Conference Transcript - F 2026-06-03

Joe, Other

All right. Good morning, everyone. Welcome back. I'm very pleased to move on to the next presentation with us from the Ford Motor Company. We have Sherry Haas, CFO. Sherry, thanks again for joining us this year.

Sherry House, CFO

Yeah, it's great to be here.

Joe, Other

A lot of topics to get to, so we're going to sort of try to be pretty orderly here. Let's start with 26 because it is a pretty noisy year. I think one of the key swing factors here is really Novellis, your aluminum supplier, and them coming back online. You know, a couple weeks ago, the CEO mentioned they fired up the plant again. Maybe you can sort of just talk about what you're seeing from them, what you're hearing from them, and how you expect that ramp to proceed over the balance of the year.

Sherry House, CFO

Yeah, sure. So from our perspective at Ford, I would say Novellis is largely on track. So when we talked about Novellis in the past at Q1 Earnings, we talked about having a $1 billion tailwind this year, you know, as a result of being able to make up a lot of our volume. So we do have, just to maybe break down that $1 billion tailwind for everybody and to give everybody a reminder of it, what we're expecting is that we are going to have an additional $1.5 to $2 billion of cost this year associated with having alternative supply of aluminum until that plant gets fully up and ramped. And then what you're going to have as a counter to that is you have a non-recurrence of the 100K loss of vehicles that we had last year. And we're also doing a partial makeup from last year of around 50,000 vehicles. But at this point, you know, in terms of communications with the Novellas facility, I would say that we would say it's largely tracking as planned. and we're going to be expecting to kind of be in this like 10 to 12 week period where you're in the process of ramping up so that's going to consist of validation of the material that's going to consist of making sure that it can get successfully through all the parts of the supply chain and if there are any hiccups along the way we have secured contingency material as well so so with that with that 12 week period does that does that effectively mean that in your guidance as you sort of get into the fall, September, October, you think that plant is running at pretty high utilization?

Joe, Other

Or how should we think about when you can sort of get someone out?

Sherry House, CFO

I would say that it's going to continue to be back half-weighted as you're going through the second half. And we would say that it's, you know, it'll be a little uneven. That's how these things go. But we would expect that you would start seeing something that's approximating, you know, full pace, full capacity as we're in Q4.

Joe, Other

Okay, perfect. And then on the head when you talked about that, you know, billion and a half to two from tariff and logistics, it was only, I think you said, about $300 million in the first quarter. So is it fair that we see that stepping up here in the second quarter into the third quarter before starting to phase back down? Is that the right shape of that cost?

Sherry House, CFO

Yeah, I would say you're going to see it stepping up in Q2 and Q3, and we'll see how this all plays out in terms of the production, because a lot of it will be matched to the production as you're using the material.

Joe, Other

Okay. Other parts of the 26 guidance and maybe thinking about sort of first half or second half, you know, you mentioned a billion dollar investment for energy storage systems, which I know we'll get to in a minute, and UEV, which we'll also get to, I think, $600 million was for the UEV. That's right, $400 for best. It seemed like a pretty de minimis number, quite frankly, and maybe earlier on in the year or so, which maybe led to some of the better-than-expected sort of first-quarter performance. So how should we think about that ramping through the year? Is it really sort of more back-end of the year loaded as well, or do we start to see some of that creep in in the second quarter?

Sherry House, CFO

So you are going to see both BESS as well as the UEV, some in Q2, and then it's going to continue to accelerate into Q3 and Q4. That's right. Because, yes, you're getting closer to your launch. And it will continue into 2027, too.

Joe, Other

Commodities, another bucket that sort of people focus on here. And I know you raised your headwind to $2 billion year over year. you know i i guess maybe the pace of the the price of one has uh slowed a little bit but you still sort of seems to have like creeped a little bit higher from from first quarter so but how are you sort of thinking about about that in terms of you know your your outlook for the year because i know you sort of also started to put in some some more hedging and involved as well so any any sort of maybe just level of comfort with where we see current i would say we're very comfortable suggesting that it's going to be a two billion dollar year over year impact with commodities you know in that range and our guidance which was the eight and a half to ten and a half billion fully comprehends that that two billion of commodities potential headwinds okay um maybe just one more on the near term on 26 and we could sort of you know talk a bigger picture about 27 but you know we had may sales the other um come out um uh you know demand i think at an industry level still looks pretty good maybe what are what are you seeing specifically at ford um from from the demand perspective from a consumer perspective in the in the face of sort of higher gasoline prices and you know how do you see pricing holding up as as well yeah i would say industry uh numbers for may looked pretty much as expected in terms of where the industry shook out

