Did Ford CEO Jim Farley just take a shot at Tesla?

Electric vehicles have been on the minds of Ford’s best thinkers for years, and on a recent podcast, CEO Jim Farley detailed the thought process behind some of the moves the company has made in recent quarters to right a nearly $20 billion wrong.

Earlier this year, when Farley was asked why, after billions upon billions of losses, he was confident that Ford could turn around its fortunes and make the Model e profitable by 2029, he said he drew inspiration from Chinese electric vehicle maker BYD.

World’s top EV markets in 2024China: 6.4 million EVs sold Europe: 2.2 million EVs soldU.S.: 1.2 million EVs soldRest of world: 1 million EVs sold
Source: International Energy Agency

In an interview with the “Rapid Response” podcast, released Friday, Farley told Bob Safian why he chose to model his strategy after a Chinese rival, rather than the most popular EV maker in the world, Tesla. Farley was blunt.

“Nothing against Tesla, they’ve been doing great, but they really don’t have an updated vehicle,” Farley said.

Farley isn’t blind; he acknowledges that every Chinese EV gets about $5,000 in subsidies from the Chinese government, but he also notes that “their factories would be half full if they just made cars for their market,” but they export so many vehicles abroad that there is no excess capacity.

According to Farley, the turmoil in Iraq and the Gulf States only reinforces the company’s decision to retool its electric vehicle division and model it after what the Chinese are doing.

Photo by Althom on Getty Images

Ford CEO Jim Farley explains why he looks to BYD, not Tesla, for EV inspiration

Ford CEO Jim Farley went on to repeat some of the points he has made recently about Chinese vehicles in America being a potential national security threat due to the large amount of cameras, driver data, and environmental data their electric vehicles utilize.

So the question became, why then does he look to Chinese companies for inspiration, rather than Tesla, an American company that operates in an environment more similar to Ford’s?

“The best in business for us cost-wise and competition-wise, and supply chain, and manufacturing expertise, and the IP in the vehicle is really BYD. And BYD became the highest volume brand in China,” Farley said.

As for the lesson he is learning from BYD, “If we’re smart, we’ll take the cost competitiveness of BYD, and then we’ll compete with that platform in the markets where we know our customers really well. And this next cycle of EV customers in the U.S. that want pickups and utilities and all these different body styles… but they want it at $30,000 not $50,000.”

“That is the gift China gave us, to be fearful and respectful enough of their progress that we could not organically just phone it in. We needed to do what Americans do greatest, sometimes, which is use innovation to compete against the best in the world,” Farley said.

Farley says he pays more attention to the used car market trends than he does to new cars, because the used car market is twice the size of that for new cars, and since all used cars sell at a reduced price, “they’re a better predictor of consumer behavior because prices are all lower.”

Related: Ford CEO Jim Farley has blunt message on Chinese EVs

Ford is taking what it’s learning from that market to make the next generation of electric vehicles.

According to Ford, an EV’s battery can account for up to 40% of the vehicle’s total expense, so the company reimagined EV battery tech to make them smaller and more cost-efficient.

“The really high-end EVs, the $50k, $60k, $70k EVs just weren’t selling,” CEO Jim Farley said in an interview Dec. 15.

Ford debuts plan to make $30,000 EV

EVs cost about $11,000 more on average than their traditional gas counterparts, according to a 2023 report. That, coupled with the expiration of the up to $7,500 tax credit that had been propping up the industry for a decade, means that EVs are as unaffordable in America as they’ve ever been.

Ford has been teasing progress on its Universal Electric Vehicle project, which aims to build an EV priced for most Americans for months.

Ford says it aims to produce a $30,000 EV in the near future. To get there, it needs to tackle the biggest cost driver for electric vehicles: their batteries.

Customers expect at least 300 miles of range, according to Ford, and to achieve that, batteries have been made bigger and heavier. But Ford says it is taking a different approach.

It gave its engineers incentives to increase battery efficiency by any means necessary. The team identified aerodynamics and vehicle weight as the two main areas where batteries were operating inefficiently.

The way EVs are currently designed increases wind drag, making the battery work harder and less efficiently. Ditto for weight, as heavier vehicles need more juice to operate.

At higher speeds, air drag becomes more important. For example, if you go twice as fast, the air holds you back four times as much, and you need eight times as much power from the battery, according to Ford.

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So Ford devised a “bounty” program in which its engineers assigned numerical values to efficiency gains. Teams competed against each other for the largest efficiency gains that reduced battery size and cost.

A millimeter change in the height of the roof could equate to $1.30 in battery savings costs while also making its pickup truck the industry leader in efficiency, as shown by Ford.

Farley told Safian that Ford expects to allow the public to see some vehicles from the platform later this year.

Related: Ford issues massive recall for its most popular model

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