James D. Farley
President and Chief Executive Officer at Ford Motor
Thanks, Lynn, and hi, everyone. We appreciate you all joining us. I'll start by addressing the obvious. Our fourth quarter and full year financial performance last year fell short of our potential and while we generated record cash flow, we left about $2 billion of profit on the table, due to cost and especially continued supply chain issues. These are the simple facts and I -- and to say, I'm frustrated is an understatement, because the year could have been so much more for us at Ford. Now I know the question you must be asking, why Ford with that incredible product lineup and all the restructuring overseas, why aren't you delivering higher profits and more competitive margins? And it's the right question.
So let me share my perspective. With Ford Plus plan, we are executing a double transformation. While we're making progress, it's hard work. As with any transformation of this magnitude, certain parts are moving faster than I expected and other parts are taking longer. Now the first part of our transformation is to completely overhaul our industrial system, product development, manufacturing, and supply chain management to deliver better costs and quality. This is critical because it provides the foundation for everything else we do. It funds our future. That second transformation, which we're aggressively building today. Building new and incredible new growth businesses like Model e and of course, Ford Pro are huge bet on commercial vehicles, which will be a high growth, high margin, not just products, but software and services business.
Now the second transformation, the growth part is going better than I imagined. At this point in our journey, I did not expect to be number two in EV sales in the U.S. I didn't know that Lightning would be completely sold out and I didn't predict that BlueCruise would be the best hands-free autonomy system in the market, or the Ford Pro software sales would be growing off the charts and that doesn't even touch all the incredible next generation EVs and software platforms that will soon be entering the market. Bottom line, in a double transformation, we have to significantly improve our cost and our quality, but at the same time, grow to fulfill that huge promise in Ford Plus. And frankly, the first part of the transformation has not moved fast enough.
Now this is what we should be known for. It's our legacy and we'll show we can do it again. We have deeply entrenched issues in our industrial system that have proven tough to root out. Candidly, the strength of our products and revenue has massed this dysfunctionality for a long-time. It's not an excuse, but it's our reality and we're dealing with it urgently. Over the past year, we have made sweeping leadership changes and brought in world-class talent to reenergize and rebuild a leading industrial organization. We've committed company-wide to implement a lean operating system that will scrub billions of dollars of waste out of our company and we are shining the light on every inch of our legacy business with knowledge that we must do better every day.
This has been humbling for both me and our team. That said, I have never been more convinced about our plan. I cannot wait to get into work every day because I'm so optimistic about our plan and what we are creating here at Ford. Now I respect our competition, but I would not trade our places with anyone. Why? Because we have a real strategy to grow. We have incredible products both on the road and the ones you haven't seen in the pipeline. And believe we now have a world-class leadership team, made up of new and existing talent ready to compete and win. These strengths will shine through. Ultimately, the proof will be in our results. That's exactly how it should be. We appreciate those who place their faith in Ford and we are committed to creating value for all of our stakeholders.
So with that, let me quickly cover some areas of focus. First, we remain committed to disciplined capital allocation. Now you saw this in the actions we took in Brazil and India and most recently in Argo and now South America and IMG are healthy and generating sustainable profits. This work is never done and will continue to be the focus for us going forward. Our balance sheet liquidity remains strong and our ability to generate free cash flow has really improved significantly. And this is allowing us to sell -- to accelerate our investment in growth, of course, electrification, but also Pro and software, while important -- importantly also returning capital to our shareholders. And we now have created three distinct customer facing business segments, Blue, e and Pro, which have given us greater clarity and insights into each of these businesses and how we can improve each of them uniquely.
So let me cover a couple highlights. I'm going to start with Pro, my favorite and also secret weapon of Ford. Ford Pro embodies all of our growth levers and it capitalizes on our commercial vehicle sales leadership and scale to build a world-class ecosystem that delivers great value to our customers and profitable growth for us at Ford. In North America, our vehicle share is almost twice that of our closest competitor. And in Europe, Ford has been the number one vehicle brand -- commercial vehicle brand for eight years in a row. Let me bring this point home. Here in North America, home market, Super Duty, our most important Pro vehicle owns half the mining business and owns half the emergency response business and half the utility business. And the requirements for all these customers are complex. They're not going to commoditize and they require a partner who deeply understands these unique businesses and is dedicated to providing a mix of vehicles, but also services that can improve uptime and total cost of ownership. And we know these customers will pay for software that will enhance their productivity.
Now we're going to future proof this business by leading the commercial electrification solutions as well, both E-Transit and F-150 Lightning today. E-Transit is already America's top selling electric van, with 73% market share. 60% of all of our U.S. fleet managers plan to add an electric vehicle within the next two years to their fleet. And that's even before the $7,500 IRA tax credit that was announced and applies irregardless of the location of raw materials and batteries. This year, Pro really gets going. We introduce our most important vehicle gets refreshed, the new Super Duty pickup, and in Europe, the Super Duty equivalent, we have an all new 1 ton transit.
