AAH #753 - The U.S. Pivots From BEV to ICE

Speaker 1: Out online After Hours is brought to you by bridge Stone Tires Solutions for your journey.

Speaker 2: Thanks for joining us. People got a great show today.

We got Michael Robinett from S and P Global, Keith Notton from Bloomberg, and Derry is here.

Speaker 3: How are you doing John?

Speaker 2: I'm doing great?

Speaker 3: I am.

Speaker 2: I mean you know I'm not just saying that to say that I'm doing great.

Speaker 4: We're good good because we'll need it because we got to.

We got this show with these guys now global mobility.

Just to add the mobility to Michael's global. Yeah, we

are mobile, You're mobile and global.

Speaker 2: So you want to kick this off with the question, get these guys cranked up or what? Well?

Speaker 4: Okay, so I know Keith, who covers Ford for Bloomberg, has has been like cranking it because of yesterday's earnings. Yes,

so give us a synopsis of what happened.

Speaker 2: And just to quickly interject, we're talking about second quarter twenty twenty five forward earnings.

Speaker 5: That is correct.

Speaker 2: Take it away, Keith.

Speaker 5: It was this sort of good news bad news story.

Speaker 2: I mean they were the good news.

Speaker 5: Well they beat all the analyst estimate.

Speaker 2: That doesn't mean anything. They lost money.

Speaker 5: Normally it would. And the stock is up today.

Speaker 2: It was down three percent yesterdaday, it's up today, how much?

Speaker 5: By about three percent?

Speaker 2: Okay, so nothing happened eventually, Yeah yeah, move along.

Speaker 5: Yeah.

Speaker 4: Nothing the year.

Speaker 5: But anyway, so they beat analyst estimates on revenue, on profit, on everything. I mean, profit's way down, and from a

net basis, they lost money. But on the other hand,

the tariff hit got bigger. A two billion dollar tariff hit.

Speaker 2: For the year is what they announced it instead of the and it was what eight hundred million for last quarter.

Speaker 5: For the quarter, but their previous estimate three months ago was that the tariffit would be one point five billion for the year. So it's growing. And the frustration for

them that that Jim Farley, the CEO, described is that all these trade deals that Trump is now cutting with Japan last night, with South Korea and with the European Union to go down to a fifty percent teriff rate actually is hurting Ford. He says it has handed Toyota

a five thousand dollars car advantage over Ford's American built cars because Japan has lower labor rates, they had lower currency rates, and.

Speaker 2: They can buy stuff from China.

Speaker 5: And they were already making money. The same thing with

GM with its four hundred thousand vehicles that had exports from South Korea every year. They were making money out

of twenty five percent tariff, Ford argues, and now at a fifteen percent tariff, they'll make even more money. They said,

a Forerunner has a tenth a Japanese built Forerunner has a ten thousand dollars advantage over an American built Bronco.

So they feel like they're the American company producing the most cars in America. Eighty percent of what they sell

in America they build in America, and they're getting screwed.

Speaker 3: So okay.

Speaker 4: So one of the things that far also talked about yesterday was the fact that because the emission standards seem to be changing, that they'll be saving a whole lot of money because they're not going to be baning credits.

Is that going to be an advantage for them?

Speaker 5: The emission credits thing is just the deregulation of everything.

As Michael can talk about here is a huge bit for the Detroit automakers because they're trucking SHUV companies and they sell big internal combustion engine vehicles that make tons and tons of money. If they didn't sell those, they

couldn't have any evs. So yes, that is the good

news side. They can sell as many you know, big

old super duty pickup trucks and fully tricked out you know, navigators and expeditions as they want, and they don't have to worry about the credits anymore.

Speaker 4: So you know, when I was, when I was listening to Farley talk about this, you know, I thought about Bill Ford Junior, who has you know, long been a proponent of environmental issues.

Speaker 3: I mean, how does he feel about that?

Speaker 5: Yeah, I mean he accepted the notion that you know, cars caused global warming. He accepted that twenty years ago.

He was the first one in the industry to say yep, that's right and to sort of embrace the whole climate change thing. So clearly he's not on the same page

as President Trump, so you know. And one of his

proudest accomplishments was that first hybrid escape that they did twenty or that it was, and he has that in his own personal collection. He has like hybrid escape number

one in his garage. He's that proud of it. And

so no, I wouldn't think that this meets his philosophical worldview, but it is certainly patting the profits of his company.

Speaker 2: That's right, you know, because they're still losing money on their evs, gobs of money.

Speaker 5: They lost five point one billion last year and they could lose another five and a half billion this year.

Their losses in the EV unit were larger this quarter than the equivalent quarter a year ago. Yeah, it's there.

They're deeply in the red now.

Speaker 2: What they did say, though, is a lot of those costs are accounting for the battery plant that's coming up to speed in Marshall, Michigan to make the LFP batteries right.

Speaker 5: And the development of the skunkworks.

Speaker 2: So it's not just operationally. In fact, operationally they were

bragging about they doubled their EV revenue from a year ago.

Speaker 5: But here's how they did that job. They started selling

EV's in Europe correct using VW's MEB platform. That's where

all that revenue comes from. Fords US EV sales fell

thirty one percent in the second grade.

Speaker 2: Point.

Speaker 5: The revenue was not increasing here. The revenue was going

the other way here. But when you open a new

spigot of revenue in Europe, that didn't exist last year. Well, sure,

you doubled your revenue.

Speaker 3: So okay, quoting you because I actually have you here.

Speaker 5: So they're going to get the Michael on the second right, Well.

Speaker 4: I mean time in anytime, but I mean, okay, So you know we're talking here about the evs and what they're making. But you know, you make the point in

your in your story about this is the fact that the earnings from Ford Blue, the internal combustion engine part, are half of what they were last year. So how

does that happen.

Speaker 5: Well, there's a couple of ways. One tariff cost. If

you have eight hundred million in tariff costs that didn't exist last year, most of those come out of your largest volume unit, which is Ford Blue. And the other

part is Ford has these persistent, nagging warranty costs. They

are on a record rate. They've had ninety recalls this year.

That's a record. They have been the leading company for

recalls in America for four years. It's a huge problem.

Farley says over and over again that they're making progress and they're fixing it and it's the old cars that are causing them the problems. But that hasn't really shown

up in the numbers.

Speaker 2: Yet that's right, the numbers keep growing.

Speaker 5: Right, So so Wall Street remains very skeptical of their claims of progress.

Speaker 2: One thing to quickly add in here, Ford Blue is where all the zev credit costs were booked to. So

with them going away, that right off the bat is going to help Ford Blue for sure.

Speaker 5: And the you know, the other thing is Ford Pro their commercial unit that's surprised on the upside there. I mean,

it was still down from last year, but it was more than expected. And Ford Credit, the money machine continues

to surprise on the upside. Thank god Ford Credit.

