Ford targets ‘meaningful changes’ in cost and quality

Ford is focused on reducing costs across the business, from commodities, labour and warranties to the design of its third-generation electric vehicles, a top executive said on Thursday.

“We're focused on making meaningful changes in cost and quality” over the next year or two, CFO John Lawler told a Barclays conference.

Earlier Ford pegged the cost of a new UAW labour deal at $8.8bn (about R165,603,680,000) and said it would work to offset that by cutting costs elsewhere.

Lawler said Ford aimed to reduce the complexity of future vehicle designs and cut the number of hours required to build the vehicles.

“We see opportunities in automation” in Ford assembly plants to help lower production costs, he said.

He said the automaker has “a lot of work to do” on trimming warranty costs, but said commodity costs for electric vehicles continue to come down.

Lawler said higher production volumes, smaller batteries and “optimised designs” will help reduce the cost of its second-generation electric vehicles due in the middle of this decade.

Towards the end of the decade, Ford's third-generation EVs will mark a “step change” in further cost reduction efforts, he said.

The company sees continued “robust demand” for its Ford Pro commercial vehicles, with orders “beyond our current production capacity” to immediately fill, Lawler said.

Ford expects additional “pricing compression” next year in its combustion-engine vehicles, as well as continued pressure to shrink premium prices on EVs. Over time, EV prices will converge with those of petrol vehicles, he said.