In Ford Pro's high margin software business, we will continue to grow, especially software for fleet management, telematics and charging. Last year these subscriptions for software grew over 70%, reflecting new software offerings, better platform for our software and contracts and growth in fleet charging attach rates, which are close to 50% now. We're also increasing our sales of parts and services via network of a 1,000 mobile service vehicles on the road in North America and Europe, and over 1,400 specialized commercial vehicle dealerships, many of which open 24/7. In fact, last year, mobile service repair orders increased 85% for us in Pro and this improves the customer experience will improve -- importantly, increasing the attach rates of our high margin parts business.
Now moving to Blue, the team is focused and has delivered the freshest and most appealing product lineup in our industry. We know that typically the fresher the ICE portfolio, the greater the pricing power. So our decision to move away from sedans and commoditized utilities to vehicles like Bronco Sport and the big Bronco, the Maverick, the Puma in Europe and hybrid powertrains has really paid off. Ford gained nearly one point of market share here in the U.S. last year, and we expect 2023 to be another big strong year of share growth.
Ford Blue is a growth business for the foreseeable future with strong profits and robust free cash flow. In F series, it was America's best selling truck for 46 consecutive year now, outselling its second place competitor by more than 140,000 trucks. We're launching even new pickups like the new Ranger here in North America and South America, after we've already launched the new Ranger in Asia and Europe last year. In addition, Blue is going after billions of costs improvements from engineering to manufacturing to our bill of material. And in quality, we have work to do. Ford has been the number one in recalls in the U.S. for the last two years. Clearly that's not acceptable. We've overhauled our entire enterprise quality operating system and we are already seeing improvements in initial quality for vehicles coming out of our plants here in North America. And Model e, it's operating with a startup intensity to build profitable EVs with differentiated industry-leading portfolios that customers are going to love.
In the U.S., our EV sales growth is twice the rate of the EV segment and more than 60% of our model e customers are new to Ford. The F-150 Lightning has been America's best selling electric pickup since it launched, and the Mustang Mach-E remains a huge hit for our customers. We remain on track to reach our annualized EV production capacity of 50,000 units per month or 600,000 units globally by the end of this year. For reference in the fourth quarter, our run rate of production was more like 12,000. So 50,000 is a big growth and by the end of -- and we are on plan for that 2 million units of incremental capacity by the end of 2026.
Now to deliver this incredible growth as we speak through our facilities in North America, we're adding shifts, expanding our facilities, building out new battery capacity and assembly capacity. Construction is in full swing in Tennessee and Kentucky on our BlueOval city and our three BlueOval SK battery plants. And in Europe, we're moving ahead with a new commercial vehicle battery facility in Turkey. Now critical to our plan is securing the necessary raw materials for these batteries to get to that 2 million unit rate, especially lithium and lithium hydroxide and nickel. We expect to have a 100% of raw materials we need for the 2 million unit run rate secured by the end of this year.
Now we are deep in the development of our second generation EVs, including our next generation electric full size pickup, which by the way is awesome. These EVs will be fully software updateable. That means a brand new electric architecture and they're going to be radically simplified. Imagine three body styles, each with volume potential of up to 1 million units and just a handful of order book combinations. That's what we're doing at Ford for the second generation of products. And that means higher customer sat, better quality, lower bill material, and lower manufacturing costs.
When we started report -- when we start reporting according to these new segments in the fourth quarter, you're going to have complete visibility in the model ease, margin trajectory, and understand the key levers to achieve our model e EBIT target of 8%. We're already making the customer buying experience better with less friction. Now this is only going to accelerate when the new model e dealer program takes effect in January next year. This program has been adopted by nearly two-thirds of our 3,000 U.S. dealers, and it's based on a radical redesign on our customer experience.
Next January, we'll be selling EVs and high volume with virtually no inventory, a simple e-commerce platform for our customers, non-negotiated price at set by the local dealer and remote and pickup and delivery for all customer experiences. We're also expanding BlueOval charging network at all of our dealers and we'll have dealer staff trained not only on software, but all the EVs.
Now I've said before, software and experiences will be the key differentiator for our industry. I mentioned earlier that BlueCruise are driver assist hands-free technology was just tested by consumer reports and judged the best hands-free autonomous system on the market. Let that sink in for a while, the best on the market. Now have you not experienced BlueCruise, I challenge you to go out and do your side by side comparison with our two major competitors and at the end of last year, our customers using BlueCruise have now traveled 42 million hands-free miles. So we're scaling incredibly rapidly, that's a fourfold increase in the million of -- millions of miles since the second quarter of last year. And we have incredible software talent making this system better every day, including those 600 former Argo engineers, who now working full-time at Ford on our autonomous systems.
Now before I hand it over to John, just a few things. Ford's a different company today, we're all about building a stronger customer focused business that generates sustainable, profitable growth and returns above the cost of capital. While our 2022 results fell short of my expectations, I've never been more excited about our future, because we have the right plan, the right structure to succeed, the best team on the field and real strategic clarity. This year is about execution. It's time for us to deliver and we will with relentless attention to our founding principles, drift and growth, and we are hitting the ground running.