Ford Motor Company (F) Earnings Call Transcript & Summary

Thanks, Ken. That's great. And just a reminder for everyone, you can shoot a question over there in the question box, and we'll try to get those answered after more from Chris and I. Ken, I wanted to talk to you a little bit about electrical architecture. It's been sort of an emerging theme at the conference over the past couple of days, speaking with Aptiv and with Conti. Aptiv obviously has their SVA, the Smart Vehicle Architecture, designed to sort of consolidate the multi-domain controllers in the vehicle. So I was wondering if you could talk a little bit about Ford's approach to that? And if you're familiar with Aptiv or Conti's program, just give some thoughts on their designs and their thoughts about how the future electrical architecture of the vehicle will look.

Well, first, let me say that it's pretty -- there are quite a few companies that are all looking to rethink the electrical architecture of the vehicle platform because of the times we live in. And Ford is no exception. I mean we're really leaning forward to design a next-gen electrical architecture that'll allow us to deliver more features and experiences to our customer. And at the heart of that design is to centralize the compute from the edge points, as I mentioned earlier, to a centralized high-performance compute cluster. And that high-performance compute cluster will allow us to do things like compute the processed images and sensing data from multiple sources so that we can deliver new experiences. Secondly, we'll have a shared memory module, zonal power and an AI software platform. And the first set of vehicles that already have the benefit of some of this thinking are -- is the F-150 and the Mach-E and the Bronco 2- and 4-door. So if you just take those 4 vehicles, we're going to start seeing lots of information and data at high scale because of the scale. And that's going to feed back to help us improve our designs and improve how we could deliver new services to our customers. But within the electrical architecture itself, we're really focused on creating that platform that sits under the water in that iceberg model I talked about so that we can deliver these kind of new services to our customers and over the -- deliver it over the air and create new experiences.

Right. Makes sense. Look, when we think about the emerging trends of EV and ADAS and as we move towards higher levels of autonomy, can you talk to us a little bit about some of the synergies that are available when you combine those ADAS levels with an EV like the Mach-E that maybe aren't available or are improved in an EV versus an internal combustion engine?

Well, it's clear that, that an electric vehicle has a real simplicity about it that is -- that doesn't apply to an ICE vehicle. But what's really neat about the scale of Ford is that we're able to see and leverage the places where the 2 are similar, and it turns out there are quite a few parts of the electrical architecture that are common between an ICE and a BEV. So the IVI stack, for example, is not any different. The fact that you can merge and share memory from multiple sensors is not any different. The zonal power strategy that we'll take is -- only has one relatively minor difference having to do with the power to be distributed to the propulsion and the sustainability modules. So the AI software platform would be the same. So we want to be able to innovate on a software platform that can take the data and then put it in -- use it in a machine learning module to do something interesting and clever. So there's actually a lot of sharing that can happen across ICE platforms and BEV platforms, and we're going to leverage that to create advantages of scale as we approach the development of our next-gen electrical architecture. So it's a bit -- it's an interesting paradox, though. So while there's a lot of commonality, it's -- there's still an advantage for us to really focus on the commercial BEV that we have in our plans to be the first platform to experience this next-gen electrical architecture in this new tech stack. So we kind of have both of those things going for us. The power of scale, but also the ability to focus on the simplicity of a BEV commercial vehicle for our first instance.

Ken, this is Chris. When we think about that next-gen commercial BEV and electrical architecture, can you just -- could you frame how far we're going? Because obviously, there's a wide spectrum, right? We could have a premium vehicle that has 150 ECUs. And I think everyone knows about how far it you can go down with Tesla under tenant. It seems like the auto industry doesn't want to go that far that quick, but we're clearly moving towards more zonal controllers. Could you give like an idea about how far down the line of ECU consolidation and zonal control you'll do in the next couple of years, 5 years? Because obviously, maybe over the next 10, that's when we'll go to more sort of vehicle-level OSs.

