Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Investor Day (September 2016)
130 slides from Ford Mtr Co Del's investor day presentation, Sep 14, 2016
Slide 1: Investor Day
INVESTOR DAY September 14, 2016 1
Slide 2: Today's agenda
Today’s agenda I. Welcome and Forward Looking Statements Ted Cannis II. Why Ford, Why Now Mark Fields III. Emerging Opportunities Electrification Hau Thai-Tang Autonomy Raj Nair Mobility Jim Hackett IV. Key Capabilities: Data and Analytics Paul Ballew V. Looking Forward: Guidance & Rewards Bob Shank
Slide 3: Why Ford, Why Now
Why Ford, Why Now Mark Fields 3
Slide 4: A solid investment with an attractive upside on emerging opportunities
A solid investment with an attractive upside on emerging opportunities 1 Proven management team, robust and defensible core business 2 Strong balance sheet and business structure protects dividend through downturn 3 Investment in future mobility provides for significant transformation upside 4
Slide 5: Profits and cash flow strong for the last six years
Profits and cash flow strong for the last six years; record level for last 18 months Billions Total company adjusted pre-tax profit* Automotive segment operating cash flow $10.8 $10.1 $9.3 $8.9 $8.2 $7.3 $7.3 $6.1 $5.6 $4.4 $3.4 $3.6 2010 2011 2012 2013 2014 2015 * See Appendix for reconciliation to
Slide 6: Continued progress to balance geographic performance
Continued progress to balance geographic performance North America Europe ▪ Strong returns ▪ Profitable transformation continues ▪ U.S. industry plateau ▪ Brexit related risks Middle East & Africa Asia Pacific ▪ Positioning for growth ▪ China at 5% market share ▪ Difficult external environment ▪ Asi
Slide 7: Fortifying and transforming core business enables expansion into emerging opportunities
Fortifying and transforming core business enables expansion into emerging opportunities CUSTOMER CORE EMERGING BUSINESS OPPORTUNITIES CARS, UTILITIES, TRUCKS, FINANCING, PARTS & SERVICE FORD SMART MOBILITY EXPERIENCE 7
Slide 8: Vision, strategy define where to play and how to win
Vision, strategy define where to play and how to win VISION MAKING PEOPLE’S LIVES BETTER BY CHANGING THE WAY THE WORLD MOVES Deliver top quartile shareholder returns through focused automotive and high-growth mobility businesses, building STRATEGY on Ford’s unique legacy of advancing human progress
Slide 9: First priority is fortifying profit pillars of strong core business
First priority is fortifying profit pillars of strong core business Profit Pillars Maintain a Leadership Position in Truck, Van, and Performance and Grow Utility Leverage Ford Credit and Parts and Service CORE Luxury Develop a Significant Luxury Position BUSINESS CARS, UTILITIES, TRUCKS, FINANCING,
Slide 10: Building on global leadership in highly profitable truck and van markets
Building on global leadership in highly profitable truck and van markets 2015 Truck and Commercial Vehicle Market Share and Rank Full-Size Pickup F-Series ▪ Best-selling U.S. pickup 39 yrs. Global Brand ▪ Best-in-class attributes 36% Sales Rank #1 Transit Large Van / Bus ▪ European leadership, 35% U
Slide 11: Ford is uniquely positioned in global trucks and van markets
Ford is uniquely positioned in global trucks and van markets Deep Customer Insights Configuration Range • Full product span, • Hands on with customers F-150 – F-750 • Engineered for extremes • Pre-prepped for upfitters Trusted Relationships Advanced Manufacturing • More than 2,100 F-Series • Sales a
Slide 12: Driving to leadership in all global utility vehicle segments
Driving to leadership in all global utility vehicle segments 2015 Utility Market Share And Rank Small: EcoSport, Escape / Kuga Global Brand 7% Sales Rank #4 Medium: Edge / Everest Global Brand 6% Sales Rank #6 Large: Explorer, Expedition Global Brand 29% Sales Rank #1 12
Slide 13: Utility vehicle growth led by new products
Utility vehicle growth led by new products Ecosport & Edge / Everest Explorer & Expedition Escape / Kuga ▪ EcoSport and Escape / Kuga ▪ Unique 3-row Edge for China; ▪ Explorer sales in U.S., China, and for global markets Europe 2016 launch Middle East, Russia ▪ All-new Everest production in ▪ All-ne
Slide 14: Performance portfolio profitably builds Ford brand
Performance portfolio profitably builds Ford brand 12 New Ford Performance Vehicles Coming by 2020 Focus ST F-150 Raptor Building at maximum capacity; More than 2 million website Sales up 12% YTD visits since January reveal Focus RS Shelby Mustang Outstanding reviews and GT350 / GT350R overwhelming
Slide 15: Ford Credit and aftermarket businesses provide loyalty, stable profitability
Ford Credit and aftermarket businesses provide loyalty, stable profitability FORD CREDIT Parts & Service ▪ Over the past 20 years: - $42 billion in pre-tax profits - $27 billion in distributions ▪ Supports Ford, Lincoln sales ▪ Consistent through cycles ▪ Financial products, services to enable mobil
Slide 16: Transforming parts of the business that traditionally have underperformed