Speaker 4: You know, and I think we should we should point out im when we talked about the ninety recalls that Ford has, Like second place is maybe Folkswagon at fourteen or fifteen.

Speaker 5: It's phenomenal.

Speaker 4: Yeah, I mean, so the gap between here and here, So Michael, how does something like that happen?

Speaker 5: Wow?

Speaker 6: Well, it's it's obviously it gets it goes back a while, but attention to detail. It's structural, you know, it's maybe

how you buy your parts, how you put them together, any number of possibilities. And I agree, I agree with Keith.

I mean, it's it's and even the Ford, folks. This

is nothing you can fix overnight. It's not like, oh,

I'm going to put a task force on it and fix it. But it it's among many different types of vehicles,

and it's just going to have to be an issue.

There is going to have to continue to focus on and one by one fix them, and then obviously more more actions for the future to say, hey, listen, how do we make sure this doesn't happen again. OTA is

probably going to help a little bit of that, but but you'd also have to believe it's if it's mechanical, Ye, you have a fuel lake, Ye software, not many OTA are you going to fix that?

Speaker 2: That's one thing they said too. That and OTA is

ninety five percent cheaper than having it physically fixed at a dealership.

Speaker 6: It's so much more convenient for the customer, right while it sits in the grade it gets fixed, as opposed to well, I have to make it a or at least the dealer are going to come and get my car and all of that nonsense. So not only the

ninety five but also the convenience of the customer.

Speaker 2: You know, this whole warranty thing is a real problem for the industry. Forward's leading, right, and they have the

worst situation. But uh, this is by NADA numbers. Last

year automaker spent twenty eight billion dollars on warranty, about fourteen billion on parts, and fourteen billion on labor. So

I mean that's to me that that's my jaw drop.

When I saw that number, I had no I mean, twenty eight billion dollars is a lot of money.

Speaker 6: Dealers like it.

Speaker 2: Dealers love it. I love it, and I'll tell you

especially why they love it because the growth of their retail customer repairs is slowed down dramatically in the last couple of years. And the thing that's keeping their back

shops humming is all this warranty.

Speaker 5: Work right, and the OTAs aren't is to full in the legacy automakers as they are, you're correct. And so

for example, Ford has had the stop sale on their electric Mustang Mokey because of that problem with the door locks that could trap occupants inside. So that is a

software problem, and it is a software update that's necessary to fix it. But you still had to go to

the dealer to have your software flashed. You couldn't do

it OTA. So they're on the road to getting there,

but they're nowhere near Tesla's expertise in OTA.

Speaker 2: That's right, Well, you need all new electronic architecture to do that, and they're all working on but you know you saw offtboard pretty much axed. It's Ford Network car program.

All the legacies are struggling with this because if you're a startup and you're starting clean from scratch and you don't have to bring this whole component load along with you to make the changes and work with your suppliers to so it's easier for the startups, it's really hard for the legacies.

Speaker 6: Especially if you've got like a legacy group within an OEM, maybe the brake team or the transmission team. Well, the electronics,

we want to control the brake electronics and the transmission electronics is like no, no, no, no no, we'll handle it somewhere else. We'll get your input, we'll handle it somewhere else,

because we want to make it much more efficient, much cleaner, much easier to fix if we have to. But yeah,

it's a big, big problem legacy versus you know, basically brand new out of the box.

Speaker 5: I also think the supplier relations factors into this warrant completely. Yes,

they notice like Stilantis and Ford have the lowest supplier relations over and over again, and they have the highest warranty costs and the biggest quality problems. And that's being

as exacerbated now because of the tariff stuff, right, because the suppliers have all these higher input costs for their raw materials and they're going to Ford or the other OEMs and saying, Okay, we want to pass these costs along, and Ford to saying no, you won't. And so it

creates more tension because of the tariff stuff in an already tense relationship. That doesn't help quality.

Speaker 1: Right.

Speaker 4: We had Dave Andrea on the show a few weeks back who did the working relations Index and showed that Ford's numbers have been precipitously dropping. I mean, I'm sure

you worked on that. I mean, how do they explain that?

Speaker 5: Well, you know, they don't. They don't well, they don't well,

let's be honest, but you know they still use i think fairly strong arm tactics with their suppliers, the sort of old school methodology that Stillantis also uses. And you know,

the American automakers are kind of set up for that.

It's not a curretsu. Like the Japanese automakers, there aren't

these interlocking ownership relationships that help smooth out things because you know, you're talking to your investor, not just your customer.

So I think there's something inherent about the legacy American automakers relationships with their suppliers that creates trouble.

Speaker 6: I think we got to be careful not to throw them all in the same basket. GM seems to be

doing a better job. Their leadership is pretty well the

pretty well run in that respect, and yeah, I think their working relationship capability is getting better. But nonetheless I

do believe it's we got to be careful. And there

are some Japanese oms that, you know, let's face it, don't have the greatest reputation either, and a couple of Germans, so it's kind of all over the place. But I

think it is an important criteria in terms of the quality of the vehicle and technology. If you're a supplier

and your only M treats you well, or your tier one treats you well, you more apt to go to them say I've got this new technology. I think it's

going to make your life easier. Customers willing to pay

up for it, blah blah blah, as opposed to having constant issue with your customer being either an OEM or a tier one. It's like, yeah, you know, I'm just

going to tell you the old stuff because I know it works, and I'm going to give this better stuff to someone else. And I think that's always another problem

that kind of works its way through.

Speaker 5: So Hot, what do you think GM does differently because they do have better relationships with their suppliers what, but they have the same structure that the other two have.

Speaker 6: Yeah, and I you know, I think that they do have the same structure. But I think it goes to

I think their view is maybe a bit different than the other ones. And there has been some turnover in

some of the I would say on the procurement side, in some of the other areas, but in GM's GM's team has been somewhat more stable, and I think that that probably lends to it. And I think they all

understand you can't build a car without strong supplier relationships.

I just think that they all go at it a bit different.

Speaker 5: Yeah.

Speaker 2: I can tell you though, several things that GM's doing differently.

It's identified a core number of suppliers. I don't know

the number. I'll just say like a hundred suppliers. They

get involved very early in a program. They are given

you know, I'm not going to say the first rider refusal, but they're they're because of their early involvement, they're almost undoubtedly going to get sourced on whatever program that they're working on. GM has also been bending over backwards to communicate, communicate,

to communicate, you know, whether it's production changes, whether it's program changes, whether it's design changes, whatever it happens to be.

They've really concentrated on doing it. And so we've seen

with the you know, the relationship study that Dave Andrey was talking about, for something like four years in a row, GM just keeps going better and getting better rated by all the suppliers. And you know, if it keeps up

this rate, it's going to be knocking on Honda's you know.

