And that as we’re coming out with new vehicles, our cost per units are coming down, so our margins are improving. When you look at the design of our vehicles and you compare it to competition, I think if you go through those benchmarks and you go through those teardowns, you can see that there’s a tremendous amount of opportunity for us to design out complexity. And you should see that coming through complexity reduction KPIs on our vehicles. I think that will be key. And it not only will be in the order combinations but also in the parts complexity in the number of parts. And what we’ll be doing is as we move forward through this year, especially at Capital Markets Day, we’ll be providing more details on those KPIs. But it’s the key areas you should be seeing how much productivity we’re getting out of $1 of engineering, and we should do something around that from a KPI standpoint because these are the areas that we need to improve.
Jim Farley: Rod, some of the things I think about — some of the things I think about is a number of complex sequencing centers we have. Our line sight complexity, number of parts sitting on side of the line, our inventory turns inside the plant. And on the supplier side, it’s going to be transparency. We had full transparency down to Tier 3 in our supply chain. It’s very important to operationalize better quality and cost. On the engineering side, it’s also indirect. What’s the ratio of indirect to direct engineering that we’re spending, i.e., the productive engineering that’s resulting in customer-facing products. And increasingly, I know it’s going to sound a little bit weird, but it’s the software output. We are spending as a management team more and more time on our software platform, and the cost of creating software and the complexity of software.
And that’s something that — we have a lot of KPIs. They’re increasing quickly and are increasingly important for us. It may not be significant for structural cost, but we have to be careful to add a lot of complexity in software.
Rod Lache: So just to put a landmark out there, do you think a year from now will be looking at structural costs that are up or down, obviously, ex-pension because you have this $3 billion cost reduction plan? And then I have a second question just on Model e.
John Lawler: Rod, I think it’s beyond just structural cost. Our biggest cost element is our material cost. We will continue to invest in our growth-related investments, some connected services. The software, as Jim talked about, we’re also continuing to invest, as you know, in our build-out of our batteries. So our spending related costs are going to go up. Volume will drive manufacturing cost, which is in our structural cost. So there will be puts and takes on the structural costs. Our biggest opportunity is in our level of material cost that we have. It’s the largest cost element on our income statement, and it’s where we are most uncompetitive.
Rod Lache: Yes. Okay…
John Lawler: So, we’re going after everything, but I…
Rod Lache: Yes. I think I got the answer on that. Maybe just to switch gears on Model e, if I can ask Jim a question, you’ve got this target of 8%. And that 8% margin target presumably has some assumptions for where costs will go, but also where pricing is going to go. And just considering everyone’s aspirations for growth in EVs, do you think you can stand by those pricing assumptions and maybe a different way of asking this is, do you think you can sell a $40,000 electric crossover with a 20% gross margin?
