James D. Farley
President and Chief Executive Officer at Ford Motor
Thank you, Lynn. Hi, everyone, and thank you for joining us. The cornerstone of Ford+ is pretty straightforward, a more resilient business model, higher growth, higher margin, and more capital efficiency. And I would say, quarter one had a lot of great green shoots in that plan. It sets us up for a very strong 2024 and beyond.
Before John goes through the quarter, I wanted to highlight four key strategic areas, how our growth drivers are changing, our progress in quality, the resilient Ford Pro business, and what we're learning on the electrification journey in quarter one.
On growth, the portfolio changes we made and the restructuring we've done in our geographic footprint has really paid off for Ford. Several years ago, we normally would be reducing our volume and our mix and having good news on pricing. What's changed in the last year, and especially in Q1 you could see, is our top line and bottom line profitability are increasing, driven by improved volumes and mix. And we're actually seeing pricing headwinds. And that new portfolio and geographic footprint is really tremendous to see at Ford.
There is no better example for this than the portfolio changes we've made in our truck and van business. Ford is the number one best selling pickup manufacturer in the world. And our Ford Transit cargo van is the best selling in the world. It's now our second best selling nameplate at Ford. And our midsize Ranger, not our most affordable pickup, is a third best selling vehicle at Ford. And together with the Everest makes up our profits outside of China, North America, and Europe. It's an incredible new franchise for Ford.
These changes in our portfolio at all different sizes and price points in the truck and the van business has really played to Ford's strength. And it doesn't stop there. Our growth drivers are diversifying. We now have a vibrant software business and physical services business led by Ford Pro. You don't need to look very far beyond our mobile services. An example, Fordnet has 3,500 or more remote service vehicles in our fleet globally. And last year, we did 2.4 million remote service experiences, both remote service and pickup and delivery. 40% of that was for Pro and 60% was for our retail business. Ford now has more than 700,000 paid subscribers for software. That's up 47% year-over-year. It's capital efficient, and the gross margins are more than 50%.
Our quality is making real progress. Kumar and the team have really focused on key areas. Our '23 model year, three months in service, initial quality is 10% better than the previous model year. And we're seeing our current model year that we're selling for several months, another 10% improvement. That should put us in the middle of the pack. And many of our vehicles start to lead their segments in initial quality.
But to bend the curve on warranty costs and customer recalls, we're really focusing on our launches. We're past the Super Duty launch now and well into the F-150 launch, and we made a lot of changes to improve and bend that curve. On the F-150 and others, we've delayed the OK2Buy three to six weeks. We've taken a lot of new testing regiments. Actually, we ended the quarter with 60,000 units in our plant stock, which hurt our first quarter but will benefit because we're shipping those now in our second quarter for all those quality processes.
And what we're so far seeing is, we avoided about 12 recalls on F-150. And we're seeing the best performance on 3 MIS after a launch in a long time. And I'd like to be specific here. Normally, after a launch, we've seen in the last five years about a 70% spike in our defects. The industry average is about 20%. And the Super Duty and Mustang launches were about that industry average 20% spike. And now, we're seeing with the F-150 even better performance at industry average. And boy, do we have a lot of launches in the second half to prove out this new launch process. What we're going to see long-term is fewer recalls and lower warranty costs because of this new process. I'm really proud of the team's progress on quality. And we have so much more to do.
I'd like to talk quickly about Ford Pro. I mean, look at quarter one. We made up $3 billion. That's how much we made the whole year in Pro two years ago. We're growing revenues, EBIT, EBIT margin, we're growing our volume. Our attach rates for high margin software and physical services are improving. And when you ask yourself, why is this different? Why would this business? Why would these profits be more resilient than our retail business? It comes down to three things.
First is, the diversity of a customer base. About a third of our Pro customers are small business. Another third are large companies and about 20% more as governments, all different kinds. And the diversity of those customers and all three of them are driving a white hot demand for our vehicles and services right now. From infrastructure build out, roadworks, 5G, onshore manufacturing and refleeting for our key government fleets. One out of four of those fleets are all Ford, and boy do they trust our company.