So it's Toyota number one, Honda number two, now GM three.

Speaker 4: John, the gap is like this.

Speaker 6: It's a good problem to have, though, I mean a problem, but that's a good problem to have. You mentioned something interesting, John,

about future product programs and the churn, and you know, we submit We've been telling our clients just for a little while, but because of all this this tariff interruption and what's going on with the emissions legislation that finally got somewhat settled, we're going to lose anywhere between twelve to eighteen months of planning in our industry if you think.

Speaker 2: About it, explain it a little bit more.

Speaker 6: And let's go back to maybe July or August of last year, when we knew that it could be a very good possibility there could be a change in government and change.

Speaker 4: In which we need pre election for election.

Speaker 6: July of twenty four, August to twenty four, that there very well could be. It wasn't going to be a

slam dunk for the Biden administration. Obviously that changed as well,

but we knew that there could be a change, and I submit, I know a lot of suppliers and om is like, WHOA, if there's going to be a change.

I'm going to hold back here just to make sure, because I don't want to start communicating things are investing here and investing there when it could be really money that hasn't been well spent. Add to that, all the

money that the manufacturers and the end of the suppliers have spent on battery electric as we call beving. We've

turned it into a verb. But you know, as you

bev there's been a lot of underutilized capital and I say that nicely. So add that and the change that

they's probably changing, and now we're still in the middle of we don't know what's gonna happen with USMCA. We

don't know if there's gonna be tariffs on parts or no tariffs on parts, or what the terraffs are gonna be on vehicles, much to what you said earlier. So

all of that probably to the end of the year, we'll have eighteen months where everybody's sitting in their hands working on short term problems and we're not really working on twenty eight, twenty nine and thirty vehicles and getting out.

We don't know what the sourcing structure should be. We

can't communicate to our suppliers. We know for sure we're

going to exactly make this vehicle, and it's going to look like this certainty is getting better, but it is a big, big problem. And in some respects we've let

the Chinese OEMs just, oh, you're going to take a break.

We're going to just keep moving and that's that's that's our read on this situation.

Speaker 4: Well so speaking suppliers, I saw this quote. ZF came

out with their their numbers and they did are doing okay, But this this was striking to me. And this is

a quote from doctor Holgar Klein, who is the CEO of ZF from Germany. Quote, stagnating global vehicle production, the

sluggish ramp up of electric mobility, and uncertainty arising from US tariffs mean lower sales and rising costs. We are

addressing these issues and accelerating our restructuring program. This is

a tough road with the right one for ZTF. And

basically what he's saying about this restructuring is there are downsizing the company. But you get back to this thing

of stagnating global vehicle production, sluggish ramp up of electric mobility, and uncertainty rising from US tariffs.

Speaker 3: I mean, how does a company deal with those things?

Speaker 6: It is a it is true as to be completely honest as and I know a number of Tier one suppliers and trust me, they are are having a hell of a time right now. It is. It is difficult

because you go your customers come your customer in the OM coustomer and says, I need to spend money on X.

But even they're a little squeechee about volumes, depending on what it is. And then we've got all these what

we call de er delays, extensions and rescopes. We've we've

delayed BEVs or sometimes rescope them into submission and cancel them.

We've extended ice vehicles. And anytime one of those activities occur,

it's it's it's a it's either a good thing or a bad thing for the supplier, depending on what side the equation you're on. You might be building an ice

component and it get extended by two years and everybody might say, oh, well, let's you know, pop the champagne quirks.

But if your margins already low, and then now you've got to go back to your OM, customers say, hey, by the way, I'm not making any money in this thing.

So and by the way, my tool's old, my machine's old, and that square footage's hoping to do something else with it.

So in some respects, it's not a good thing when these when these vehicles get extended. So you know where

we submit that North America could be the home of slower technology turnover for at least the next six or seven years, because we basically have told the market to take a break. You know, we're going to keep building

some of the older stuff. We're not going to get

a we're not going to get a credit for any good things we're doing on the fuel economy side at lea it's not a lot. So we're just going to

keep doing what we're doing. It's going to be a

lot of extensions of existing technology. Yeah.

Speaker 5: I had one guy tell me, Uh, the US is going to become the global leader and V eight development.

Speaker 6: We have been. We're just going to continue to be.

We're going to maintain that, right yeah.

Speaker 4: Right, Okay, So Keith, you know, Farley mentioned that in a couple of weeks from now they're going to have like a Model T moment.

Speaker 6: What what what.

Speaker 3: Can you tell us about this?

Speaker 5: I mean, this is interesting Farley is turning. Uh, they

are currently in an e desert. They have no new

electric vehicles coming until twenty twenty seven. So their last

new electric vehicle was the Lightning and how long have we had that now? Three years? And so they've got

really old product and that's affecting demand. Not to mention

that mainstream buyers don't want electric vehicles, so it hurts it even more. That's a virtue to Ford because GM's

out there with all these new evs and there's no demand for it. That was their take.

Speaker 2: One point Firly made is they have to continue those to the end of their products site, right.

Speaker 5: And here we come and so what On August eleventh down Louisville, they're going to do this event where they're going to show their next EV platform. They've kind of

already telegraphed this really for quite a long time now.

This is that Skunkworks project out in California that's being led by the former Tesla guy, Alan Clark, and they're coming with a small to mid sized cup truck in twenty twenty seven that'll be powered by a lower cost LFP battery made in Marshall, Michigan. We know all of

that stuff. I'm not sure what else they're going to

tell us. I guess we're going to see a prototype.

I don't really know, but we know for certain what the vehicle is, what the body type is, what the battery is going to be, and what the price point is going to be because they say it's going to below thirty thousand dollars. So I guess they're going to add

some more flesh to that bone. But it feels kind

of fleshed out already.

Speaker 2: Okah, they told me they're not going to show any sheet metal at all.

Speaker 5: Okay, then what are they going to show? John?

Speaker 2: They're going to talk about the platform. They're going to

show the battery and talk about the skunk works and how it developed. This platform feel new.

Speaker 4: So, I mean, so my question is is that, you know, we've established that EV sales are not all that bang up damn sure. And we've also established from what you

know Michael is saying about the extension of.

Speaker 3: The combustion engine going forward. So what does Ford hope

to achieve from this?

Speaker 5: Yeah, I mean, I think they're trying to create some excitement, but it really cuts against what's happening in Washington with public policy toward EV's, which is cutting the legs out of every stimulus to sell EV's. The seventy five hundred

dollars consumer tax credit is going away on September thirtieth.

That was part of President Trump's big beautiful bill. You know,

they clung to the manufacturing credits, you know, barely, and I feel like it won't be along till that goes away.

Speaker 4: And this is for making the batteries that they make.

Speaker 6: Yes, the forty five books.