Transforming parts of the business that traditionally have underperformed Profit Pillars Maintain a Leadership Position in Truck, Van, and Performance and Grow Utility Leverage Ford Credit and Parts and Service Luxury Develop a Significant Luxury Position CORE BUSINESS CARS, UTILITIES, TRUCKS, FINAN
Slide 17: First generation of transformational Lincoln vehicles nearly complete
FIRST GENERATION OF TRANSFORMATIONAL LINCOLN VEHICLES NEARLY COMPLETE MKZ M KC MKX C O N T I N E N TA L 17
Slide 18: World-class luxury product, client experience and China launch deliver Lincoln growth
WORLD-CLASS LUXURY PRODUCT, CLIENT EXPERIENCE AND CHINA LAUNCH DELIVER LINCOLN GROWTH U.S. QUALITY AND GLOBAL LINCOLN SALES SUCCESSFUL CHINA LAUNCH CUSTOMER EXPERIENCE 77 % GROWTH THE LINCOLN WAY, DELIVERS WARM, HUMAN, AND PERSONALLY-CRAFTED EXPERIENCES INITIAL SALES QUALITY APEAL SATISFACTION SURVE
Slide 19: Reinventing small vehicle business model
Reinventing small vehicle business model through focus on critical success factors Global Brand Global Brand Global Brand Fiesta Sales Rank Focus Sales Rank EcoSport Sales Rank #2 #3 #2 Brand Tailored Effective Low-Cost Reduce Resonance Designs Scale Footprint Complexity Note: Global brand sales ran
Slide 20: Growth in select emerging markets based on clear path to profitability
Growth in select emerging markets based on clear path to profitability ▪ Restructured joint venture Russia ▪ Focus on SUVs, vans Positioned for market recovery ▪ Improving results ▪ Plants and products launched India ▪ Established as small vehicle export base Reviewing alternatives ▪ Domestic growth
Slide 21: Emerging opportunities provide potential for significant future growth
Emerging opportunities provide potential for significant future growth Electrification Become a Top Player in Electrified Solutions EMERGING Autonomy OPPORTUNITIES Lead Development and Application of Fully Autonomous Vehicle Technology and Businesses FORD SMART MOBILITY Mobility Develop Services and
Slide 22: Transforming to auto and mobility company allows significant revenue growth potential
Transforming to auto and mobility company allows significant revenue growth potential Ford Potential Revenue $5.4 Retail / Fin. 1.5 Insurance 0.5 Trillion Mass Transit 0.9 Motorcycle 0.4 Taxi 0.4 $2.3 Total $3.7 Trillion Other Transportation Revenue Fuel / Taxes $1.7 Ford Share 6% Ford Share 0% Trad
Slide 23: Emerging ecosystems
We plan to capitalize on new emerging ecosystems on our own or through partnerships and acquisitions Connected Telematics Sharing Vehicle Swap Financing Pay EMERGING Vehicle ECOSYSTEMS Predictive & Management Sustainability Services Enterprise Data Grid-Link Solutions Driver Management Charge 23
Slide 24: Autonomous vehicles might account for up to one in five sales
Autonomous vehicles might account for up to one in 10 miles traveled and one in five sales U.S. Autonomous Miles Traveled U.S. Autonomous Annual Sales (Percent of Total) (Percent of Total) 20% 2030 10% 2025 2% 5% 2025 2030 24
Slide 25: Electrification cost of ownership will continue to decrease
Electrification cost of ownership will continue to decrease with scale and technological advances Cost Of Ownership Over Time Electrification cost decreasing reflecting scale and Transportation technological advances Internal combustion engine (ICE) cost increasing reflecting rising regulatory and f
Slide 26: Technology platforms support both owned and shared usage models
Technology platforms support both owned and shared usage models Own Share Ford technology platforms support both models Connectivity Data / Yield Management Autonomy FinTech 26
Slide 27: Vision, strategy define where to play and how to win
Vision, strategy define where to play and how to win VISION MAKING PEOPLE’S LIVES BETTER BY CHANGING THE WAY THE WORLD MOVES Deliver top quartile shareholder returns through focused automotive and high-growth mobility businesses, building STRATEGY on Ford’s unique legacy of advancing human progress
Slide 28: Developing new capabilities to leverage deep automotive expertise
Developing new capabilities to leverage deep automotive expertise Continuing to Build User experience Business model Data and analytics, Agile mergers and innovation innovation software talent acquisitions team Unique Strengths Today Technology Global Automotive development Manufacturing World class
Slide 29: Why Ford, Why Now
Why Ford, Why Now 29
Slide 30: Presenters
Hau Thai-Tang Group Vice President, Purchasing Ford Motor Company Paul Ballew Chief Data and Analytics Officer Ford Motor Company Raj Nair Exec. Vice President, Product Development Ford Motor Company Bob Shanks Chief Financial Officer Ford Motor Company Jim Hackett Chairman Ford Smart Mobility LLC 3
Slide 31: Emerging Opportunities
Emerging Opportunities 31
Slide 32: Electrification
Electrification Hau Thai-Tang 32
Slide 33: The world is changing; electrification is key
The world is changing; electrification is key to addressing consumer needs and societal trends Global Middle Changing Consumer Urbanization Air Quality Class Growth Attitudes 33
