Chapter 1: What are the latest trends in the carmaker industry?
Bloomberg Audio Studios, podcasts, radio, news. I want to welcome our Bloomberg television and Bloomberg radio audiences to Michigan Central Station here in Detroit. I'm sitting down with Jim Farley, the CEO of Ford, as well as Laurent Mechies, who runs the Red Bull racing team. It's a pleasure, gentlemen. I'm very excited as a fan of the brand and the league.
And let me start, Laurent, with you, because you've said... that this is the steepest hill F1 has ever had to climb. New regulations this year are sweeping. It's not just a tweak here and there. And you're starting with a brand new partner with Ford who is gonna build the engine with you as a collaboration. Why choose Ford as a partner?
You know, at first, you're right. It's the biggest regulation change probably in the history of Formula One, at least in the modern history of Formula One. And it's also on that very same year that we chose the, let me say, crazy challenge to go and build our own power unit. And if you do that, you want to partner with the best.
And we are in a lucky position where we have managed to strike this strategic technical partnership with Ford. in this crazy adventure of building from absolutely zero our own power unit, and we go together in these new regulations.
Jim, for you, this must be exciting because you've built, honestly, a new legacy for Ford in terms of racing. I mean, on the one hand, you've got the new industrialized America here. On the other hand, you're going back to Le Mans. with a hypercar in a couple of years, you're essentially doing DFV 2.0, right? This is like the Cosworth of old.
When you're talking to Bill Ford, when you're talking to the shareholders, how do you justify this spend and this drive to go racing?
Well, a couple things. First of all, the tech transfer, this sport that Laurent leads, this team that Laurent leads, you know, leader in aerodynamics, predictive failure components and software control of the hybrid system, high discharge batteries. These are all core capabilities that we need for the next five to ten years as a company.
So the tech transfer is very relevant for us, like maybe four valves or overhead cams were in the 60s. But the tech transfer is totally different today.
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Chapter 2: How is Ford collaborating with Red Bull Racing on new technologies?
Formula One is a complete digital sport. And that's where we're going as a company, number one. Number two is racing, especially in the off-road world, gives us credibility for customers that the product they buy has real capability that's been tested in a way that a brand who doesn't race can't say.
and that's what Porsche and Ferrari knew for a long time, especially for us in the off-road world. This is really important. Racing is a fundamental part of our company's business because To beat all the great off-road brands and to establish ourselves. Now we're 2X Jeep sales in the U.S. To keep that going and keep growing the off-road brand.
Off-road racing in Dakar, Baja is where our customers will say, hey, that Ford has the real deal. It's the real deal. It's not a poser product. So racing is integral into our credibility as a company.
And you've obviously got a deep, rich history there and you're bringing your software and battery technology, those capabilities, to Red Bull Racing. But for you, Laurent, this is a whole new thing, right? Building the engine. I know you're getting a lot of help from Ford. What are they helping you with on the fuel side?
Look, they've been helping us on many different topics, and that list of topics is expanding every day. But let me give you a couple of practical examples. James' team have unique advanced manufacturing capabilities that we use to produce some of the most critical parts of our engine. And not only are they able to...
manufacture this part for us, but also they do it in less time than we would do otherwise. And that gives us a crucial, you know, our business is a time to market business.
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Chapter 3: What challenges does Formula One face with new regulations?
We call it a time to raise business. And when we are able to manufacture complex components in a short amount of time at this incredible level of quality that we are looking for, that's a key competitive advantage.
especially since I think you've said you gave up some time focused on last year's car, so you're in a hurry to make sure that this year, this new car, when Max gets in it in Bahrain, right, that it's a winner and not a learning moment. How do you make sure that you're winning straight out of the gate?
You will have to bear with us a little bit. The scale of the challenge is monumental. We have started to design and build these engines in what was a field. We've made the factory, we've bought the dyno, we've put together an unbelievable group of people and group of partners such as Jim and his team.
It will be foolish and naive to think that from the first day you are going to be at the same level than people that have been doing it for 90 years. So bear with us. It will give us a few sleepless nights. It will give us a few headaches. We feel we have the right people, the right tools, the right spirit.
across what Red Bull means and what Ford means will eventually come out of top, but the first few months will certainly be full of learnings.