Speaker 5: Yeah. And then of course now we're taking away regulatory

you know, impetus for regulating climate change.

Speaker 2: I need no fines if the CO two limits right.

Speaker 5: And so that means there's really no push for alternate power trains. And there is push as President Trump has

done with everything else, with coal and oil and everything.

There is push for the old world methods of transportation, no push for the new methods of transportation that the Chinese are running away with.

Speaker 6: So it think about what you just said. It's not

only a propulsion question, but you know, new platforms were given way to while we can lightweight them, we can put more lighter materials, either lightweight steels or aluminums or whatever.

But if there's no real reason to lightweight vehicles, why are they going to redo platforms. It costs a lot

of money everything of them. So you know, I'm hearing

out of one OEM that you know, they used to think in five year chucks every five years or six years we'd redo a vehicle, either a major or all new, and in the middle would do a mid cycle enhancement.

It's kind of kind of time and material we do that.

And now they're starting to talk about eight pro eight year programs, nine year programs where they might have two or three mid cycle enhancements in the middle. As a supplier,

and if you're underneath the vehicle, you're going, WHOA, my economics just changed. I need instead of dividing by five,

I need to divide by eight or nine or ten in terms of, oh, my machine needs to last as long, my tooling these fast lasts as long. What's my margin

going to be at the end of the program. This

is a major shift for the industry.

Speaker 5: And Farley also tied this to sort of a major shift for the global industry. Instead of being a global industry,

he feels like we are going back to being a very regional auto industry.

Speaker 6: We're reregionalizing regional because we were and we turned global and now we're going back. And if you think about it,

China is moving in their direction on BEVs. The Europeans

are slowing down, but they're still going to move at a slower pace and North America. Well, I guess us

just basically crawling almost.

Speaker 1: To a crawl.

Speaker 6: And so those three regions are going to continue to split, and it's going to be more difficult to have interregional volume going back and.

Speaker 5: Forth because it'reconomy going to walk as.

Speaker 6: So volume PRINTNY plate's going to go down, and it's it's it's economies of scale is going to be a real driver going forward. I agree.

Speaker 3: So so let me ask you, all three of you this.

Speaker 4: I mean, when Farley is using the Model T, okay, which which is you know Ford talks about icons all the time. Okay, this is like the most iconic vehicle

maybe ever, right, I mean, and it put the.

Speaker 3: World on wheels.

Speaker 4: But apparently the world is not all that interesting anymore.

But if this doesn't turn into something that's phenomenal, hasn't he basically smirched the Model T.

Speaker 2: That's an interesting way to look at it. Let's see

what they show us. I mean, let's see what these

guys come out with. You know what Farley and I

think all the legacies recognize is China's getting to market far far faster by doing things differently, really by copying Tesla and you know, smash the silos in the organization, get colo keate aid, cross functional teams, let them go like a bat out of hell. And he knows that

Ford's got to do this, and he knows that, I'm sorry, the organization in Dearborn could never get that done, never ever, ever, That's why he went with the skunk works. So let's

see what these these supposedly that some of the smartest people in the world that they went out and recruited from all over the world. Let's see what they came

up with. My only question is I think they're going

to come out with a product that is sensational from a cost standpoint and a technology standpoint. What happens when

they hand that over back into the normal legacy system to productionize it and get it built. That's usually when

these things fall apart.

Speaker 5: My other concern, too, is not just about the propulsion system in terms of falling behind the Chinese. The Chinese

are doing way more than just making cheap battery electric vehicles.

They're putting incredible technology on those vehicles. DYDS. What is

it their hand of God? I mean, there are all

I've gotten. Yeah, that's it, I have got. That's it.

They have all this phenomenal The cars park themselves over several levels in a parking structure. You just get out

and it goes sniffs out its own parking space. They

have all this tech that is being enabled by these software driven vehicles that are built on big batteries that we're not doing because we don't have much of a market for electric vehicles and all the oms are pulling back from development and investing in that technology.

Speaker 6: I would submit they look at capital differently than a lot of the Western world. So there may be a

a new Chinese naeplate that comes on the market and they feel, you know, it's doing okay, but not as well as I'd like, They'll change it the next model year.

It's almost like back to the fifties where we were back here in Detroit, where they would change the front of rear ends on a pretty regular base is and and and we would that would be verboten in Detroit.

Why would we ever want to do that. We've got

to that's got to run for a couple of years before I can get that fatia and the rear end to get paid for itself, and then maybe I'll think about changing it. They don't care. It doesn't to them.

They can they they iterate so quickly that they feel we are our customer wants us to keep moving forward.

Speaker 2: But remember, almost no car company in China makes money.

Speaker 5: Agreed, You've got Tesla and.

Speaker 2: What by D great wall uh Le Auto, and I think there's one other and all and and except for b y D, all the ones that I mentioned make peanuts for profits. I mean they make.

Speaker 5: Next government support, isn't it that Well.

Speaker 2: That comes back to I think what Michael was getting at when you said they look at the cost of capital differently. It's free there.

Speaker 6: I mean, you're close to free, but you're right, I mean the lower lower cost of capital. I mean, let's

face it, everybody in Detroit is being a on lines of credit. I'm not again, I don't know what they're

being in in in other parts of the world, but that's definitely that goes into the equation of what we do see.

Speaker 4: Well, it concerns me about what using the model t this.

This reminds me of before the Segue came out. Remember

when it was Project Ginger, and that's what we knew this to be, and it was going to be the you know, the most phenomenal thing transportation device that we'd ever seen. And then the segue comes out and all

the air goes out of the balloon and I just you know, and and whether you know, the platform is magnificent, and what is the consumer going to think? Okay, is

a consumer going to say, wow, this is the most fantastic thing I've ever seen in my in my lifetime.

The way the Model T was when it arrived on the scene, you know, suddenly there's you know, there had been cars before that, but suddenly I can afford to buy one. This is something that's going to be for me.

And is we're going to do that? Is ford going

to change the perception of electric vehicles among the market that you know, as we've said many times.

Speaker 5: Don't get any American consumer, including those who bought Tesla in the early days, we're looking for an electric propulsion system.

They just thought it was a cool car and that's why they bought it. And so you can't wow them

with that kind of what consumers use mundane technology just get me there. I don't care if it's electric or

gas or whatever, you know. And it's also hard to

wow them with technology they haven't experienced. Yet it's the

old Henry Ford axiom that if you asked a consumer what they would have wanted one hundred years ago, they would have set a faster horse. So they can't understand

eye of God until they've experienced eye of God. And

so it's this chicken and egg thing. So I don't know,

if you show them a platform or show them talk about their defined vehicle or all that kind of stuff, I'm not sure consumers are connecting or wowed by that.

Speaker 2: Yeah, I totally agree, but I got to we got to take a quick break right now. For her great sponsor,

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Speaker 4: That's what really matters.