Slide 34: Ford is already a top player in U.S. electrification
Ford is already a top player in U.S. electrification 1 st full hybrid SUV in #1 brand in U.S. for #2 brand in U.S. for North America plug-in hybrids electrified vehicles 500,000 Electrified Vehicles Fusion and C-MAX 2005 MY Escape Hybrid H P H P HYBRID PLUG-IN-HYBRID HYBRID PLUG-IN-HYBRID ALL-ELECTR
Slide 35: EV adoption will rise as barriers come down
EV adoption will rise as barriers come down EV Demand EV cost Infrastructure Education offerings EV adoption 35
Slide 36: Projected BEV battery cell cost at scale
Projected BEV battery cell cost at scale $/kWh $120 Advanced Li-Ion $95 $85 Post Li-Ion $75 2020CY 2025CY 2030CY Source: Ford internal estimate 36
Slide 37: Electrification will reach tipping point
Electrification will reach tipping point Anticipated Anticipated Electrification Global MixMix Electrification Rates Rates Internal Combustion Engine (ICE) Hybrid Electric Vehicle (HEV) Zero Emissions Vehicle (ZEV)* ICE HEV ZEV 2015 2020 2025 2030 * Full Battery Electric (BEV), Plug-in Hybrid Vehicl
Slide 38: Strategic approach focuses on building a foundation for long term success
Our strategic approach focuses on building a foundation for long term success Play To Our Strengths Commercial, trucks, utilities, performance Zero compromise battery electric vehicles Build Brand and Credibility and go to market strategy Design, volume, manufacturing and Leverage Scale and Technolo
Slide 39: Ford's phased approach for electrification
Ford’s phased approach for electrification focuses simultaneously on building the ecosystem and brand $4.5 Billion Investment and 13 New Nameplates • Commercial vehicles • Charging infrastructure • Top player in electrified solutions • Trucks and SUVs • Ecosystem development • EVs a key element of F
Slide 40: Commercial delivery is an ideal fit for electrified vehicles
The use case for commercial delivery is an ideal fit for electrified vehicles Sector Attractiveness Ford Strengths Usage Profile Dominant Position Inherent Incentives Strong Brand Underserved Market Customer Knowledge Adjacencies Manufacturing Expertise 40
Slide 41: Building from a strong base and investing to remain a top player
We are building from a strong base and are investing to remain a top player in electrification Ford Electrified Product Offerings Ford Capabilities ▪ More than 1,000 Ford 18 electrified vehicle patents ▪ 240% increase in EV resources since 2010 ▪ Hybrid, plug-in hybrid and full battery electric expe
Slide 42: Electrification key takeaways
Electrification key takeaways 1 Electrification is an important part of Ford’s transformation to a leading mobility company 2 Electrified vehicles will reach a tipping point by 2030 – Ford is pivoting and deploying resources accordingly to win in the future 3 Ford’s blueprint for electrification pla
Slide 43: Autonomy
Autonomy Raj Nair 43
Slide 44: New terms for autonomous vehicle technologies and businesses
New terms for technologies and businesses in the autonomous vehicle space Transportation as a Service (TaaS) Point to point mobility for a fee – ride-sharing, ride-hailing, dynamic shuttle or package delivery Autonomous Vehicle (AV) Virtual Driving System (VDS) Autonomous Vehicle Platform (AVP) Comp
Slide 45: Plan to launch high volume SAE Level 4 autonomous vehicle in 2021
We plan to launch a high volume, SAE Level 4 autonomous vehicle for ride-hailing or ride-sharing in 2021 Level 5 Full Automation Ride-Hailing/Sharing ▪ Announced our intent to have a (All Areas) high-volume, fully autonomous Society of Automotive Engineers (SAE) Level 4-capable vehicle in commercial
Slide 46: AV technology will lower TaaS prices and increase usage
AV technology will lower TaaS prices and increase access and usage Transportation as a Service Evolution Price Per Mile Number of Rides Taxi $6.00 Higher Usage Uber Personal Ride Hailing Ownership ~$2.50 $1.50 - 0.70 Lower Price AV TaaS ~$1.00 Mass Transit $0.30 46
Slide 47: Level 4 AV can reduce TaaS price per mile
With Level 4 AV technology, Ford can reduce TaaS price per mile and participate in larger share of TaaS per mile profit Transportation as a Service Price Per Mile Approx. $2.50 / Mile Price per mile reduces with AV technology and competition Driver Approx. $1.00 / Mile Operator Operator Service (VMa
Slide 48: Initial deployment in large geo-fenced urban markets
Initial deployment will be in large geo-fenced urban markets and with geo-fenced corridors New York City Geo-Fenced Area With Corridors Detroit Geo-Fenced Area With Suburbs Linked By Corridors Bronx Brighton Manhattan LGA EWR Metro Queens Detroit Brooklyn JFK Detroit Staten Island Ann Arbor DTW 48
Slide 49: Up to 20% of vehicle sales could be autonomous
Under a moderate TaaS adoption scenario, up to 20% of vehicle sales could be autonomous by the end of the next decade Vehicle Mix AV (20%) Non-AV Non-AV (80%) 2015 2030 49
Slide 50: AV TaaS vehicles introduced in 2018, high volume in 2021
