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Ford CEO: "We've never seen a competitor like this before."

Jim Farley opened up at the 2024 SIEPR Economic Summit about the future of electric vehicles, the threat from China, and why motorsports are key to staying competitive.
Ford CEO Jim Farley and SIEPR Senior Fellow Annamaria Lusardi share a laugh at the 2024 SIEPR Economic Summit.

When news broke late last month that Apple was abandoning plans to become an electric car maker, Ford Motor Company CEO Jim Farley had two reactions: Maybe we can grab some tech talent. And we鈥檝e got a much bigger problem to worry about.

Despite recent headlines questioning the future of electric vehicles (EVs) amid a slowdown in sales, Farley said the market is 鈥渁live and well.鈥 And the biggest threat on that front comes not from Apple, or any U.S. player, but from China.

鈥淲e鈥檝e never seen a competitor like this before,鈥 Farley said on March 1 during the 2024 SIEPR Economic Summit鈥檚 kick-off keynote. Chinese players, like BYD, have a big advantage because they have already done what Ford and other U.S. automakers are now trying to do: build car parts, like batteries and silicon carbide inverters, in-house rather than rely on suppliers.

鈥淏YD is totally vertically integrated,鈥 said Farley. 鈥淚t鈥檚 so amazing [and represents] a new fitness test for our company and for our industry. Their scale is something we鈥檝e never seen.鈥

Ford CEO Jim Farley says the automaker is undergoing a massive cultural shift as cars become more digitized.

Ford is the second-largest seller of EVs in the U.S. and its F-150 Lightning was America鈥檚 best-selling electric truck in 2023. Even so, Farley said, 鈥渋conic legacy companies like Ford have really no sustainable advantage鈥 in the race to dominate EVs. Winning, he said, comes down to which automaker can innovate the most while keeping costs down.

Motorsports: A surprising payoff

Farley talked candidly 鈥 and, at times, jokingly 鈥 throughout his onstage conversation with , a SIEPR senior fellow and director of 黄色电影鈥檚 Initiative for Financial Decision-Making, and in the ensuing Q&A with audience members. He also met privately with a group of 黄色电影 students to answer their questions following his keynote.

Ford, Farley told the Summit audience, is undergoing a massive cultural shift as cars become more digitized. It鈥檚 changing the makeup of its workforce and how the company innovates. He pointed to Ford鈥檚 decision, announced last year, to return to Formula 1 racing through a deal with Red Bull to develop next-generation hybrid power.

Ford鈥檚 role in motorsports is no longer about a 鈥渃igar-chomping executive鈥 who wants to win a race, Farley said. It鈥檚 about the cutting-edge advances happening in that arena and how they can be adapted to Ford鈥檚 own designs and manufacturing.

鈥淲hat matters [in motorsports] is the tech transfer,鈥 Farley said.

On the cost front, Farley described how a 鈥渟kunkworks鈥 team of 17 Ford engineers in Long Beach, Calif. has worked quietly over the last two years to come up with 鈥渁 radically different approach鈥 to designing smaller, low-cost EVs that he thinks will compete with Chinese players.

鈥淲e have to radically redo the vehicle鈥 to make EVs cost-effective for Ford and for consumers. 鈥淭hat鈥檚 probably the biggest fitness test of my management team: Can we do that with an affordable EV, as an American manufacturer?鈥

A recent deal to allow Ford car drivers to access Tesla鈥檚 expansive network of EV charging stations is a big step in the right direction, Farley said.

Commercial drivers also present a big opportunity, he said. 鈥淥ur commercial customers are adapting to EVs the fastest because [they are] brutal about ownership costs. Fuel costs, insurance, repairability [are] much more important to them than to a retail customer.鈥

(and look for the cameo of a pink pony).

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