Speaker 6: Bridge don't pretends to tires, improved grip and wet conditions.

Speaker 2: All right, we're back talking. I sort of cut you

off there, Keith, But I completely you agree with what you're saying. You know, with all the incentives going away

for buying evs, now for the automaker. Look, they've put

a ton of money into these EV things. They may

cancel a program here, push another one back there, they cannot walk away from this stuff. So now it's incumbent

upon them to come out with products where people go, damn, I don't care what's under the hood. I want that.

Speaker 1: That's what I wie.

Speaker 6: That's exactly what's what's going to now. We're looking at

more than natural rate of growth for BEVs. That's what

we're really looking at now, and we're going to start to see how much the US consumer really wants them, especially we start to BEV in the middle of the market.

It was I wouldn't say it was easy, but we were on the edges. We were doing some luxury products,

we're doing some pickup trucks. But now we're starting to

BEV in the middle where mom pas Smith from Des Moines actually need a car, and it'll be interesting to see how that works its way through. You know, we've

obviously had to ratchet back our forecasts, but it is it is really, it's really interesting, but it's more of a natural rate of growth through twenty thirty and then you know, one might say, well, after this administration, what's going to happen, But as we've seen, it won't stop on a dime. It's got its own sort of momentum,

probably through thirty one or thirty two, before the next administration can say, okay, I may want to ramp this up a little bit because maybe we've strayed too far from the rest of the world and we need to catch up a little bit. But we're probably got about

at least five to six years of this to be completely.

Speaker 4: So of five to six years of what uncertainty.

Speaker 6: No, no, no, I would say slow emissions legislative improvement.

I would call it improvement. But basically the emissions legislation

driving what consumers are going to want to buy here.

I mean, I think it's what Keith said earlier. You know,

it's it's caveat. I mean, basically, they're going to buy

whatever whatever they like. If they want to buy a

V eight, they want to buy a V twelve, have at it. It's going to be available, right.

Speaker 4: I mean. One of the things that we've talked about

many times on the show is the affordability crisis that exists out there, you know, I mean with with you know, average average transaction prices being just under forty nine grand for a vehicle, and you know, it occurs to me that, Okay, if you put two vehicles next to each other, you know, compact cuvs, and one has a gasoline engine and one is an electric vehicle and the one with a gasoline engine costs ten grand less.

Speaker 3: What is the consumer going to do?

Speaker 5: It wins every time, right, But here's the thing we're gonna have to keep ten times.

Speaker 2: We're gonna have to keep an eye on used evs.

I mean, the prices are way down. In fact, I

was just reading this report on used cars and they're saying, by this time next year, used evs by far are going to be the cheapest alternative to anybody looking for a used car. And what was it that we reported

Sean this week you can get Mercedes EQS. I mean,

this is like it's an S class, right, it's an electric car for thirty thousand dollars. So there's going to

be somebody saying, you know, should I get that used RAV four for thirty grand or should I get a Mercedes Electric S Class and eqs?

Speaker 4: But okay, but how does how does that help the industry if people are just buying these old vehicles?

Speaker 5: Does it normalize electric vehicles in some way? Does it

get more electric vehicles on the road?

Speaker 4: Although then the question becomes, okay, I don't know how how confident is the person going to be that the battery is going to be fine for X number of years.

So if you buy the used Raft four, you know pretty much that it's going to run forever, right, you know what I mean?

Speaker 6: I do not think we're a little bit past that.

We that's been I wouldn't call it a wise tale, but yeah, and there's been some horror stories out there, But I think we're a little bit past that. Oh

I'm gonna have to change the battery of four or five years down the road.

Speaker 2: I don't think I think we're going past it. It's

still a concern out there.

Speaker 5: I think I think we're past that.

Speaker 2: Yeah, but I know the general public is not pasted it, right or in much of the junt.

Speaker 4: Know, they're they're familiar with with flashlight batteries, right, you know pretty soon that flash light isn't quite as bright as it used to be and therefore, but or you know, on your phone, your phone goes down over time, right, and consumers know that, and they're like, damn it, I got to get an It's.

Speaker 5: Like part of the charging infrastructure concerns that consumers have, which are legit. There aren't enough chargers out there, for sure,

but the sellers of electric vehicles will tell you no, no, no, It's like your iPhone. You plug it in when you

go to bed in your garage, and when you wake up in the morning, it's all charged up. It's not

the same as going to a gas station. You don't

need as many charging stations as you do gas stations.

But you can't convince American consumers of that. They feel like,

I'm going to be driving on vacation and I'll need to fill up somewhere, and will it be there for me?

Speaker 4: But but Michael, okay, you know, with all the money that has you know, as John's pointed out, you know, the Oeans have invested a lot of money in evs, but now with the change in the emissions rules, suddenly they can they can bring back the hemmy. They can

you know, do things they.

Speaker 3: Weren't doing before.

Speaker 4: So they have a finite amount of capital to invest.

Where do they invest it.

Speaker 6: They're obviously being a lot more careful about where they invest, and so you're not hearing about a brand a lot of brand new BEV platforms that they're going to launch in twenty eight, twenty nine to thirty. That's all been

pushed out. They're more or less redoing existing ice platforms.

Maybe they're looking at an engine and adding a hybrid capability to it. That's something that's actually pretty popular these days.

They're taking BEV platforms and saying, okay, maybe need to add a range extender to it. So they're looking at

the front packaging and as you all know, I mean it's about the thermal but you don't and obviously crash is a bit of an issue as well, but you don't care so much about where the engine sits in the front because it doesn't have to be aligned with the front wheels. It's just the thing. I joke, and

Honda may not want me to hear this, but think about it. It's like a Honda generators initting in the

front of your car. It runs, it charges your battery

sometimes sometimes it goes back to the electric motor. But

so there's some flexibility there. I make it sound like

it's easy, but you're adding a exhaust system, a thermal system, a fuel system, and all the all the usuals are going to be there. So it is much more complicated.

But more and more oms are looking at Okay, this was a bad platform. I need to make this into

a BEV and a rev platform. And then and they're

also looking at their ice vehicles and saying, well, maybe I'll do a mild hybrid and a full hybrid plugins depending on the OEM. They've had good and bad situations,

so it depends on the OEM. But that is really

going to be the focus going forward. I would say

that lightweighting not so much, which is, you know, not great if you're trying to substitute your material into somebody else's and they're going to want to cut costs. They're

absolutely going to want to carry over parts as much as they can and cut costs as much as they can.

They they got to get their ROI up and uh and and and as we detrim vehicles. That's the other

thing that's going on right now is we're starting to detrim vehicles not not putting as much leather and all the content in. They're starting to bring it down to

bring that price down. That's also going to impact profitability

as well.

Speaker 2: You know, Farley talked about range extended trucks and pe have trucks. What do you think is the consumer going

to go for that?