Low volume AV TaaS production vehicles will be introduced in 2018, paving the way for a high volume all-new product in 2021 2016 2017 2018 2019 2020 2021 2022 2023 Development 30 120 140 Production Transition High Volume SAE Level 4 - With Safety Driver SAE Level 4 – No Safety Driver Or Controls Fus
Slide 51: Leading OEM in autonomous vehicle technology
Our position as a leading OEM in autonomous vehicle technology will allow us to lead commercialization Advanced and Production AV Expertise Engineering Staffing 1st to test at 2nd Gen AV Fusions th w ro 1st On-Road Vehicle Testing G y Academic AV Academic AV iil t Partnerships Partnership a b Use of
Slide 52: Ford to introduce AV technology at SAE Level 4
Ford to introduce AV technology at a SAE Level 4 Level 1 Level 2 Level 3 Level 4 Level 5 Autonomous with Autonomous with Autonomous with Assisted driving Assisted driving human driver driver not required; steering or accel/decel steering or accel/decel driver not required; backup required geo-fenced
Slide 53: Mediated perception with direct perception
We are using mediated perception methods with direct perception to correctly determine driving solutions Direct Perception Meditated Cameras LiDAR Use of sensors to develop LiDAR Perception Visible sensing Near-infrared real-time view of Real-time for object laser detecting and environment to use in
Slide 54: Solving scenarios instead of accumulating miles
We are focusing on solving scenarios instead of accumulating miles Testing Coverage ▪ A scenario is a vehicle maneuver in a driving environment combined with ‘noise’ factors ▪ Ford is focused on correctly solving the scenarios an AV will encounter in its operational 95% environment ▪ Mileage accumul
Slide 55: Scenario example of direct and mediated perception approach
Scenario example illustrates the benefits of our direct and mediated perception approach Ford’s Approach ▪ 3D maps lay the foundation (rules of the road and fixed objects in the environment) ▪ LiDAR is primary sensor for localization and for providing a real-time 3600 view of the environment and obj
Slide 56: Autonomy key takeaways
Autonomy key takeaways 1 Ford believes the potential for the AV business is very large 2 Ford has been a leading player in AV technology development for more than 10 years 3 Ford is testing Level 4 AVs with safety drivers on the road right now 4 Ford is in a unique position to marry our AV technolog
Slide 57: Mobility
Mobility Jim Hackett 57
Slide 58: Significant opportunities for participation in far more transactions
As we move from our traditional sales business, there are significant opportunities for participation in far more transactions 9 million miles traveled Each minute in the U.S. … 125K taxis / Ubers on the road 60K “shared” rides 30 But… 450K bytes of vehicle data from a connected vehicle New vehicles
Slide 59: Traditional business vs emerging businesses: own and share
Our traditional business is about selling cars to individuals and fleets; our emerging businesses are about providing transportation for passengers and goods Auto Industry Own Share Car Ride share Truck Ride hail Fleet Ride pooling Vehicle sharing 59
Slide 60: New business model across the full mobility value chain
We see a new business model where we can leverage our history to take advantage of the full mobility value chain Ford’s Historical Orientation walk bike automobiles shuttle bus planes spaceship Ford’s Mobility Orientation 60
Slide 61: Post-AV shared miles will grow exponentially
Post-AV, shared miles will grow exponentially, especially in densely % populated areas, but will still represent only 3 of total passenger miles U.S. shared* miles traveled U.S. passenger miles traveled 110 - 140 Billion Shared miles ~25 X 5 5 Billion Trillion 2015 (Pre-AV) 2025 (Post-AV) 2025 (Post
Slide 62: Building, partnering or buying technology platforms
We are building, partnering or buying technology platforms to support and benefit our traditional and mobility businesses Own Share Ford technology platforms support both models Connectivity Data / Yield Management Autonomy FinTech 62
Slide 63: Example: connectivity shared platform
Example: connectivity shared platform Own Share My wife taking My son getting her car to the on a shuttle grocery store pooling service Ford technology platforms support both models Connectivity Data / Yield Management Autonomy FinTech 63
Slide 64: What we've done so far
What we’ve done so far… Ford Smart Mobility Greenfield Labs New announcements New City Solutions organization to foster low-friction multi-modal travel in cities 30 global experiments ▪ Consumer experience ▪ Draws on existing Ford resources and selected new talent ▪ Flexible usership ▪ Focuses on co
Slide 65: Greenfield Labs' user experience focus will incubate new mobility applications
How to win… Greenfield Labs’ user experience focus will incubate new mobility applications The ability to make “things” better improves over time Design gap Ability The ability to understand use bias decays over time Time 65