But more than anything, it's the breath and freshness of our new lineup at Pro that's driving our profitability. We have the freshest lineup we've had in 20 years in Pro. We have an all new Super Duty, an all new Transit from top to bottom. And we have an all new Ranger and five plus plants around the world. These new products are really attractive to customers. And beyond that, we have the most diverse Class 1 to 7 lineup in North America, our key market. And that adjacency sales are important because customers buy different kinds of vehicles for us in the same fleet. But beyond that, in those fresh nameplates, we offer the best choice.
We have cabin chassis and cutaway versions of our vans, different wheel bases and heights, the same pickup trucks. And we also have the most choice in terms of upfitters. We have 500 different upfitters across Western Europe and the US that prefer to work with Ford because of our experience with them. And it doesn't stop there. We've designed all of our commercial vehicles with a multi-energy platform. And that allows our customers to choose electric, partial electric, diesel, petrol, whatever choice on powertrain that best meets their cost of ownership. No one has this kind of lineup in our business globally.
The third key area is the diversification and the completeness of our software and physical services experiences for our customers. Now, 13% of Ford Pro's profits in the last 12 years make up these attached services. And it's a big change for us. And what's really driving that is our advantage in physical service. We have the largest repair network you can find of any brand out there. And we're widening that gap. We've added 700 commercial service bays in the last year and more than 11 very large service lead centers with between 50 and 200 repair bays that are open 24/7 for our customers. None of our competitors offer this kind of extensive repair network.
And it doesn't stop there. We have over 2,000 remote trucks and vans doing remote service for our Pro customers, no brand can match that either. And now we have over 560,000 active software subscriptions for our Pro customers, that's up 40%. And that Pro Intelligence business took many years to build. It requires advanced electric architecture. It's a really hard moat to copy. Long list short, Ford Pro is in for a great performance over the next several years.
What did we learn on electric so far? Well, as you know, we're number two in our home market and electric sales for the last couple of years. And boy, we learned a lot. Since Capital Markets last year, we continue to adapt to evolve our spending and our investment ramp for battery plants and assembly capacity for our EVs to match customers demand. And more importantly than all of that, match the price expectations.
We're retiming our launches and our capital spending. In fact, this year we expected to spend about $10 billion as a company. We've now guided $8 billion to $9 billion. We'll probably be on the low end of that range. And we're being very consistent about our discipline on profitability. We expect every one of our EVs to make money in the first 12 months. And that is a very disciplined process. In fact, we delayed the launch of our three-row crossover, which is a great product, two years. Not only to match the slower growth in EV, but more importantly, to take advantage of new battery chemistry and formats to substantially reduce the cost of the batteries for that vehicle. We'll do everything it takes to be profitable in the first 12 months of our vehicles.
And what's our bet as a company? Well, it's pretty simple. We're going to bet on commercial work vehicles where we do really well, where we know the customers, where we can innovate for them like ProPower Onboard with partial and fully electric vehicles. But increasingly, our bet will be on our new small, affordable platform developed by our team on the West Coast.
Why is affordability so important? Well, when we look at the connected car data from our EV customers, we notice that people live in the suburbs, urban customers. They tend to drive shorter distances, and those more affordable vehicles, more approachable, and we believe that's where the adoption of EV will go the fastest. And we believe we can compete in segments of small cars and vehicles, more affordable vehicles in a unique way that's forward. A good example was, we learned a lot when we -- in our more expensive vehicles, Mach-E, when in February we dropped the price 17%, our volume went up 141%. That's telling us that the more affordable we can make great product, the more attractive it is to these mainstream EV adopters.
And the last thing I'd say is, we're learning about the importance of choice. Our growth in the first quarter in hybrids is a good example. We do 36%, we think the full year would be 40%, we're now approaching 400,000 units of volume for our hybrid business. And we're now number three in hybrids in the US. It's a big advantage. We've been in the business for more than 20 years. And what's really exciting for us is for the first time, some of our contribution margins on hybrids are above or at similar contribution margins than our pure internal combustion engine margins.
With that, I'll turn it over to John.
