I would always want faster. My team is doing a great job. I think we are among the best in doing that. We still need some time to converge fully. But I think that what we are going to see over the next two or three years is that the affordability is going to be driven by the speed at which we reduce the total production cost as we want to protect our margins. And the people that are not going to protect their margins, they are going to put themselves in trouble, which is obvious. And some of them have communicated on the profitability of their BEVs, and most of them are red. Ours is black, and significantly black. That’s what I can share with you. Natalie, anything you’d like to add?
Natalie Knight: Maybe just from my side, the thing I would add on the pricing topic is, yes, it is part of our AOI guidance, and it’s one of those items where you’re right, there’s positives and negatives to that. When we look at North America, I think what’s important to call out is we haven’t seen any radical pricing drops. People have been pretty disciplined, perhaps after everything that happened in the fall of last year, it’s in everyone’s best interest to be disciplined there. The place where you do see it, and I’m sure that’s what you were alluding to, is when you look at EVs, particularly in Europe, there is a different position there. But what we think about is always what can we control? And what we can control is that we want to maintain a strong pricing differential vis-a-vis our peers.
This is something we’ve built up over the last several years and where it’s really one of our key USPs. So expect if the market goes up and down, we’re going to use that ability that we have as a company with the cost savings, with the efficiencies, all those things that we’re known for to be able to maintain that relative distance, but also to have the flexibility to make sure we don’t use it to the detriment in terms of how it impacts share in our position.
Carlos Tavares: Thank you, Natalie. Next question. Thank you, Michael.
Operator: The next question comes from Jose Asumendi of JPMorgan.
Jose Asumendi: Thank you very much. Question, please, from the third engine. If you could please comment on the rate of growth we are expecting for the three regions in 2024, and also if you expect the margin or the profitability to remain so high in 2024 as it has delivered in 2023. Thank you.
Carlos Tavares: Well, a great question, Jose. Thank you. The only thing I would like to share here is that if you go back to my statements last year or a couple of years ago, it is fair to say that the results that we presented to you with Natalie are ahead of plan. We have seen such a tremendous response from the overseas club, which of course creates inside of the company some kind of competition, which is nice and healthy, where the third engine is indeed growing faster in profit. They doubled the profit in 2023 against 2022. So on that front, we are ahead of plan. What does it mean? It means that I don’t foresee that we would have our third engine at the level or close to the level of Europe later than 2025, and it could happen in 2024.
Because that’s really what we see. We see that we have the right products, we have the right pricing, we have the right teams, and most importantly, we are reinforcing significantly the local sourcing for the local markets. You may have seen that we have taken many initiatives. We are already 90% plus sourced in Latin America for Latin America. We have now upgraded our objective for African sourcing for Africa and Middle East to 90% in 2030. Previously, we were at 70. We just moved it to 90, because it’s the same recipe. We want to source in the region for the region to be able to have in the region the right technology that the region wants. This is what we are doing. We have manufacturing entities in Morocco, in Algeria, in Tunisia, in Egypt, in Turkey, very soon in South Africa.
So we have a very strong manufacturing footprint plan for Africa Middle East, as the market is responding very, very well to our product offering. So we’ll keep on doing that as fast as we can. We have a fantastic, fantastic position right now in Algeria with more than 80% market share. We are now moving with the plant, which is already in operations and we have more steps to go. So we see that, yes, the third engine is a big competitive differentiator against some of our other peers that have more shrinking strategy. So we are there. We will keep on moving. And I would be disappointed if we were not on par with Europe by 2025. And I think that we have a good chance that it will happen in 2024. This is what I wanted to share with you, Jose.
Thank you.
Carlos Tavares: This is, I believe, the last question. I just would like to close by expressing to you all my sincere appreciation for your support, for the quality of your questioning, because the quality of your questioning is making us think better. I would like to thank my employees, I would like to thank my top leadership team because they give me the privilege of challenging them and that’s a big privilege I have to be able to challenge them and they are working super hard to create the returns that Natalie presented to you today and Natalie has brought us a breath of fresh air in the way we understand you, we understand your expectations, so we expect to be doing a better job in the future. Thank you, have a great day.