Slide 66: Ford will play and win in businesses part of a mobility system
Ford will play and win in businesses that are part of a mobility system and offer unique value to customers and cities Layers of value in mobility Where we will play and win 9 million miles traveled 125K taxis / Ubers on the road Dynamic 60K “shared” rides shuttle to 450K bytes of vehicle data from
Slide 67: Dynamic shuttle leverages global van and fleet strength
Dynamic shuttle leverages global van and fleet strength with Chariot acquisition to grow rapidly Market leader in Shuttle will beam route vans and and use information to commercial / the cloud for storage At least 6 cities Number of Cities government fleets and analytical design globally within 18 m
Slide 68: Dynamic shuttle provides near-taxi convenience at near-mass transit price
Dynamic shuttle provides near-taxi convenience at a near-mass transit price China Market Example Higher Passenger Cost Per Km Personal vehicle Taxi Dynamic shuttle Mass transit More Passengers Per Km 68
Slide 69: Increasing occupancy by 10% can improve profits by 30%
Increasing occupancy by 10% can improve profits by 30 % Number of Rides (Sample City) Gross Profits (Sample City) 10% increase 30% increase leads to… Base Increased Base Increased occupancy occupancy 69
Slide 70: Pre-AV focus on bike sharing and dynamic shuttle; post-AV adds VMaaS
Pre-AV focus on bike sharing and dynamic shuttle; post-AV adds VMaaS Pre-AV Post-AV Own Share Own Share VMaaS Connectivity Connectivity Data / Yield Management Data / Yield Management Autonomy Autonomy FinTech FinTech 70
Slide 71: Data-based services and total addressable market
Beyond dynamic shuttle and bikes, we’ll develop data-based services like telematics and vehicle management for AV fleets Pre-AV Post-AV Total Addressable Market 2016 2017 - 2020 2021+ 2025 - 2030 Dynamic shuttle $100 - $200 Billion Vehicle management as a service (VMass) $100 - $400 Billion (AV only
Slide 72: Mobility key takeaways
Mobility key takeaways As we move from our traditional sales business, there are significant opportunities for participating in 1 far more transactions, revenue and profit potential with low capital investment and to increase our interactions with many more customers Ford Smart Mobility focused on t
Slide 73: Key Capabilities: Data and Analytics
Key Capabilities: Data and Analytics Paul Ballew 73
Slide 74: Data and analytics capabilities a catalyst to upside
Our rapid improvements in data and analytics capabilities will continue to be a catalyst to upside Fo r t i f y Tra n sf o r m G r ow Profit Pillars Luxury Small Vehicle Emerging Electrification Autonomy Mobility Markets Strategic pr iorities EM Co re E m e rg i n g Data and Analytics Capabilities E
Slide 75: One Ford approach to data and analytics
We are leveraging a One Ford approach to data and analytics to optimize agility and scale… unique in our industry After: One Ford Skill Team Before: 43 Analytics Organizations One data and analytics platform which Marketing and Sales = 8 teams includes modern tools and a flexible Multiple Product De
Slide 76: Capturing value from vehicle data and legacy systems
We are rapidly capturing value from vehicle data and harnessing value trapped in legacy systems Rapidly Capturing Value From Customer Opt-In Data Vehicle ▪ 1,500 individual data elements Data ▪ Some are being sent at a rate of 50 times per second ▪ 25 GB of data is created per hour of normal driving
Slide 77: Benefits in manufacturing and logistics operations
We are seeing rapid and growing benefits in manufacturing and logistics operations Material logistics Plant floor Scheduling and sequencing Freight and customs Plant floor Scheduling ▪ Complexity / batching ▪ Bottleneck analysis ▪ Vehicle sequencing ▪ Route optimization ▪ Preventive maintenance ▪ La
Slide 78: Optimizing a single part can scale to $100M+
Methods to optimize a single part can scale to $100M+ when systematized across total buy $20 Variable Cost Save $0.15* Optimized Total Landed Cost (low cost country, freight, scale) Reduce Disruptions With Risk Monitors Example: Save $0.06* ▪ Optimizing a single part potentially saves $0.71* on $20
Slide 79: Deeper customer insights and revenue management opportunities
Our integrated approach is generating deeper customer insights and more revenue management opportunities User Experience And Revenue Management Breakthroughs ▪ Customer / lead management actions ▪ Customer usage and life triggers ▪ New mobility solutions Customer e nc pe the ▪ Relationship activatio
Slide 80: Common data platforms foundation for emerging opportunities
Our new common data and analytics platforms are also the foundation for emerging opportunities Connectivity Mobility Solutions Autonomous Vehicles Vehicle Performance Insights Mobility Autonomous and Driver Assist Technology ▪ Vehicle prognostics ▪ Dynamic shuttle ▪ Advanced driver ▪ Vehicle diagnos
Slide 81: Framework to support exponential AV data growth