Sherry House, CFO

I would say that for us, you know, we had some expected reductions with the focus and the escape that we were going away. Because we've been moving more into more high-margin vehicles, you know, higher mix here currently. So I would say that the industry is largely as, you know, as we would have expected. And you had a second part to that question as well.

Joe, Other

How you're seeing pricing holding up for Ford?

Sherry House, CFO

Yeah, that was one of the reasons why we updated our guidance is that we saw strong net pricing in blue in Q1. We also saw great, you know, software and physical services as well. And at this point, we are not seeing fracturing in terms of the demand. And we think part of that is because our products have such more powerful powertrains than we had in the past. They're much more fuel efficient than they were. If you go back just a few years, you've got 20% improvement in fuel efficiency. And so this is playing out into the consumers. And then also when you look at the demographics of who is buying our vehicles, particularly when you're getting into some of those high trucks, you have a richer customer, a wealthier customer that is able to be able to purchase those vehicles. Also, you also find that a lot of the vehicles are purchased for vocation. their purchase for lifestyle. There's people, particularly commercial customers, that need it for towing. They need it for the payload. And so as a result, even though the fuel prices have been going up and we know that we need to continue to offer a wide range of products that are going to enable our customers to be able to adapt, we're not seeing a lot of changes as of this point in time.

Joe, Other

Yeah. Maybe to bridge this conversation to sort of how investors should think about um 2027 and beyond for for for for motor company you know i think a lot i think post the first quarter um a lot of investors said oh look at we're looking at the the guidance for the year we look at what you did in the in the first quarter it assumes about two of the two billion dollar pace for the for the balance year i know that's not sort of how you view it internally um um and you know i i'm not expecting to sort of give 2027 guidance here today but if you want to feel free. But maybe we can just sort of talk about some of the larger building blocks, the puts and takes you see, you know, 427 relative to sort of what is transpiring over the balance of the year.

Sherry House, CFO

Sure, sure. Well, thank you for acknowledging that it's early to be talking about 2027. But let me give you a few puts and takes, as you suggested. So first off, you know, from a tailwind perspective, you wouldn't have the one and a half to two billion of the aluminum supply, alternative supply costs that we had. So you start with taking that away. As you look at the core business, I think what's important is you are going to continue to see a fitter business and one that is really focused on being more durable for the long term. And so that breaks into us continuing to work on warranty and our material costs and a lot of our structural costs, so continuing to do that. But we are going to continue to have launch costs as well as we're getting closer to the unlock that those investments are going to make for the best, the battery energy storage business, you know, as well as the universal EV platform, both launching in 2027. You're going to have, I would expect, you know, continued savings. You're going to have the continued investment there. Now, we also have been seeing.

Joe, Other

But sorry, but more than the incremental billion dollars you're seeing today, or sort of is that the right level?

Sherry House, CFO

I think that you should think about it as comparable. Yeah, so kind of think about that comparable as you're, the composition might change a little bit as to what's in it, because now you're starting to get more labor that you're hiring as you're getting ready to launch, and you're backing off some of those other costs.

Joe, Other

But, you know, think about that as being, you know, roughly comparable.

Sherry House, CFO

But you're also going to have software, you're going to have physical services. We've seen years now of improvement there. We're continuing to expect to see software and physical services improving. And also remember that we've got a pathway laid out in order to get Model E profitable by 2029. And so a lot of that is getting the best in the UEV, you know, kind of continue in its launch curve through 2027, which will give you that further unlock as you go forward. And then in terms of the headwinds, I would say one would be the non-recurrence. So the IEPA receivable, so that would be one. And then I think we're going to have to see what happens with commodities. But is that going to continue at its current pace as you move into next year? So I would say those are the couple of things I'd be thinking about.

Joe, Other

And what about the additional superduty capacity that comes on?

