Ford CEO: Disassembling Tesla, Chinese EVs Sparks Major Wake-up Call
Ford’s CEO, Jim Farley, acknowledged a significant wake-up call regarding the electric vehicle (EV) market. His revelation came after disassembling cars from both Tesla and Chinese competitors. In a forthcoming episode of “Office Hours: Business Edition,” Farley shared insights on how this experience impacted his approach to Ford’s operations.
Shocking Discoveries in EV Competition
During the teardown, Farley expressed feelings of humility and surprise. “It was shocking what we found,” he remarked about the structural differences. For instance, Ford’s Mustang Mach-E contained approximately 1.6 kilometers of electrical wiring compared to Tesla’s, leading to added weight and the necessity for a larger battery.
The practice of disassembling competitor vehicles is common in the automotive industry. For example, a smartphone manufacturer, Xiaomi, recently disclosed that its team bought and studied Tesla Model Ys to improve its EV offerings.
Strategic Overhaul at Ford
Farley, who took the reins at Ford in 2020, initiated a significant shift by establishing a separate division for EV operations known as Model E. Despite facing over $5 billion in losses in 2022, he believes in the importance of holding the division accountable. According to Farley, approaching challenges directly and transparently can expedite solutions.
The Rising Threat of Chinese EVs
Farley has consistently warned of the competitive threats posed by Chinese EV manufacturers, labeling their vehicles as “far superior” to Western versions. Additionally, he noted that Chinese brands like BYD are “completely dominating” the global EV landscape. Currently, about 50% of new car sales in China are electric, in stark contrast to only 10% in the United States.
The rapid advancements of Chinese automakers are attributed to their ability to offer high-tech electric vehicles at competitive prices, allowing them to gain significant market share both locally and internationally. Farley has openly praised Chinese EVs, mentioning his positive experience with an electric sedan from Xiaomi, which he enjoyed driving for six months.
Challenges and Adjustments in the U.S. Market
Despite registering record electric vehicle sales in the third quarter, Ford faces challenges in the U.S. EV market. Farley forecasts that only about 5% of U.S. cars will be electric soon, as consumer preferences lean towards more affordable options rather than high-end models costing $70,000 to $80,000. This evolving landscape has prompted Ford to redesign its EV strategy.
- New EV production line established to counter BYD and Tesla.
- First product is a $30,000 midsize truck, launching in 2027.
As Ford adapts to the shifting dynamics of the EV market, they remain committed to competing against both Tesla and Chinese automakers. Farley emphasized the necessity of maintaining a robust presence in the global EV sector, stating, “We can’t walk away from EVs.”