We have laid out the framework to support the exponential data growth from autonomous vehicles Total Autonomous Vehicle Data Growth Compressed (Stored) — Petabytes 30 25 By 2017, 23 we will have increased our processing speed by 30-fold 15 8 0.25 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-
Slide 82: Expanding capabilities to accelerate core and emerging opportunities
We are expanding our strong capabilities to accelerate core and emerging opportunities 2015 Initial Staffing 2016 YE Target 2018 YE Target Invest in Talent 230 600 900 Advanced ▪ Ingestion, curation and governance Data – Storage requirements are increasing from 11 Petabytes (PB) in 2016 to +200 PB i
Slide 83: Data and analytics strategy a key enabler for transformation
Data and analytics strategy is a key enabler for our business transformation Improve Optimal You hear my needs modem activation press utilization Plant safety You knew what Optimized pricing Mitigate supplier risk I wanted FordPass parking space finder Re-sequence Optimize vehicle schedule plant sta
Slide 84: Data and analytics key takeaways
Data and analytics key takeaways 1 Data and analytics has been a key catalyst for both core and emerging opportunities We are seeing a quantum leap in agility, innovation, scale and efficiency after integrating the data and 2 analytics resources, platforms, and tools across the company We are levera
Slide 85: Looking Forward
Looking Forward Bob Shanks 85
Slide 86: Business outlook focuses on 2016 to 2018
Our business outlook focuses on 2016 to 2018; today we will focus on the core business, emerging opportunities, and the total business EMERGING CUSTOMER ▪ Electrification ▪ Autonomy CORE EMERGING BUSINESS OPPORTUNITIES CARS, UTILITIES, ▪ Mobility TRUCKS, FINANCING, PARTS & SERVICE FORD SMART MOBILIT
Slide 87: Global industry volume growth to continue with regional variability
We expect global industry volume growth to continue with regional variability; pace of industry change will accelerate ▪ Global GDP and vehicle industry sales growth to continue; increasing urbanization, growth of emerging market middle classes, aging of population globally and growth of the sharing
Slide 88: Current performance and strong track record position us to win
Our current performance, along with our strong track record, positions us to win in the future Restructured Business and Implemented One Ford Plan Positioning To Managed Through Great Recession Transform and Win Total Company Adjusted Pre-Tax Results (Bils.)* Automotive Operating Cash Flow (Bils.) $
Slide 89: Delivering top-quartile TSR through disciplined capital allocation
We are focused on delivering top-quartile TSR through disciplined capital allocation Strategic Framework VISION MAKING PEOPLE'S LIVES BETTER BY CHANGING THE WAY THE WORLD MOVES STRATEGY Deliver top quartile shareholder returns through focused automotive and high-growth mobility businesses, building
Slide 90: 2015 best year ever; first half 2016 best ever for Company and North America
2015 was our best year ever; the first half of 2016 was our best ever for Company and North America Company North America 2015 1H 2016 2015 1H 2016 Adjusted Pre-Tax $10.8 $6.8 $9.3 $5.8 Profits (Bils.)* Auto Operating Margin (Pct.) 6.8% 8.7% 10.2% 12.1% Auto Operating $7.3 $6.9 Cash Flow (Bils.) NA
Slide 91: Company profit outlook for 2H 2016 lower than normal
The Company profit outlook for 2H 2016, however, is lower than normal – beyond seasonal effects Total Company Adjusted Pre-Tax Results (Billions)* $6.8 1H 2016 2H Super Recall Product Commodities Brexit Profit 2H 2016 Seasonality Duty Investment & Exchange & Other Improvement Actions * See Appendix
Slide 92: 2016 full year adjusted pre-tax profit about $10.2 billion
We expect 2016 full year adjusted pre-tax profit to be about $10.2 billion, including recent door latch recall 2015 FY 2016 FY Memo: Results Guidance Status 2016 1H Results Total Company Adjusted $10.8B Pre-Tax Results* ≥ 2015 Lower $6.8B Adjusted EPS* $1.93 ≥ 2015 Lower $1.20 Automotive Segment Rev
Slide 93: Growth, Returns, Risk
During the next several years, the core business will remain strong as we invest in emerging opportunities; our focus will remain on the drivers of value Growth ! Risk ! Returns ! Rewards 93
Slide 94: 2017 and 2018 growth in line with or higher than global GDP
In 2017 and 2018, we expect growth in line with or higher than global GDP growth of 3.5% to 4.0% Proj. 2015 2017 2018 2016 Wholesales 5% ≥ ≥ Global GDP Revenue 4% ≥ ≥ Global GDP 94
Slide 95: Core profitability to improve through 2018
Core business profitability to improve through 2018; total Company results decline in 2017 as we invest in emerging opportunities, then improve in 2018 Total Company Adjusted Pre-Tax Profit (Billions)* Total Other Emerging Core Electrification $10.8 $10.2 $0 2015 Proj. 2016 2017 2018 * Excludes spec
Slide 96: Operating margin follows profitability trend
Operating margin follows profitability trend… strong and improving for core Auto… but total Auto to decline in 2017 before improving in 2018 Auto Operating Margin (Percent)* Total Other Emerging Core Electrification 6.8% 0% 2015 Proj. 2016 2017 2018 * Electrification and other emerging included in c
