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00:00We're joined by Martin Zander, he is general manager for Ford Model E Europe. His task is to transition for its operations in Europe to passenger vehicle to electrification. It seems that everybody is in agreement that these are the future. Your small task is to figure out how exactly to make that happen. Talk to me about what's happening in this space, in this factory right now. Here we are in our factory in Cologne. And what you see around us is a factory that's being transformed by an investment of 2 billion dollars to one of the most modern plants for a battery electric vehicle. So this is the first plant in Europe. We're going to build a battery electric passenger if it's performed. And this has been here since 1930. So there's been a lot of change essentially on time, a lot of the speech to say that this is the biggest moment of transition. It really is, because in terms of the technology we're using, in terms of customer expectations, everything is changing. But it's also extremely exciting because you basically can build a new business plan, plants by 20, 30 to 100 percent of all passenger vehicles and European Battery Electric. And by 2035, all our product range for Ford in Europe will be battery electric. And not only that, but also our whole industrial footprint will be carbon neutral by 2035. You can imagine a huge amount of investment and change has to go in to make the plant the logistics and supply us to take everything, everyone along on this journey. It's expensive. It's complicated. There's a lot that goes into it. What do you focus right now on cracking in this transitional period at this point in time? FTSE It's a huge transition. It's a huge investment. It's a huge project to turn traditional car company, traditional production side into a very modern production side and getting the whole team on board and making the whole team aware of the of the changes, building the confidence in what the company can actually achieve in these exciting times. That I think is a big task and a great challenge. And these exciting times, also challenging times in some ways. You know, inflation has been the moment, the word of the moment for a while now. A lot of the inputs and the issues going on there as we shift into the electric into an electric world where there are some ways in which we're much more sensitive to very specific inputs, namely batteries and chips. How do you insulate yourself to those kinds of vulnerabilities? In general, when it comes to semiconductors, we see the challenges of the last. Yes, yes. So supply is clearly picking up. That comes to the overall resources. I think we need to have a solid club. You need to have a clear plan on where we want to go in terms of product line up, in terms of production, and then make sure that we understand the overall supply chain and lock in all the contracts and make sure that we have supply to all the materials we need. We need to put our growth plan into into action. And on the subject of inflation, where do you see costs still being pushed up and where do you feel that it's gotten better? It sounds like chips, it's improved somewhat. Is that across the board or are there still places where there's some persistent issues with cost? In general, we see costs coming down, maybe not to the normal levels. Also, energy costs, of course, still higher than a couple of years ago. But overall, we see the cost pressure coming back from the challenges we seen maybe half a year ago. What about batteries, the cost of batteries? I know that this has been something that everyone's trying to get batteries. The entire world is trying to reorient its entire energy system. What is the challenge for getting batteries and making sure that that pricing doesn't get out of control? Of course, having the supply for batteries and the pricing under control is extremely important as the battery is such a large part of the overall value of a battery electric vehicle. But again, it comes down to sort of planning, you know, to have a clear vision. We want to go about what we can achieve as a brand and then have a long term perspective. And a long term horizon becomes the building, the capacity, the supply chain, supply chain with our partners. And that is what we are doing. And I think this is I am I can be very confident that we've got everything lined up and everything secured in terms of sourcing and supply. We need to put our growth plan into action. And Schultz right now is in Chile. You know, in part an effort to kind of source lithium in some of these rare earths. Do you think that the that Europe and the United States have done enough to secure their lines to these sorts of things? Is there is that fear of an overdependence on China for this something that comes into your thinking at all? I think all the talks are all the activities you see at the moment are going in the right direction. I think everyone understands how important the supply of raw materials as part of this overall transition is. And this is why I feel confident that the right things are being done. But most important is what we are doing. We as a company, we have many opportunities to do what is necessary to lock in the contracts and make sure that we have availability, what we need. And in terms of all these cost pressures, we're talking about what you're what you're doing here. We were in Mercedes not long ago. It's a different you know, they're making mailbox is a different thing. You're trying to crack the market for the mass vehicle. This is what's required for a transition to zero emissions with some of these input costs coming up. Are you confident you'll be able to crack that night? And what do you see for profitability and kind of in the shorter term overall? Of course, we have to deal with inflation and with price changes. But this almost daily business. This is what we have to this is what we have to manage in the long run. I don't see issues. Another thing that we'll be discussing is labor, right? Labor. We know that. I think