Ford targets ‘meaningful changes’ in cost and quality -CFO

(Reuters) – Ford Motor (NYSE:) Co is intensely focused on reducing costs across the business, from commodities, labor and warranties to the design of its third-generation electric vehicles, a top executive said Thursday.

“We’re focused on making meaningful changes in cost and quality” over the next year or two, Chief Financial Officer John Lawler told a Barclays conference.

Earlier, Ford pegged the cost of a new UAW labor deal at $8.8 billion and said it would work to offset that by cutting costs elsewhere.

Lawler said Ford aimed to reduce the complexity of future vehicle designs and cut the number of hours required to build those vehicles.

“We see opportunities in automation” in Ford assembly plants to help lower production costs, he said.

He said the automaker still has “a lot of work to do” on trimming warranty costs, but said commodity costs for electric vehicles continue to come down.

Lawler said higher production volumes, smaller batteries and “optimized designs” will help reduce the cost of its second-generation electric vehicles due at mid-decade.

Toward the end of the decade, Ford’s third-generation EVs will mark a “step change” in further cost reduction efforts, he added.

The company sees continued “robust demand” in its Ford Pro commercial vehicles, with orders “beyond our current production capacity” to immediately fill, Lawler said.

Ford expects additional “pricing compression” next year in its combustion-engine vehicles, as well as continued pressure to shrink premium prices on EVs. Over time, EV prices will converge with those of gasoline vehicles, he said.