Slide 97: Cost efficiencies will offset most cost increases
We continue to focus on cost efficiencies, which will offset most cost increases Year-Over-Year Cost Changes – Average 2016 - 2018 Cost Decrease Cost Increase Total Core Investments Efficiencies Net Price Related Product Emerging Cost of Economics Design Regulatory Opportunities (Contribution (Parti
Slide 98: Cost efficiencies averaging $3 billion annually
Generating cost efficiencies across all parts of the business… $ averaging 3 billion annually in the 2016 to 2018 period MATERIAL MANUFACTURING STRUCTURAL • Annual material • Labor and overhead • Zero-based budgeting cost reductions efficiencies supported by technology advances • Waste elimination •
Slide 99: Auto operating cash flow remains positive through 2018
Total Auto operating cash flow remains positive through 2018; core Auto strong, offset partly by investments to support emerging opportunities Auto Operating Cash Flow (Billions)* Total Other Emerging Core Electrification $7.3 $0 Auto Cash 2015 Proj. 2016 2017 2018 Balance (Bils.) $23.6 ≥ $20 ≥ $20
Slide 100: Capital allocation in 2016 to 2018 period
Capital allocation in the 2016 to 2018 period focuses on product, emerging opportunities and shareholder actions 2016 – 2018 Capital Allocation* Change In Mix vs Recent Periods Emerging Opportunities Products Products Restructuring & Emerging Opportunities Infrastructure Restructuring & Capital Debt
Slide 101: Investment for emerging opportunities mostly electrification
Majority of investment for emerging opportunities is for electrification and a cash provision related to strategic acquisitions and equity investments 2016 - 2018 Capital Allocation – Emerging Opportunities Data Analytics Equity Investments & Acquisitions Mobility, Connectivity & User Experience Aut
Slide 102: Capital spending to increase as percent of Auto revenue through 2018
Capital spending to increase as a percent of Auto revenue through 2018, then decline Capital Spending Equity Investments & Acquisitions Capital Spending as % of Auto Revenue 5.3% 5.6% 4.9% 2016 2017 2018 Ongoing 102
Slide 103: Company ROIC expected to exceed cost of capital
Outlook for Company ROIC through 2018 expected to continue to exceed cost of capital After-Tax Five-Year Average ROIC* (Pct.) 25% 16% 11% Cost of Capital 9% 0% (6)% 1995 2000 2005 2010 2015 2016-2018 * See Appendix for definition 103
Slide 104: Our business structure remains robust
Our business structure remains robust • Ford is a dramatically different and improved company than in 2008 - 2009 • A proven, deep and collaborative global leadership team with a clear point of view of the future and a strategic framework of where to play and how to win • Sustaining a strong North A
Slide 105: Operations in much better shape than before Great Recession
Our operations are in much better shape than before the Great Recession ® ! Brands Vehicle Age Of Plants At Avg. Dealer APEAL* APEAL* Platforms Portfolio 3 Shifts Throughput Ford Lincoln (N.America) (F/L, U.S.) (Non-Premium) (Premium) 2015 2✓ 9✓ 2.6 yrs ✓ 50% ✓ 594 ✓ #4 ✓ #5 ✓ 2007 7 27 4.9 yrs 20%
Slide 106: Financial health much improved
Our financial health is much improved as well $ ✓ Transaction Operating Return on North Pension Automotive Credit Price vs Mkt Margin Invested America & OPEB Debt Rating Capital Breakeven Obligation (F/L, U.S.) (% of Wholesale) BBB Stable ✓ 2015 +6 ✓ 7% ✓ 16% ✓ 64% ✓ $14B ✓ $13B ✓ B 2007 (1)% (1)% 2
Slide 107: UAW agreement provides greater flexibility and lower cost
Our present UAW agreement provides much greater flexibility and lower cost than in the past U.S. Lay-Off Costs for Hypothetical ~40% Volume Reduction (Bils.) ▪ Reduced hourly employees $2.6 by 28% since 2006 ▪ Temporary employees provide flexibility in event of downturn ▪ Jobs bank eliminated $0.5 ▪
Slide 108: Well positioned if fuel prices increase
We are well positioned if fuel prices increase given significant improvements in our fuel economy North America Pct. of Vehicles with Competitive Fuel Economy Labels* ▪ EcoBoost leadership 79% ▪ Light-weighting ▪ Hybrids, plug-in hybrid and electric vehicles 27% ▪ 6-speed transmissions ▪ Start-stop
Slide 109: Difference in annual fuel costs much less than in the past
The difference in annual fuel costs across our trucks, utilities and cars is much less than in the past F-150 Edge Fusion 2007: $950 2007: $700 Incremental Fuel Cost 60% Incremental Fuel Cost 30% Improvement Improvement 2015: $400 2015: $500 Incremental Fuel Cost Incremental Fuel Cost * At $4.00 a g
Slide 110: North America downturn scenario modeled on Great Recession
We test our business robustness against downturn scenarios; here is a potential North America downturn modeled on the Great Recession Assumptions 2017 2018 U.S. Industry Volumes (Mils.) 11.4 12.7 U.S. Industry Volume vs. 2015 (Pct.) 36% 29% NA Wholesale Volume (Mils.) 1.8 2.3 NA Wholesale Volume vs.