Sherry House, CFO

That is a great point. So Oakville is ramping really well. And, you know, our thesis all along is that we have not been able to supply is the amount of demand that we've had for that product. And so we do believe that there's going to continue to be increased demand. How much? It's probably a little bit early in the year to make that call. But that is going to be there. It's going to give us the upside opportunity.

Joe, Other

Okay. And the capacity there is about 100,000 units. All right. Let's move on to BESS, which I think is probably what a lot of people have been waiting for. So, you know, late last year, you talked about this $2 billion investment to convert one-year facilities in Kentucky, 20 gigawatt hours, I think five megawatt hour plus systems. You know, as we, and I think everyone sort of continues to do a little bit more work on this area, especially sort of coming from the auto side, you see it's a pretty somewhat fragmented value chain, right? You've got the cell provider, you've got the pack and sort of container provider, the integrator, if you will, and you've got install service. So, you know, if I go back to your original release, you sort of talk about almost sell to service. But I want to sort of maybe try to sort of touch on each one of those parts of the value chain to sort of see where you think Ford fits in and what the core competencies are. So if we start with the sell, you have the CATL license, right? I think they are widely viewed as one of the leaders in LFP, so that's a good thing to have, I would say. And I think it's, I would say, very unlikely anyone else would be able to sort of get the setup that you have right now. I think where we get some questions for investors, and maybe, you know, hopefully you could sort of help clarify or maybe even debunk some concerns, right, is, you know, I think you've made clear that you're PTC eligible. I think people look at some of the language, the FOC language, around licensing and everything. And so I know this is probably a very nuanced sort of answer, but maybe at a high level, maybe you could sort of clarify for people why you think you are or why you are PTC compliant.

Sherry House, CFO

Yeah, sure. So this is drawing upon the same licensing agreement that we already have in our Marshall facility. We went through great lengths to make sure that this was going to be eligible for the current language of the production tax credit. And we believe that that is going to hold as we move into this additional factory that's making the same type of cells that we were making before. We're also making electrode coils, as you were talking about, the value chain. So we don't see any issues there. The other thing that's really important is that we believe this is going to be ITC eligible as well. And so that is really important for the customers to be able to have a U.S. domiciled product, be able to get the eligibility of that ITC.

Joe, Other

Oh, you front-ran one of my questions there, so you're going to get to that too. But maybe just a little bit on sort of the cell. So to the extent you're able to sort of comment on this, right, It likes some of those components or the materials, if you will, needed to sort of make the sale clearly are not yet available in the United States. Now, you can get them from Asia, whether that's, you know, Korea, Japan, China, of course. Given that it is sort of, you know, let's say a CATL licensed technology, does that mean you sort of piggyback off their supply chain or do you have leeway to sort of source as you see fit for your business?

Sherry House, CFO

Yeah, so we're in the process of setting up the supply chain today. We do have a level of, you know, kind of flexibility there, I would say. And given what we know today with the way all of these regs are written, we don't see any concerns with respect to eligibility of what we're sourcing.

Joe, Other

Perfect. So if we move from the cell now to the module, the pack, the container, right? I think it's easy to sort of maybe think of this as like somewhat simple, like you're just shoving it all in and packing it. It seems, I think, in reality, it's much more sort of, you know, complex than that. So you're really acting as, I would say, the storage system, you know, integrator here. And that's where I think some of your board's manufacturing capabilities really, really play in. And then I know Tesla does this, although they're sourcing their sales from from from overseas. I guess Fluence is another one that's sort of acting as an integrator. How would you assess that part of the market and why you think Ford has an ability to compete and win in that integration area?

Sherry House, CFO

Yes. So what I would say is it's very similar to the way that we create battery packs today. the container is different, but we're already creating battery packs today. So you start with the cell. The cell then goes into a module that we are creating and building, and then it's going to go into a container that we're buying. We're also going to have in there liquid cooling thermal regulation components, and you're also going to have battery management infrastructure that's going to be resident within that container as well. Our rule today extends for the entirety of the container. So everything that goes in the container, we're going to bring in, we're going to manufacture. These are not incredibly complex units to create, especially when you compare it to something like a vehicle or a truck. So we're going to be building those.