Yes. So -- and we're kind of -- we're really looking today at the next, say, 4 to 5 years. So we're targeting 2025, '26 for the next-gen tech stack to come to market on this new commercial BEV platform. In that time frame, we think we can go pretty far in terms of consolidation. We haven't finalized the whole -- the entire design, but we're pretty confident that we can get down to a small number -- single-digit number of central modules for doing the compute and likely to be in the 2 to 4 range. So we think we can go pretty far. However, the compute chip industry continues to innovate. Moore's Law is -- you know the famous saying, "Moore's Law is dead. Long live Moore's Law." We continue to see innovation in the compute chip arena where new SoCs and new logic is being innovated every day. And so over the next 10 years, you can imagine that we'll be able to even go further in terms of that module consolidation. But we've got our focus really on the next 4 to 5 years at the moment, and we think we can get down to 2 to 4 modules with respect to the compute stack and then shared memory across all of the modules. So that's what we see in the next, say, 4 to 5 years.

Okay. This is John again. Last question from us before we kick it over to some of the audience Q&A. We spoke earlier about partnerships, and we want to talk to you about Ford's closest partnership, which is Argo AI and Ford's AV LLC. Understand that those are not under your purview today, but what we really want to focus on is knowledge sharing. So how is Ford thinking about sharing the learnings between those groups? And if you could focus the discussion around data, this is an area where Ford should have some good overlap between the 2 programs.

Yes. That's a really important question because the retail and commercial vehicles that we sell will have much more scale in volume than the Argo SDS vehicles. And so one of the things we're working on is we're trying to work out how would we take the insights from connected car data that will be in the field from retail and commercial customers and then leverage the insight of that to help the Argo SDS Level 4 vehicles be more effective. We don't have all that worked out yet, but it is something we're thinking about very deeply. On the Argo front, they're -- they -- an AV -- a Level 4 AV, what is really differentiated between a Level 4 AV and a retail or a commercial vehicle is the amount of data that a Level 4 AV collects and gathers is massive. And Argo has built a closed-loop data ecosystem, where they bring key insights from the LiDAR point cloud to each Level 4 AV that's being operated on the streets, brings back to the vehicle, gets processed and then gets brought back to the Argo engineering team so they can continue to improve the Level 4 AV SDS. So they have a pretty carefully architected technology stack for taking advantage of the massive amounts of data that an AV collects because of the LiDAR point cloud and the array of high-def cameras as well as the radars that they use. So I won't go into the details of how their stack works, it's not really my place to do that. But I am aware, because I sit as an observer on their Board, that they have a very, very effective closed-loop data ecosystem that has -- that enables their SDS to benefit from continuous learning and for perception as well as for navigation. So learning between the 2 is something we're still working out because we think we could advantage both of those by having that kind of a solution. So more to come on that.

Perfect. And I'll -- we've got a bunch of questions here, so I'll try to combine a couple. Do maps have a role in sensor fusion in Level 2 to Level 4? And is there a current time line in place for moving to Level 4 automation from Argo testing to self-driving delivery vehicles?

So the Argo forward plan is to bring the Level 4 solution to a -- both a people-moving and a goods-moving service in the 2023 time frame. Details of that we haven't communicated, but we're going to be in -- operating in multiple cities, including Miami; Austin; Washington, D.C.; Pittsburgh; Detroit; and Palo Alto. So that -- those are the cities we're testing in today, that Argo's testing in. And we think -- well, we know, this is the largest demographic footprint of any AV developer. And it's going to allow us to go to market in 2023 with a self-driving service for both people and goods in the '23 time frame with confidence.

And how do outside influences like smart cities, or 5G, sharing information between vehicles, V2X, communicating across the ecosystem play into your strategy?