Slide 111: North America Auto stays at or above breakeven in downturn
Our North America Auto business should stay at or above breakeven in a Great Recession-like downturn Downturn Scenario Downturn Impact* 2017 2018 Industry Dealer Stock Impact Pricing Volume-Related Manufacturing Cost Other Costs Pre-Tax Profit Outlook Breakeven Profitable Breakeven -- U.S. Industry
Slide 112: Maintain Automotive cash above $10 billion during a downturn
We can maintain Automotive cash at or above $10 billion during a downturn, while continuing to pay regular dividends $ ! F Breakeven Cash and Regular or Profitable Liquidity Dividend (Committed credit lines unused) ✓ ✓ ✓ 112
Slide 113: Ford Credit would remain profitable in a downturn
During a downturn, Ford Credit would remain profitable and increase cash distributions to parent Downturn Scenario Downturn Impact* 2017 2018 Credit & Residual Losses ▪ Strong liquidity enables consistent support to Ford Credit Financing Share Ford and its customers ▪ Balance sheet shrinks Managed R
Slide 114: Rewarding shareholders; regular dividends through a business cycle
Rewarding our shareholders is a high priority at Ford; we have a plan to pay regular dividends through a business cycle ▪ Pay a regular dividend ‒ Sustainable through a business cycle and… ‒ Targeting a top-quartile auto yield ▪ Pay a supplemental cash dividend – principal mechanism for shareholder
Slide 115: $12.6 billion distributed to shareholders since 2012
By year end, we will have distributed $12.6 billion to shareholders since restoring our regular dividend in 2012, including $3.5 billion this year Billions Supplemental Dividend Anti-Dilutive Repurchases $12.6 Regular Dividends $1.0 $2.5 $6.6 $2.3 $3.5 $9.1 $2.5 $1.0 $4.3 $2.4 $2.4 2012 - 2014 2015
Slide 116: 2016 – 2018 Business Unit Outlook
2016 – 2018 Business Unit Outlook North America South America 2015 2016 2017 2018 2015 2016 2017 2018 GDP GDP (U.S.) 2.6% 1.6% 2.2% 2.1% (Brazil) (3.8)% (3.5)% 0.8% 2.0% Industry 17.8 17.8 17.7 17.5 Industry 2.6 2.1 2.2 2.6 (U.S.) (Brazil) ▪ Moderate GDP growth to continue ▪ GDP and industry volume
Slide 117: 2016 – 2018 Business Unit Outlook
2016 – 2018 Business Unit Outlook Europe Middle East & Africa 2015 2016 2017 2018 2015 2016 2017 2018 GDP GDP (Europe) 1.2% 1.5% 1.5% 2.0% (Saudi Arabia) 3.3% 1.5% 2.0% 2.8% Industry 19.2 19.9 20.2 20.9 Industry 4.3 3.9 4.2 4.6 (Europe) (ME&A region) ▪ Moderate GDP growth to continue, with ▪ GDP and
Slide 118: 2016 – 2018 Business Unit Outlook
2016 – 2018 Business Unit Outlook Asia Pacific Ford Credit 2015 2016 2017 2018 2015 2016 2017 2018 GDP 6.9% 6.7% 6.7% 6.6% Industry 17.8 17.8 17.7 17.5 (China) (U.S.) Industry Industry (China) 23.5 25.7 26.0 27.1 (Europe) 19.2 19.9 20.2 20.9 ▪ GDP and industry volume growth in ▪ Moderate receivables
Slide 119: Financial performance to remain strong through 2018
Our financial performance to remain strong through 2018 ▪ Core business to improve ▪ Investing for emerging opportunities important to our future success ▪ Proven, strong management team ▪ Clear strategic framework ▪ Disciplined capital allocation delivering strong ROIC ▪ Fully prepared for a downtu
Slide 120: Why Ford, Why Now
Why Ford, Why Now Mark Fields 120
Slide 121: A solid investment with an attractive upside on emerging opportunities
A solid investment with an attractive upside on emerging opportunities + + i c e k Pr Current o c St Stock Price Fortify + Transform + Grow Luxury Electrification Profit pillars Small vehicle Autonomy Emerging markets Mobility Co re Co re E m e rg i n g 121
Slide 122: Investor Day
INVESTOR DAY September 14, 2016 122
Slide 123: Risk Factors
Risk Factors Statements included or incorporated by reference herein may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve
Slide 124: Appendix
Go Further Appendix
Slide 125: Definitions and Calculations
Definitions and Calculations Automotive Records ▪ References to Automotive records for operating cash flow, operating margin and business units are since at least 2000 Wholesales and Revenue ▪ Wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconso
Slide 126: Net Income Reconciliation To Adjusted Pre-tax Profit
Net Income Reconciliation To Adjusted Pre-tax Profit (Mils) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1H 2016 Net income / (loss) attributable to Ford (GAAP) $ (12,617) $ (2,795) $ (14,766) $ 2,717 $ 6,481 $ 16,885 $ 1,917 $ 11,953 $ 1,231 $ 7,373 $ 4,422 Income / (Loss) attributable to non-
Slide 127: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate FY 2015 1H 2016 Pre-Tax Results (Mils) Pre-tax results (GAAP) $ 10,252 $ 6,526 Less: Impact of special items (548) (304) Adjusted Pre-tax results (Non-GAAP) $ 10,800 $ 6,830 Taxes (Mils) (Provision for) / Benefit from income taxes (GAA
Slide 128: Earning Per Share Reconciliation To Adjusted Earnings Per Share
Earning Per Share Reconciliation To Adjusted Earnings Per Share FY 2015 1H 2016 Diluted After-Tax Results (Mils) Diluted After-tax results (GAAP) $ 7,373 $ 4,422 Less: Impact of Pre-tax and tax special items (343) (371) Adjusted Net Income (Non-GAAP) $ 7,716 $ 4,793 Basic and Diluted Shares (Mils) B
Slide 129: Return on Invested Capital Calculation
Return on Invested Capital Calculation Approach ▪ Reflects an “all-in” after-tax measure providing a true return on total capital employed ▪ Focus is on rolling five-year average ROIC, which reflects our industry’s product and investment cycles Operating Return (NOPAT) ▪ GAAP income before taxes ▪ E
Slide 130: Investor Day
INVESTOR DAY September 14, 2016 130