Joe, Other

We're also going to be providing service on on that as well uh and so that's that's largely where we're installed you mean that's right yeah that's right um so you mentioned some of the other components that get into the container battery management you know some power electronics um you obviously have some of those capabilities from as you mentioned your electric vehicle business i know i was also i was recently out at um your uh your formerly known as skunkworks facility in california and And, look, I think, like, one of my takeaways from that is that, you know, there's a big focus not just on sort of hardware but also software. As the energy business evolves, is there also an opportunity to take some of the software and hardware learnings from that UEV platform and apply it to energy? Or are you sort of – are the requirements different? Do you need to, you know, bring in other parts of the value chain or supply chain to make that container?

Sherry House, CFO

Certainly, as it relates to the container, the battery management system, the thermal cooling, these are our core competencies that our company has today. And so we're going to continue to do that. If you are looking to go even further, you know, kind of downstream, then we're building the DC block, the direct current block. You know, from there, a lot of times there's an inverter that would be added to enable you to be able to link up to power sources, whether they be solar or they're wind or they're otherwise. and that part of the value chain we are not participating in at this point. We'll keep our options open as to whether or not that makes sense, but there'd have to be synergies, there'd have to be profitable, we'd have to make sure that the bringing together of the business components made sense. But at this point, we are definitely fully committed to the full container and everything that goes along with that, including service.

Joe, Other

You did design your own inverter for you and other power lines for you.

Sherry House, CFO

We've got that capacity in-house.

Joe, Other

And then installation, are you partnering there? Do you have any sort of ambitions to sort of get involved in that part of the value chain?

Sherry House, CFO

The customers would be responsible for the installation.

Joe, Other

Of course, on-site support would be something that we'd be providing as it relates to our container. one of the things I was sort of thinking a little bit about and sort of Ford's broader capabilities also is you have to have Ford credit it's effectively a bank is that is is there an opportunity for Ford credit to also help finance customer purchases here on the energy side really spoken about that at all at this point yet so nothing to share on that front okay so 20 gigawatts 20 gigawatt hours at the end of 20, 27, right? We know through the old sort of, you know, BASC setup, you have a second facility right nearby that I think is effectively just four walls and a roof maybe at this point, and it's empty. So I guess, you know, you clearly have capacity. Now, I think you would obviously need to make an investment to sort of build that out that capacity but wondering how you sort of think about if you decided to go down that path the capital requirements to do so and also really what signals you're seeing internally for the decision to make further investment because i can i can certainly totally appreciate that like you don't want to get too far out of your skis and commit capital before you sort of see the the demand signal On the other hand, right, like things like the PTC, we know, you know, start stepping down in terms of expiring. So it does seem like you've got a counterbalance there that would almost want you to move faster rather than slower to sort of take advantage of some government programs.

Sherry House, CFO

Well, I think you're right in that we want to get our 20 gigawatt hour facility up and running first. We're making terrific progress on that today. And that had a $2 billion investment associated with it. And partly that $2 billion investment is not as large as what it would require to build out a second facility because this was already a battery operation. Now, it was producing NMZ versus the LFP, so we do have to do some conversion to get there. But it would be a different investment profile to move into that second facility. And we think it's just too soon. We're making all the right progress points that we'd want. As you said, the Blue Oval SK dissolution occurred, so that JV dissolved in Q2. And so that has now enabled us to unlock to do the factory changeover that we needed to do within the Glendale, Kentucky 1 facility. And the equipment's ordered. We're working on that process. us and we're also in the process of doing all of our contracting so in terms of you know levers let's get our our contracts all set for this first 20 gigawatt hours and um you know we'll continue to evaluate if and when it makes sense to expand but we're certainly not um looking to be talking about that today okay well one one thing um that i did that has come up with a couple clients i I think if you go back to the original, you know, Blue Oval SK announcement, there was talk about, you know, sort of maybe, you know, total ultimate capacity of like 60 gigawatt hours with the possibility to sort of expand further.

Joe, Other

But that's not the right sort of level to think about now because, one, again, what you're building has changed, plus some of that footprint is being used for containers, et cetera. So is it fair to say that at least if you look at the original Bosque footprint, you can't just say, okay, we were going to do 60. We could do up to 60 with what you're doing now on the energy side.

