“A significant driver of these savings is material cost improvement actions, which will also flow through into 2026.”

In context

“elivering tangible progress on our core priorities, cost and quality. We're making this progress by establishing key enablers, leading indicators and output KPIs, enablers are the most important factor. For example, we have roughly doubled the number of our safety and technical experts. We have significantly increased testing to failure on critical systems like powertrain, steering and braking. We are also monitoring more vehicles in the field through connectivity. Insights from these initiatives are also being incorporated into current production. This has contributed to some more recalls in the near term, but it is the right thing to do for our customers. Let's start with costs. We are still targeting to deliver a net improvement of $1 billion this year, excluding the impact of tariffs. A significant driver of these savings is material cost improvement actions, which will also flow through into 2026. It is important to note that in the second quarter, our costs would still have been down even if the special field service action or DFSA was included. Turning to quality. Warranty is the largest component of our competitive cost gap. This is a major cost opportunity for us. There are 2 warranty costs investors should focus on. The first is warranty coverage. This is the expected cost to cover our bumper-to-bumper and powertrain warranties. Coverages make up about 60% of our total warranty costs. As the quality of our vehicles improves, the cost of coverage per vehicle should come down. In fact, we are already seeing this improvement. Our latest 0 and 3 months in service metrics are tracking towards our strongest performance in over 10 years. The second part of warranty costs are FSAs, co”