Speaker 6: I think that there are consumers that will look at a range extender and say, god, this is the best of all worlds. I've got the acceleration of an EV,

I've got the torque of an EV. But yet I

don't have to worry about finding a charger. I can

go five six hundred miles and I'm good and I just fill up with fuel. Now, one would say, well,

you're carrying two power trains on board. Agreed. I think

that that's incredibly inefficient. But there's going to be a

pocket of consumers to say I've got the best of all of it. I launched the way I want to launch.

It's quiet, it does all it's supposed to do, and the engine doesn't run at like twenty five hundred rpm.

You know, you set it a light, it goes down to seven point fifty and then you're running and maybe goes up to fifteen hundred or a little bit higher.

But all it's doing is just putting power back into the battery or towards the electric motor.

Speaker 3: Well, you say there's a pocket.

Speaker 4: I mean, how big a segment of the market is this, and does it provide profitability for the OEM to scale these things?

Speaker 6: Well, they've got the platform now, so much to what we said earlier, we're kind of stuck between a rock and a heart place. It's not like they're going to

shut these platforms down. They have to keep moving because

a lot of these oms are also still active in China.

Not as active as they used to be, but they're still active. So they are going to need some of

these technologies for China, and maybe they're also active in Europe.

They're going to need them for Europe and some other markets as well. So, but North America is their primary market.

That pocket is slim. I don't get me wrong, I

don't disagree with you. It's not like all the plumbers

out there are saying this is exactly the type of vehicle I need. No, they're not saying that it is

the weekend warrior that might look at that say this actually meets all my needs.

Speaker 5: So, you know, and finally talked about this last night.

As you said, John, U revs are a great solution, but there's still not a great towing because that can still drain the battery really quickly and you're you're switching over to the you know, sort of burning more gas.

So so so what he I don't know if you heard him say this last night, but he referenced, is you know an e Rev would be a good fit for a three row SHUV, the exact thing they killed a year ago, this time the electric version, the electric three row suv. And so what he was telegraphing there is, yes,

we're going to bring that platform back because they had engineered the whole thing. We're going to bring that back

as an e REV. No.

Speaker 2: I did not hear that. That's very interesting, but you

know to your point that if you're towing, it really puts a strain on an e REV. This is why

the ram.

Speaker 5: What was the charger as the erev?

Speaker 2: What was the e rev? It's a V six. It's

not a little two leader or one and a half liter engine. It's a V six for the very reason

that you cite it. When when you're pulling heavy low

it's up a grade. You got to be able to

run that generator at.

Speaker 6: Itself like that was hardt. That was their criteria because

you could easily ask why wouldn't you have put a two liter in there and save some fuel, save weight, all those other things. Three six already packaged into that

vehicle kind of they've already got the thermal and it's all done and I think that that was the mindset.

Can we can we go Pike's peak and toe something and the engine can still drive the electric motor at the speed that we needed. I hate to say it,

I'm not an engineer, but that sounds like that was the criteria.

Speaker 2: Yeah. The other thing that's interesting about e revs is

because you are running them in a limited rev range, you can take a lot of cost out of the engine.

Absolutely do need turbo, you don't need to variable valve right, you can go to a far higher EGR for cleaner emissions, a whole bunch of things. So what I find interesting

about e revs is it's a real interesting merger of ICE and BEV technology. You need them both, and we're

way behind the Chinese when it comes to these e REV engines. I mean, who is it? Chang'an and was

it byd have the highest thermodynamic efficiency of any ice engines in the world and buy a wide margin too.

So I think the ice engineers are going to be busy not just retooling V eights for production, but figuring out how do we take cost and noise out of these EREV engines.

Speaker 6: Those angines are not going to have to go over two thousand and ir pm at any point in their lives.

There's been no reason to. So there all the electronics

are basically to keeping between seven hundred and seven to fifty and up to about eighteen hundred and anywhere in between.

And so you optimize the engine where you're able to do something like that.

Speaker 3: But again you said, this is still a small segment.

Speaker 4: So you know, I get back to this investment thing, and Farley said, new investments in ice, more efficient, in performance hybrids, and full electric vehicles are all on tap at forward. So Keith, of these three buckets, where do

you see them putting their their investments?

Speaker 5: So they already are, they've lowered their investments in evs substantially, like to the two to twelve billion dollars how much twelve one to two twelve billion, Yeah, and so they are they are trying to increase their investment in hybrids because hybrids are now you know, for them, I think about twenty percent of their business. I could be wrong,

fifteen to twenty. For Toyota, they're a huge part of

their business. Uh over fifty Yeah, but it is still

to Michael's point, it is still redundant powertrains. It's still

a more costly solution, so you're always going to get a higher return on investment with an internal combustion engine vehicle.

And that is clearly where the legacy Detroit automakers are moving money. I mean, including General Motors, who instead of

turning Lake Orient into an EV factory, is turning it into a pickup an SUV factory. That's where Detroit makes

its money, and that's where they're going to put the money down. That was just a matter of time. Yeah.

Speaker 3: So so Michael, I mean, do you see it.

Speaker 4: The play is to go forward on ice products and then supplemented with hybrid products, and then over here will be the evs and E revs.

Speaker 6: Yeah, I think what you're going to I mean, ice will still be here, but it is going to decline.

I think you're going to find more mild hybrids and more full hybrids are going to work the way into the equation. Customers are going to look for better fuel economy.

I don't think they're going to be clamoring for it, but they're gonna be looking for better fuel economy. I

mean fuel is still three or fifty four dollars a gallon and probably not going to change off that anytime soon.

So at that rate, you know, consumers is still gonna be looking for better fuel economy. So I don't think

that's going to go away. But I think you're right,

You're you're going to have kind of the ICE what we call multi energy, you know, ice and hybrid in one situation, and then the BEVs and the e revs in another situation. And and and because they're taking all

these BEV platforms and making sure, can we throw an engine in the front? Uh? And be honest, I've talked

to a couple of OMS, a brand new one, by the way, but a couple of OMS have basically said, yeah, that's a rework. I mean, that's a repackage and and

and that means a lot of costs. But I think

most OEMs kind of thought about this in advance, and they're saying to themselves, you know, we'll find a way to do it if we have to. And there are

there are a couple of new vehicles coming out there are definitely being engineered for both. Absolutely.

Speaker 5: I talked to Scott Keel, who is the head of SCOUT, the new electric vehicle line from Volkswagen, and you know, they got very far down their development path and then added E revs. And I said, did that delay you?

How much rework is that? And he characterized it as

and Michael, you would know better, as not that substantial ear work. They could use the same platforms. They could

add a small engine. They have a pickup truck. That's

that's a Rivian sized type pickup truck. Medium they and

they have an suv also kind of Rivian sized. And

and so they will be launching with both E revs and BEVs. And they didn't have to delay their launch.