Sherry House, CFO

I would say that probably the most available capacity would be actually in our Marshall facility that's already making LFP batteries as well. We do have a little bit of capacity there, but that's not something that we're talking about at this point. We're still talking about the 20 gigawatt hours. But there are other alternatives for expansion that we could look at. We just think that we want to really focus on landing successfully what we have right now.

Joe, Other

And I know you had the initial EDF Power Solutions Agreement.

Sherry House, CFO

Yes, that's right.

Joe, Other

And I'm sure Lisa Drake and her team are working to sign up as many customers as possible. So is that really what you would, you internally and what you advise investors as well to sort of look for as confidence and demand signals before you start thinking about, you know, I know you said you're not ready to make that, have that conversation today. But presumably that is what you're looking for as signals to sort of be able to make a go or no go decision on additional outcomes.

Sherry House, CFO

It's one of many. I mean, you would look at what is the profitability of expanding, how are we seeing the industry demand signals play out, are we seeing any type of commoditization that's occurring, how does our right to win to continue to play out? We feel very strongly about it, but we'd be watching all of those items. Is the early investment that we made on target, so watching all of those, the progress points. And then the EDF contract that you mentioned, yes, it's for 20 gigawatt hours over five years. It is a framework agreement, and then it has the ability to get up to four each of five years. But it does, importantly, have a minimum purchase commitment that's part of it as well, which some of these agreements don't always have that clause, but ours does.

Joe, Other

Okay. And what's that level?

Sherry House, CFO

Well, we haven't shared that.

Joe, Other

But is the best way to think about that is sort of mostly like an off-take agreement in its simplest terms? the way to think about that okay um let's move on to to you ev as i mentioned earlier i got a chance to it to explore that facility and um um you know i know uh started production scheduled for for for next year you know the ev market i think in the us you know generously i think you could sort of say is a little bit at a crossroads so you know i guess internally as a management team and working with with allen and sort of the other constituents within ford But, you know, how, because you have made this comment about, like, you won't launch a vehicle unless you're comfortable that it can be profitable within 12 months. So how do you get comfortable with that framework, given what we're seeing from a demand side?

Sherry House, CFO

Yeah, so we haven't really talked about that kind of framework in a couple of years that you're referring to right now. The way we look at this product is it's a platform. And the more that you utilize the platform, the more the economy, the scale will come in to play and the more profitable it will get over time. So we are excited about this product. It's going to be very feature rich. It's going to be very tech forward. It's going to be affordable. And we think that it's affordable to the point that it's not just competing against EVs. It's also competing against gas powered vehicles as well. And so that starts to open up a larger total addressable market, which helps with the point that you were making about where is ED today. We see the market opening up when you're starting in the price point range of $30,000. And so at this point, the project is going really well. We are on plan for our 2027 launch. We are making prototype vehicles in Michigan. We're testing those already on the road. We're testing our mega castings, which is a new product. We're doing supplier readiness assessments. So all those things that you'd expect us to be doing as we're kind of preparing for launch are in full force today.

Joe, Other

On the supplier readiness, I'm glad you sort of brought that up because I know in talking to Jim, he mentioned, right, the unique process you went out to suppliers to sort of try to source content for this vehicle. And, you know, I forget the exact number, but he mentioned, I think it's a, I want to say it was 80%, but there's a lot of new suppliers to Ford, I think, through this program. So maybe you could sort of talk about that process, some of the benefits, but also maybe some of the risks it presents, because it sounds like that's what you're sort of going through now in terms of sort of assessing their readiness.

Sherry House, CFO

That's right. Well, we have a standard protocol that we take all of our suppliers through. They have to run the product at rate, at high quality. There's a production approval process that they go through. What's really important about the way we did this product is it started with the design. We decided to design the most complex items in-house, and we took a very physics-based approach to the cost because we looked at what should it cost and we know because we designed it. So that puts you at a very competitive advantage as you're going out to then source it and it allows us to then take that knowledge and we chose to not just go to the suppliers that we've always had, but to open the aperture a little bit wider to see what other opportunities were there. And so that process where we have full design control, we know intimately what it should cost. We also know where you can make adjustments to the design to potentially improve the cost, we believe is part of what is making this so successful.