Jim, what can you bring back from this, I guess, laboratory, if you will, to the Ford customer here in America? Because yesterday we saw figures from the Bureau of Labor and Statistics that showed prices for the average passenger car, not Ford, but across the industry, are up more than $500. Prices for the average truck across the industry are up more than $1,000.
What can you bring back that puts value into those price increases?
Well, Matt, I think Laurent said it really well. If there was a initial premise of what those transfer technologies would be to help the company, but what we're learning working with him over the last several years is actually that list is growing and it's more diverse than we thought. Of course, we thought it was aero and high discharge batteries for performance hybrids.
Well, now it turns out performance hybrids are really important for the company. 25% of F-150 is now hybrid sales. People are buying it because of Pro Power on board, not just because of the efficiency.
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Chapter 4: Why is racing important for Ford's brand credibility?
Laurent, the President of the United States was with Jim a couple of days ago here touring their plants. As the U.S. turns more inward, it's interesting that you're participating in this sort of global sport, right? We've just learned of new visa restrictions on people from many nations, including Brazil. Do you find it harder to get people in to Miami, to Las Vegas, to Austin?
I know there have been problems already holding up gear at the border.
Really, you know, it's not an issue today. We are a global sport, as you have said. We are enjoying racing in pretty much every part of the world, or nearly every part of the world. We have incredible logistic capabilities, which is also something that we are brainstorming and exchanging with Jim and his team.
And these teams, together with the help of Formula One, makes it very, very smooth to go around. And we back-to-back races from... the U.S. to the opposite side of the globe without any issues. So, you know, it's a privilege that the sport have as a global sport to be able to move around very freely.
Jim, how are your discussions with President Trump? I know that you have pointed out in the past that The tariffs, as they're set up now, as they're designed, put you at a disadvantage to somebody, even an American auto manufacturer that produces in South Korea or Japan. I know you're going to meet with Jameson Greer tomorrow in the great state of Ohio.
Have you had a chance to talk with the president? Have you made any progress in getting maybe carve-outs?
We're really encouraged. I mean, look, Ford is the most American car company. We produce the most, most hourly workers. We export the most. And so the administration's been great to work with. They always answer the phone. But there is a long list of things we've got to work through. I think we've made progress on mitigating some of the tariffs, but we have more work to do.
For us, we have a high exposure to aluminum, for example. The EPA changes are really welcome, frankly. And we're seeing that play out really in our business. Part of the reasons why our valuation is increasing is because people understand we can build more profitable vehicles now.
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Chapter 5: How does Ford plan to leverage technology from racing?
And that's more employment in the U.S. But there's a long list. We got the USMCA coming up. Very important negotiation for Ford. We need to change USMCA. But we built our entire vehicle business recently. as an industry between Canada, Mexico, and the US. We have to get this revised, but it'll be very important. I think continue to work with the administration on tariffs. How we handle the China.
If you look at what's happening in Europe right now, in the UK, the Chinese are now quickly almost 10% of the marketplace, and electric cars even higher. They pose a lot of threat to labor locally. They have huge subsidies from the government that they're exporting. As a country, we need to decide what is a fair playing field from a cost. How do we handle these vehicles?
If we're scared of a balloon, you can imagine a car with 10 cameras that can drive itself. You know, these are incredibly sophisticated technologies. And when we deploy that in China, it has to be approved by their defense department because, you know, those vehicles can be guided into all sorts of things. Well, we need the same.
You know, we have a good starting point for that philosophy of the ITC of the vehicle, the digital footprint. Now we have to, you know, make sense of that for the China. I know that the president talked about that during his visit at the Economic Club. How do we handle Chinese cars? Now, his personal opinion was we should let them into the U.S., but maybe.
You know, I think we need to work through that as a company and as a country. I think there's always a lot of big topics for the car industry because it's so important for our country.
Well, we'll be covering all of those here in Detroit with you, Jim, and you, Laurent. Thank you so much for joining us.
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