They didn't have to delay the launch of the erevs.

He characterized it as simple as oversimplifying, but but as not as complex as you might think they had.

Speaker 6: They had a little bit more realistic to deal with.

I would say, uh, smaller let's call it c r CD platforms that are in the BEV space. Putting an

engine in front of one of those is a completely different story room, right, that a lot more room packaging.

It's all about packaging. Where do I put the fuel tank,

where do I put this? Where do I put that?

How do you package it all? And if you think

about it, sorry, but you've got this you were you have this battery that basically was completely under the vehicle, and now you've got to find a way to move exhaust and you're not going to put your fuel tank in the front. Nobody really does that anymore. So you

got to move your fuel tank's got to go in the back, and your exhaust as to going to back.

So now what do you put part of the battery in the tunnel and make some room for it. It

just it does turn into a little bit of a packaging nightmare. If you've got a bigger vehicle, you've got

some levers you can pull.

Speaker 4: So well, see I was just wondering, so Scout, I mean, so here's here's a new brand to the market basically right and coming out with with evs and eros. Okay,

so it's coming out with a product that is not going to be as appealing as it was when you got seventy five hundred bucks for buying one, and another type of technology that nobody really knows about.

Speaker 3: Right, So Scott Keyo sleeping well at night, John.

Speaker 2: No, because besides those technological and marketing challenges, he's going to have whopping lawsuits on his hands as he tries to sell these things direct, and dealers, especially Volkswagen dealers, go absolutely nuclear on for not using franchise dealers.

Speaker 5: He already has lawsuits. There's one in California, there's one

in Florida. From there will be at least fifty. Yeah, yeah, yeah, yeah.

That's going to be a huge challenge for them for sure.

Speaker 2: Look, you made your bed, now you've got to sleep in it. You know, the old saying they planned this

whole thing. They're building a multi billion dollar plant, They've

sourced this vehicle out, they have plans of how they're going to go forward on it all. They're going to

go forward and now whether it becomes a success or maybe the Volkswagen Group does step in and say, you know, Audi really needs some US manufacturing. Why don't we move

these Scouts aside and see how many Audis we can build.

I don't know, but you bet they're going to go through with it.

Speaker 5: I put Scouts new South Carolina plant and Ford's new Tennessee plant in the same boat. These were built at

the peak of the hype cycle, or conceived to be three hundred thousand unit you know, pure battery electric vehicle truck factories and turns out there isn't demand for that.

But they've already sunk the costs billions and billions of costs.

So they got to find a way to get some kind of return on that investment, and it won't be by producing exclusively battery electric vehicles.

Speaker 6: So what is what is it like exactly the capital it's the loss of economies of scale. If you were

going to build two hundred thousand of something, then you know, you divide by two hundred thousand for the development costs and all of that. But if you're only gonna build

fifty of something or seventy five of something and it's going to be choppy, that that is a different economic equation that. So you've got a variable costs and a

fixed cost situation they do that. Both aren't very very appealing,

and it's gonna be it's gonna be a long time until some of these projects can get you know, above water, let's put it that way.

Speaker 5: And everybody talks about well, okay, so add E revs to the line. Scout AVI or obviously already is doing

it that But as Michael was just saying, that's a nascent well, it's a non existent market in right now, So we have to educate consumers. So that's not going

to fill up the volume e revs. So what fills

up the volume?

Speaker 6: Right?

Speaker 2: I got a question for your Keith. So the Ford

model TeV is going into is it Lexington?

Speaker 5: We think it will go into Louisville.

Speaker 2: Oh, Louisvian. Excuse me Louisvill. Why is it going into

Louisville and not into that brand new plant?

Speaker 5: So excellent question, but I think it's I think it's the same essential size platform as an escape, and of course the escape is going to go away, and so I think it replaces that in the cycle plan. And

if you have a plant that was already building something with hard points that are essentially the same size, I bet the tear up is less. I don't know. Maybe

Michael could reflect on that. Think it fits in that plant.

Speaker 6: If you go backwards into plants, and that's kind of my specialty for good or for bad. You know KTP,

which is down the road truck France. I'll turn that

into English. Is massive, but then they work on three crew.

But for a long long time Louisville was the largest assembly plant at least with with one line in the United States, and in fact, in North America they made explorers there, they made rangers there. It was. It was

a real melting pot, it was. It was a very

productive plant. Escape was there built there for a long

long time and we moved from Kansas City over to Louisville.

But I agree, And there's gonna be a little bit of a hole in the portfolio there. Let's think about that.

So you started the portfolio, go Bronco Sport and then and then yeah, there's a Bronco, but you know, it's a little bit over to the side, is more you know, rough and tumble, rough and ready kind of off roading type, and you go all the way to an explorer and there's not in between. That. That's and I'm sure the

Ford management looks at that and says, we got to find a way to start filling in some of that space.

Speaker 2: Well, why would you drop Escape? And what's the Lincoln

the course air of course there?

Speaker 4: Yeah, I mean, don't they look at the Rev four which is biting at the heels of the F series for.

Speaker 5: Sale for leadership? Right? No, I think they make more

money off of Broncos Sport and a Broncos Sport and an Escape are the same size, and I think they want to ride the Bronco.

Speaker 3: But will they get the volume well?

Speaker 6: And then add to your Bronco, Sport comes out of Hermicio in Mexico, so exactly knows what's going to happen with tariffs and all of that respect. So again, I

think similar to what we're seeing, a lot of these a lot of these decisions were made a couple of years ago when there were many more nons. This is

very rumsfeld in there's no nons and unknown unknowns, and boy, we got a lot of unknown unknowns right now, unfortunately.

And it's so and we could always Monday morning quarterback and say, well, that wasn't such a good decision. But

I guess with everything that they knew at the time, this is the highest probability decision. So let's let's move

forward on this. And obviously what's with what happened in Washington,

the automotive industry is is really feeling it right now.

Speaker 5: Well, and they were all chasing Tesla back then. Chase

Tesla was the north star, and now, of course Tesla is a fading star and they're all chasing byd.

Speaker 4: But the American consumer is completely oblivise to BYD.

Speaker 3: There's there is no idea that there.

Speaker 4: Is such a doesn't exist there, right, right, So how does it matter?

Speaker 5: Well, because it will exist here someday. You know, you

can't hold back the tide forever, and eventually it'll make its way here, whether they have to build a plant in Mexico and ship them over the border or whatever.

BYD will get here as well. Well, I mean, Jeelie's

already here, right, So we are have Chinese evs in this market, the Evolvo, yeah right, but they're just not big sellers, so they will find their way in.