Joe, Other

And as you think about UEV and it sort of being more like a next-gen platform, maybe something a little bit closer to what Tesla or some of the Chinese have done, right where um you know the hardware is sort of mostly fixed it's you're able to sort of continually uh improve the vehicle via software and over and over there update but um you know i think like when i when i go back to sort of tesla's earlier days and visiting um their factory in fremont like they had also mentioned that basically like even even some of the the hardware right like uh that if that you're looking at the the vehicle um that's coming offline today like there could be you know dozens of changes versus sort of what was produced maybe a couple months ago because

Sherry House, CFO

they sort of found the better way so um how set is some of the the hardware and the manufacturing or and do you sort of expect it to be a little bit more iterative relative to sort of how you typically have designed programs we're already looking at the next generation um in next uh elements of savings cost savings so this is something that ford is always doing you have a product that you launch, and then you're looking at how are we going to take cost out over time? How are we going to continue to improve the product over time? So although we're launching in 2027, you can expect that shortly thereafter, we're going to continue to improve that product. And that's part of the agile engineering that we're doing. Of course, you're going to make sure that that makes sense from an investment perspective. Are you going to get the payback based on the life cycle of the vehicle? But importantly, this is set up as a platform. The platform is capable of everything from B-sized vehicles all the way up to commercial vans, and it can also adapt to different types of battery chemistry. It was all designed in to enable this to be flexible, to enable us to get economies of scale.

Joe, Other

And you mentioned the new suppliers and the supplier readiness that they're going through now. I guess where are they in terms of sort of, for lack of a better term, like setting up shop here, you know, in the United States or near Kentucky or wherever they are going? Like, how is that process going? Because, you know, as we've seen many times in manufacturing, right, like, you know, there's a hiccup somewhere along the way. It sort of obviously can impact your output. So what's their ramp looking like?

Sherry House, CFO

Yeah, I'm not here to maybe talk about the details of that. I guess what I would say is that as we selected these suppliers, we looked at it through the entire life cycle of what it would take for them to deliver the product operationally. And then we also look at it, what would it take to deliver it financially? So we look at a fully landed cost. We think about the piece price. We think about the investment. And we think about the logistics to get it to where it needs to go. So all of that is in the financials. And then we look at that entire life cycle stream as well as it relates operationally. And that goes into the consideration set as to whether to select the supplier or not.

Joe, Other

When we were talking about, you know, large factors for 27, you mentioned, you know, starting that glide path to model-y break-even in 29 from about, you know, 4, 4.5 billion loss this year, right? And so, you know, we know the energy, Ford Energy is a part of that, right? And, you know, since you're sort of really not committing beyond that 20 gigawatts, we could all sort of make reasonable assumptions or how much that contributes to 29. It still does suggest like pretty meaningful improvement in the vehicle making of the business. I know, you know, the mix right now of vehicles from Europe versus the U.S. might sort of help a little bit with that loss. But can you help us understand what type of cost down assumptions on the UAV you're baking in? And also more importantly, obviously, like what type of volumes? Because clearly you're going to need some sort of scale here in order to sort of, you know, get billions of dollars of loss out of that business.

Sherry House, CFO

Yeah, you know, what I've said publicly is that we've got a whole vehicle plant that's dedicated to it. So you can make your own assumptions about what a vehicle plant might be capable of. We also have just said that we are going to be launching additional top hats over time. And so I think that you're going to continue to see capacity increase. As you know, there's unit step function increases that you can do at key points to increase the number of shifts that you have, which enables you to, you know, maximize a first shift before you move to a second. Then you can do different types of labor arbitrage in order to be able to get a little bit more through overtime. And so we're going to be working all of those mechanics to, you know, to optimally produce this from a structural cost perspective. You can certainly expect that.

Joe, Other

Okay. Let's maybe close, and if we have time, we'll see if there's anything in the audience, but on USMCA. So there was obviously some news and headlines late last week about the U.S. negotiating for 50 percent content. I guess maybe to take a step back, a couple of questions here. One, you know, I know Ford and really the entire automotive industry has been in, I think, pretty close contact with this administration and understanding sort of what's going on. So what can you share about what the Ford team is hearing and thinking about how USMCA will evolve and or change? Maybe you could also help us understand, you know, on average, what you would sort of put the U.S. content on on a Ford vehicle today. And then maybe finally some comments on work that is already being done to sort of help shift more of that content to U.S. content. Because I think when we talk to the suppliers, I mean, without mentioning you or any automaker specifically, they do broadly mention, right, that there is an effort to sort of try to bring more of the content to the United States.

