capacity. From a product planning standpoint, we’ve made, I think, really good bets on the ICE and HEV side in case the EV market is not as fast as we thought. We have affordable Mavericks. We have a strong international business now with Ranger and Everest. Those markets won’t go EV anytime soon. And the markets where we’re in, like F-150, Super Duty Pro, they’re not duty cycles that are going to go EV, and we have really fresh product. So, our bet is maybe different than others who just said, look, we’re going to get rid of an ICE Explorer and go to an EV Explorer. That’s not our strategy.
John Murphy: It’s very helpful. Thank you.
Operator: The next question is from Dan Levy with Barclays. Please go ahead.
Dan Levy: Hi. Good evening. Thank you for taking the questions. I appreciate, Jim, the commentary that you gave on warranty and just cost more broadly, but I wanted to ask the question maybe in a slightly different way. This is, obviously, as you pointed out, a lingering issue. I think you said at the CMD earlier this year, it’s a $7 billion cost gap versus your competitors for Blue. What exactly is the line of sight or how confident are you that these issues can be turned around? Just because these have been issues for some years. And specifically, in the context of your pivoting to new architectures here where there’s obviously going to be some uncertainty on your end, what gives you the confidence or the line of sight to actually turn around these cost headwinds?