Speaker 6: I completely agree. What we've done is now as the

western OEMs lose volume in China and they kind of come run running back to either Europe or North America whatever their home market is, they obviously don't have as much demand diversification, but they're also they've also basically told the Chinese, well, we don't want you in North America and we're going to make it more difficult for you to be competitive in Europe unless you build here, just go and sell vehicles everywhere else. And so export markets

that we used to enjoy in places like Saudi Arabia and the Middle East, and in places like Africa, those are going to decline. I mean, look at what happened

to Thailand. I mean, the Chinese share growth is incredible.

I mean I remember when Toyota was forty percent of the market and it's not that way anymore. So anybody

thinks that this will be a slow path I think has to pinch themselves. It's not going to be. And

to your point, the Chinese are going to get and I call it as one big melting pot. There's gonna

be a lot of consolidation. There's gonna be four or

five players that really do well, and they're gonna basically sit on the doorstep and say we're ready, and we've got all this scale and we control all these other things, and in some way sayer form, we're gonna have to find a way to work with them in this market.

Speaker 5: It's just and that's what Farley was saying last night, that they are not trying to be competitive against the global electric vehicle makers. They're trying to be competitive specifically

with the Chinese. That's it. That's that's their bogie.

Speaker 2: Yeah, Well, they're at the top of the list, right or the head of the class. I mean, as I've

said before, there's some crummy Chinese companies, but the best of them are the best in the world.

Speaker 4: So so Michael, I question, you know, part of the whole tariff thing is to bring manufacturing back to the United States. How expensive is it for a car company

to bring something well back?

Speaker 6: Well, if you can find the tooling, which again I would say, the US has some labor issues in terms of availability of lower cost semi skilled labor, that kind of thing. We really have a tooling problem. And I've

got a good friend who brought this up years ago, and now I completely agree with what he's saying. We've

got a massive tooling problem. We could say we want

to move this vehicle from Mexico into a plant in Michigan. Well,

that's all great, but guess what a lot of the hard tools and we got to get a lot of that from China. So we actually asking China to help

us CO locate more production here. It's not the situation

we should be in, and that is not an easy pix.

So I say, to answer your question, the tooling is part of it. I would also submit we've heard out

of a couple of wims that fifteen percent is kind of that teeter totter. If we're at fifteen percent tariff,

we might stay where we are, and if we're above, oh gosh, that gets a little bit difficult. I'm going

to have to start to co locate. So and again,

that's not a hard and fast rule, but that's kind of a loose one that we've heard out in the industry, and that's probably one of the reasons why we're hearing about ten and fifteen percent. That seems to be something

that will drive longer term behaviors, not right away. I'm

going to shut this plant down tomorrow and move everything tomorrow.

I think the industry still basically adheres to the longer term.

Let's get the program to pay for itself, and then when we need to resource it, we're really going to think about what we're going to do.

Speaker 2: So, Gary, we're at the top of the hour, just about you want to recap.

Speaker 4: Yeah, I want Keith to tell me what the what Ford is going to be in five years.

Speaker 5: Yeah. I think they will be still a ice driven

in tonal combustion engine driven truck and SHUV company, and the F series will continue to be the profit driver for that total company as they lean more into the commmercial vehicle business. And that's another thing Farley said last night.

They're going to put more investment in commercial vehicles because they're getting such a good return and that's where they're seeing the recurring revenue with the software service business. So

as you go more into commercial, that means more trucks, more vans, more SUV's.

Speaker 4: So the normal consumer is not going to be getting as much from the Ford mortar company as.

Speaker 5: They have in history. They practically get nothing in Europe anymore. Right,

Ford used to be like the manager's car was the company car, you know, the Mondeo, Right, it used to be a big car car, passenger car company. It's mostly

commercial in Europe. Now. I don't think it'll be mostly

commercial here, but I think commercial will be much larger than it has been for them.

Speaker 2: Michael, your recap?

Speaker 6: What do you think? John? I remember when we used

to do this, when it was more at like six or seven at night, and we used to bring beer inside.

Speaker 2: I know we needn't bring a beer.

Speaker 6: In again, and you're probably thinking, how did you drive home?

We only had one or two and my wife some way.

Sometimes we'll make cookies. Yea, yeah, we have to return

to that.

Speaker 2: I like that idea.

Speaker 6: Actually, my recap is I would say that given everything that's going on, there's still a lot of uncertainty. They're

getting a little bit more now that the OBBBA has been signed in in law, at least we know what we're dealing with, But on the on the tariff side, it's still a lot of insecurity out there, and profitability is still going to be pretty sketchy for the next couple of quarters until this kind of settles down. And

I think that this is going to be much like what we said, there's going to be a low technology turnover region for a number of years, and get ready, we're going to have longer life cycles, lower technology turnover.

Maybe more design changes to make cars look better, but those will be cheaper to do than a full platform redo, and more electronics, maybe to add some content and consumer features.

But it's it's it's it's a different world that we're going to be living in for the next five to six years for sure, Gary your.

Speaker 4: Recap, I'm just dwelling on what he just said about basically, the US becomes the technology backwater, and I mean.

Speaker 6: Think about we used to say China are old and tired platforms. I'm not sure we're going to get quite

to that point, but you know, I remember someone said, we packaged up the old an old rover and we send it over to China because they wanted to build it.

I don't think we're going to get to that point, but I think we're going to start losing that technology raise, not so much with Europe, but definitely with China, and the differences between our regions are going to grow. And

I don't like the idea of that occurring. I really don't.

Speaker 3: What do you think?

Speaker 2: My recap is all this week and a little bit of last week, we've been reporting on Automaker's second quarter earnings without fail all of their earnings plummeted, plummeted, without fail, every single one. And I think the second half of

the year is going to be worse. That's my recap I.

Speaker 6: Think look forward to I'll disagree with you.

Speaker 2: Yeah, I mean, I hate you know we're talking gloom and doom here, but I think one of the reasons our audience watches is they know they're going to get it straight from us. We're not going to gloss over things.

Speaker 5: Well, I think to your point, though tariffs they're supposed to be promoting the American aud auto industry, is making it poorer and less profitable.

Speaker 2: And I think we'll see net of everything, fewer automotive jobs, manufacturing jobs.

Speaker 4: Yeah, so well we we go for another half hour on this. But I mean, I mean, you know, as

I said earlier, wasn't it to bring back manufacturing to the United States?

Speaker 3: And I would assume that would mean more jobs.

Speaker 5: But when guy say, if you're trying to move jobs from Mexico to the United States, what you're going to do is increase robot sales.

Speaker 6: Yes, that's right, from companies that may not be based in the United States.

Speaker 2: Well, anyway, with that, we're going to wrap it up.

I want to thank all of you for having tuned in Speaker 1: Auto Line after Ours is brought to you by Bridgestone Tires Solutions for your journey

AAH #753 - The U.S. Pivots From BEV to ICE

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