Sherry House, CFO

Yeah. So let me just start at the highest level first. Very important issue for us, USMCA. As the company that produces the most vehicles in America and also the company that exports the most from America, this is a very key issue for us. it's going to be really important that we've got a strong North America agreement that also enables ability for supply chains to thrive as well. And so as we look at the components of the policy that are important to us, we think that we need to have good clarity around labor. We need to have really good clarity around content. And there needs to be a structure that enables non-compliance to be handled with tariffs. And those tariffs have to be meaningful enough to really encourage the type of behavior that we think the U.S. needs in order to continue to have high-skill, high-wage jobs within America. And so that is going to be kind of the overarching framework in which we talk to Canada about, we talk to Mexico about, we talk to our own U.S. government about. As we have been encountering, you know, these content requirements, you know, just even associated with what we're dealing with today, we're constantly looking at where does it make sense to onshore more, maybe to put more within Canada or Mexico. That is already ongoing. So as you said, if this is what you're hearing from the suppliers, it's true. We're constantly talking to them about that. But, you know, not really here to kind of talk about, I can't really talk at this point about any specifics there on what we might be changing. But I think it's fair to say that, of course, we're looking at it and we're always going to be trying to profit optimize.

Joe, Other

What about just on average across your portfolio, roughly the U.S. content?

Sherry House, CFO

We haven't even shared that.

Joe, Other

I guess the other thing that's at least unclear to us from the outside is what is the government considering as part of the content? Is it straight physical product? Is it some of the intellectual property and R&D that goes into the vehicle? Do you have any color there?

Sherry House, CFO

The concepts, the negotiations are ongoing. There's lots of things that are on the table that come off the table. So I would say that there is not a lot of clarity yet in what this is going to look like.

Joe, Other

Maybe let's see if there's anything in the audience here. We just have a couple minutes left. Okay. If there's nothing there, I guess maybe just to sort of close. I mean, if we, you know, I know you sort of gave out these 2029 targets. If we sort of think and fast forward to 2029 and even beyond, if Ford is sort of successful on some of these initiatives and energy storage system and, you know, software and services, you know, how would you say that sets the company up? you know, for the future to be a structurally different company going forward than sort of what it's been in the past.

Sherry House, CFO

Yeah, I think that what you are seeing is a company that is becoming fitter through all of the cost and quality efforts that we've been ongoing, being able to take one and a half billion out on a net basis last year, taking another one billion we're expecting out of cost this year. Now we are reinvesting some of it this year, and I expect that we're going to continue that momentum as we go forward. So that's going to be a core part of the foundation lane in order to enable that pathway to 8% in 2029. Also important is going to be us to continue to successfully launch all of our new profit pillar vehicles like the new F-150, the new Super Duty, and also these new products that have a very important part in our portfolio, like the universal EV platform that isn't just going to satisfy an affordable product for the customer, but it's also a hedge on what if regulations change in the future as well. And now we'll have a product that's going to be a lot more profitable for us to lean into if we need to. So you're going to have all of that happening. Then, of course, you've got, as you had said, the adjacencies and the diversification that we're doing. So the software and physical services are going to continue to give us uplift and that is anti-cyclical so now you've got a more durable company as well and then the battery energy stationary storage we're very excited about that it's an opportunity for us to continue to be in high growth high margin anti-cyclical businesses that we think are going to make a much more sustainable sustainable financial picture for forward and just accrue benefit to all of our shareholders more successfully. So that's what I would say that you can expect to continue to see from us, and we have all the strategic initiatives in place to make that happen.

Joe, Other

Great. Well, looking forward to seeing what's next. I think we got through a lot here today in our time, so really appreciate you coming back to the conference here, and thanks for joining us.

Sherry House, CFO

Oh, thanks, Joe. It was a pleasure. Take care. I really appreciate it.