the CEO of Ford said that, you know, it takes about 40 percent of the people to produce these combustion engines. This is one of the realities of this. There have been reports of job cuts here in Germany for Ford. Is that something that you that will happen? Will there be job cuts this year? So as I said, already, we're in the middle of a huge transition. Everything is changing in our industry. We as individuals, we have to change, of course. Also, our organization has to change that. We are in talks with Iraq's council about activities, but I can't get more into right now. Once you've got a decision and concrete plans, we're going to share those. Of course, in terms of the skills, though, that's safer for labor. That's just changing in the workforce. What are some of the skills are no longer relevant. What skills are you now looking for in that that labor base that you don't think you're not NASA finding? Of course, people who are skilled in terms of battery technology drive hard, drive train technology software. It's gonna be a huge part of the way we are creating value in the future digital business. These are the areas which normally have not been really the core of the car business. And this is where we have to build muscles. And this is where we have to build competencies in the company. That's what we're in the process of doing. You're a very unique position in American car company producing cars here in Europe. The United States has gone very big with the Inflation Reduction Act. There's been a lot of discussion in Europe about what it needs to do in order to counter that or get under the umbrella. What does Europe need to do? Is it you need to do in order to remain a viable place to produce cars and competitive? Well, I think the most important thing is not to react to anything what's going on in the world or anything, but have a European comprehensive scheme to support this massive transition, because we need investments everywhere in charging infrastructure, in production of electric vehicles, in production of the components, all the way down to the processing of raw materials. And I think we need a comprehensive a really comprehensive scheme of regulations to support this transition across many businesses and industries within Europe. And do you think the government and the EU and Germany are listening to what what you need is as an auto manufacturer? You know, we have very good conversations with the policymakers in Germany, in Europe. They're clearly listening. But I think there is still a way to go to come to this really comprehensive European plan. And one of the other kind of many shocks that we've been discussing you alluded to earlier is energy, right? The cost of energy. It seems that the fear for gas rationing, blackouts, all that sort of stuff has now receded. Have you dialed back some of the emergency measures in terms of energy consumption? Yes, we are clearly not in an emergency state. I mean, we have to make sure that we are as efficient as possible. The other part of this is, of course, building a new factory, which is overall much more energy efficient than the machine she needed to be used to have in the past. And of course, we're looking into other opportunities like putting solar panels wherever it is possible in order to bring our cost base down. And in terms of energy, do you think that, you know, these prices have remained elevated? Obviously, they're not as bad as they were, but they've remained. Do you think that that changes fundamentally kind of the longer term view of manufacturing in Europe? Obviously, in Germany, it was based on, you know, cheap Russian gas, as we know. Does that alter your long term thinking? Does it make it more attractive to be somewhere else, like, say, Spain, where you have huge renewable capacity and potential in the long run? I don't see why Germany should be disadvantaged, because there are certain things we have to change things about whether a country has to. But I think it's all possible. That's all possible within a couple of months to provide the energy, the competitive prices that it is needed so long in the long run, I don't see a disadvantage in terms of the market opportunity here in Europe and the demand for electric vehicles. How how is that looking? What is your what are your expectations for that in the coming years? So first of all, so far we've always seen much more demand than we could supply our first better battery electric vehicle we have in the mass market the Mustang. The biggest problem is that we couldn't get enough. We have still long lead times and we still see strong demand for electric vehicles. Electric vehicle market is a rapidly growing market. In my view, for a very simple reason, the battery electric vehicle is just a better product in terms of instant acceleration, in terms of the the quietness noise level, no vibration. It's just the better product. And this is why I really firmly believe in a rapid growth of the market going forward. And then you have another in another facility and Czar Louis, which is set to end production in 2025. I mean, I know there's been a lot of discussions about potential acquisitions and negotiations around that. What's the update on that institution and also what is what is the ideal outcome for that facility? So first of all, it's important to note that at the moment we've got a great team in the Louis building default focus and we are planning to continue production of the Ford Focus until 2025. And we are in conversations with many interested parties to make, make, make an investment inside the car industry, other industries. And that's all I can say about that at the moment.

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Ford Europe EV Boss Says Costs Coming Down

The auto industry is in the midst of a historical shift towards electrification. Ford is front and center as it transitions from building combustion engine cars to EVs. Ford's General Manager Martin Sander sat down with Bloomberg's Oliver Crook at the car makers' factory in Cologne. (Source: Bloomberg)