And puts it into electric vehicles, trucks, and SUVs.
Ford’s new CEO Jim Hackett wants the automaker to be “fitter.” To Hackett, and the rest of the Ford’s senior leadership, that means slashing costs by $14 billion by investing less in manufacturing cars and putting more money into electric vehicles, trucks, and SUVs.
Hackett, along with several senior executives, outlined a new strategy for Ford on Tuesday that is aimed at making the automaker more competitive and profitable. Hackett, who took over as CEO in May, shared more than a handful priorities to reshape the company.
Some of them we’ve heard before. Hackett touched on these plans with Fortune’s Adam Lashinsky last month. But today, Hackett and other executives put some numbers behind their once nebulous vision for the future.
1. Cut Costs
Ford will slash costs by $14 billion in five years. The company will target $4 billion in product engineering and $10 billion in material costs. Ford says it can reduce engineering costs from planned levels by increasing use of common parts across its full line of vehicles, reducing the number of possible option combinations customers can order, and building fewer prototypes.
2. Shifting Money to The Money Makers
The Ford F-Series has been a dependable profit maker for Ford (F, +2.48%) , particularly in the U.S. where it has been the best-selling vehicle for more than three decades. Meanwhile, the appetite for crossover SUVs is strong.
So, Ford is taking $7 billion away from cars and putting it to work in areas that will deliver more profits: trucks and SUVs, including the Ranger and EcoSport in North America and the all-new Bronco. And the company’s efforts won’t be U.S.-centric. They’re taking this trucks-SUVs vision globally.
Ford isn’t ditching cars altogether. But it’s moving some manufacturing to China. The company says it plans to build the next-generation Ford Focus for North America in China to save money.
4. Pivot From Gas to Electric
Ford is reducing the money it spends on internal combustion engines by one-third and then putting those funds towards electrification. That’s on top of Ford’s previously announced plans to invest $4.5 billion and add 13 new electric cars to its lineup by 2020, including an F-150 hybrid, Mustang hybrid, and all-electric small SUV. To be clear, Ford is not moving completely away from gas-combustion engines.
5. Simplify and Modernize
Here’s weird and wild car fact: There are 35,000 different configurations of the current generation Ford Fusion. The automaker plans to is reduce that to 96 in the next generation. Ford has already made a tenfold reduction to the number of orderable combinations in the next-generation Escape from 2,302 to 228.
Fewer combinations and new tools will help Ford reduce new vehicle development by 20%, the company said Tuesday.
Ford also pledged to redesign its factories and add 3D printing, robotics, and virtual reality tools to speed up the design, development, and production of its cars, trucks, and SUVs.
6. Make Internet Connectivity a Priority
Hackett is pushing Internet connectivity, promising that 100% of new U.S. vehicles will be built with the capability. This connected car vision extends in foreign markets as well with plans for 90% of new global vehicle to feature connectivity by 2020.
In-vehicle Wi-Fi isn’t ubiquitous quite yet. Yet it’s still a selling point. And it’s considered critical for all the services and features that technology can support including, advanced driver assistance systems and autonomous vehicles.