Ford CEO Jim Farley is annoyed.

The corporate’s fourth-quarter earnings on Thursday missed analyst expectations by a large margin, as prices and provide chain points once more harm Ford’s backside line, Farley is aware of his firm wants to vary.

“Now we have to vary our value profile,” Farley instructed CNBC after a name with analysts to debate the quarter’s outcomes. “We all know what we now have to go after. I might love to offer you all of the metrics and all the precise gaps we see. However , whether or not it is absenteeism, the variety of sequencing facilities, the variety of wiring harnesses we now have, we all know what it’s.” 

In brief, Farley desires Ford to grow to be a much more environment friendly firm, and he wants it to occur rapidly.

The push to remodel Ford is taking up larger urgency after the automaker reported 2022 adjusted earnings of $10.4 billion, simply three months after the corporate instructed analysts it anticipated to make $11.5 billion to $12.5 billion in that 12 months. 

How did Ford fall greater than a billion {dollars} shy of hitting a revenue goal it gave Wall Avenue on the finish of October?  

Blame it on poor execution and higher-than-expected prices. Final quarter, Ford mentioned, overcoming provide chain challenges, together with a scarcity of semiconductor chips, elevated prices by $1 billion greater than deliberate. Ford manufacturing was 100,000 automobiles shy of what the automaker anticipated to construct.

Provide chain and value points harm Ford during the last two years. Final September, Ford warned third-quarter prices could be $1 billion larger than anticipated. For the final two years, excessive guarantee prices — from recollects and troubled launches of recent automobiles — had been an issue that Farley and his crew have been unable to repair.

Farley mentioned Ford’s complexity is a part of the issue.

“Now we have a whole lot of complexity relative to the shopper and in addition inside our firm. And we will minimize the customer-facing complexity like we now have, nevertheless it takes time to work that all the way down to components on the road, to the manufacturing line,” he mentioned. “It simply takes time to work by way of that and that is what we’ll do.”

Whereas discussing the fourth-quarter outcomes with Wall Avenue analysts, Ford’s management declined to element the precise steps it can take to chop prices and make the automaker extra environment friendly and worthwhile.  

Farley mentioned the reply will not be merely chopping jobs, which has traditionally been the way in which automakers have minimize prices. “There are issues we might do within the brief time period, however I do not wish to simply make the output the cuts with out redesigning the work. This needs to be sustainable and that is how we’re fascinated by it these days,” he mentioned.

Will this new push to chop prices harm Ford’s progress in manufacturing and gross sales of electrical automobiles? Farley mentioned no. 

In truth, he mentioned he believes separating the EV and inner combustion engine car operations into two distinct divisions will truly speed up efforts to drive larger effectivity. To show his level, Farley says Ford’s second era of EVs can be radically simplified, which ought to finally result in fewer issues and better margins. 

“I can not wait to indicate you and the entire world this subsequent cycle of merchandise,” he mentioned. “Lots of our opponents are simply popping out with their first cycle and we will see their batteries are too massive. Their distribution prices are too costly. They’re spending an excessive amount of cash on promoting. You understand, we won’t do this. We do not plan on doing that.”

When Farley grew to become CEO of Ford in October 2020, he vowed to rapidly drive the automaker into a brand new leg of progress led by electrical fashions just like the Mustang Mach-E, the E-Transit industrial van and the F-150 Lightning. 

And in some ways, he has succeeded. Ford is No. 2 in EV gross sales in the US, with just below 8% market share. 

Whereas it isn’t near catching up with Tesla, which sells two out of each three EVs within the U.S., Ford’s EV manufacturing is rising quickly. On the finish of final 12 months, Ford was constructing 12,000 EVs a month. By the tip of 2023, Ford expects EV manufacturing will attain 50,000 a month. 

Nonetheless, for all of its accomplishments transitioning to EVs, Ford continues to face points with inner combustion engine automobiles, that are accountable for nearly all of Ford’s earnings.

Farley is aware of traders are watching and ready for Ford to lastly get its act collectively.

“Be affected person. You understand, we acquired the best crew. We acquired the best plan. We’re rising like heck in our professional and EV enterprise,” Farley mentioned when requested what he would say to Ford shareholders. “This key crew goes to ship for you and you’re going to get an important return in your funding.”

— CNBC’s Meghan Reeder contributed to this report.