So right now, that's not part of the Argo strategy, but it is part of the broader Ford strategy. So we really believe that 5G and cellular V2X will be key technology enablers for future smart vehicles, including advanced driver assist technologies. It'll allow us to do Level 3 driving with more confidence in more places, including in urban environments. This is why we've made the central -- the Michigan Central Station investment and the Corktown investment. Our vision there is to have a mobility corridor that spans from Ann Arbor through Dearborn into Corktown, which is in Downtown Detroit, to be the development showcase for developing smart vehicles in a smart world, where we can have 5G communications between vehicles and the infrastructure as well as cellular V2X communication amongst vehicles and the city streets. That's not in place today, but we know it's coming. In fact, you can see signals of that in China, where there are some early prototypes. We've done some early prototyping in China as well. So we know it's coming, and we're going to be an active player in that space. Look, we just showed an example of that in Detroit where we worked in partnership with Bedrock and Bosch, where we had a smart infrastructure in the -- in a garage with -- equipped with LiDAR sensors. And then we had intelligence in the vehicle, and the vehicle talked to the sensor and the garage talked to the vehicle and allowed the vehicle to do a valet parking demonstration with the person holding a cellphone telling the vehicle to go park itself. This is a glimpse of the future, where people will be able to do valet parking at -- just by using their smartphone, but they'll also be able to do smart driving in an urban environment as well as on the highway as we're planning today. So 5G is going to be a hugely important part of that as well as cellular V2X. And by the way, since I -- while I'm answering this question, let me mention that cellular V2X is -- we've been really leaders in that space. We are the first auto company to plan to launch cellular V2X on our vehicles in 2022, and we've been active players in prototyping and confirming that the technology is superior to DSRC. So we're really excited about cellular V2X and that being a stepping stone to 5G.

Okay. Great. That was a great answer. And then incorporating all of these systems within the instrument cluster, is that a key focus for Ford in terms of sustainability going forward?

Yes. So the instrument cluster and the infotainment stack is the first place we're going to see a lot of these customer experiences and innovations come to life. We're partnering with major technology companies. We've got a pretty exciting partnership that -- we haven't announced it yet, but stay tuned. We'll be communicating that before too long. But this partnership is going to allow us to bring industry-leading and differentiating experience to our IVI stack and our infotainment stack in the 2023 time frame. This is going to be a really important stepping stone to the 2025-'26 next-gen tech stack I spoke about earlier. So this is going to get a lot of our attention in the next 2 years to bring that to our retail and commercial customers. So excited -- it's going to be an exciting few years.

Ken, I think we have time for one more. Selfishly, I'm going to take it for myself. One of the things we heard about yesterday, which maybe think of you and maybe think of Ford, one of the LiDAR companies that came on talked about the exciting opportunities in last-mile delivery. We've seen some of the press releases about Ford working on things like delivery bots, delivery drones. Can you talk a little bit about this whole idea of mobility as -- from the software side to right to the door? How much -- how broad does Ford want to go when we think about these future opportunities?

Well, it's a great last question because it gives me the opportunity to talk about the fact that we -- at Ford, we are committed to working both in the now, the near and the far in parallel. And we believe that in the future, there will be end-to-end solutions like this that are mature, where you can make, as I said earlier, commercial customer, make every minute count. So robotic delivery is something we believe will be in the future. Today, it's in its infancy, but that's why we have to work on technology today with partners and push to mature that technology so that it will be ready, and we will be ready to receive it and integrate it in solutions for our customers. So I know that you've seen our partnership with Agility Robotics, where we've taken delivery of the first 2 next-gen digit robots. This is a bipedal robot that actually we used in a demonstration to take a package out of a Ford van and walk to a doorstep and deliver the package. This is not production yet, but this simple demonstration that we had at CES last year gives you a glimpse that this future is coming. And so we're also working with a number of other robotic companies as well as universities and other strategic partners. We will be the anchor tenants of a new research facility at the University of Michigan opening this fall, called the Ford Motor Company Robotics Building on the University of Michigan campus. This is a really exciting partnership we have with the University of Michigan. We'll use that facility and our partnership with the University of Michigan to help us accelerate the development of next-gen technologies like advanced robotics, drone technologies, bipedal robots, rolling robots. So all of this is coming, and we're right in the middle of that mix, working in the far in parallel to working in the now and the near to deliver products today as well as develop the possibilities for tomorrow. So thanks for that question.

All right. With that, I think we'll wrap it up here. Thank you very much to Ken and to the whole team at Ford. I think that was a great conversation. And thanks to everyone for attending.

Thank you.