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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’ve 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 “alive and well.” And the biggest threat on that front comes not from Apple, or any U.S. player, but from China.

“We’ve never seen a competitor like this before,” Farley said on March 1 during the 2024 SIEPR Economic Summit’s 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.

“BYD is totally vertically integrated,” said Farley. “It’s so amazing [and represents] a new fitness test for our company and for our industry. Their scale is something we’ve never seen.”

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’s best-selling electric truck in 2023. Even so, Farley said, “iconic legacy companies like Ford have really no sustainable advantage” 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 — and, at times, jokingly — throughout his onstage conversation with Annamaria Lusardi, a SIEPR senior fellow and director of Stanford’s Initiative for Financial Decision-Making, and in the ensuing Q&A with audience members. He also met privately with a group of Stanford 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’s changing the makeup of its workforce and how the company innovates. He pointed to Ford’s decision, announced last year, to return to Formula 1 racing through a deal with Red Bull to develop next-generation hybrid power.

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

“What matters [in motorsports] is the tech transfer,” Farley said.

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

“We have to radically redo the vehicle” to make EVs cost-effective for Ford and for consumers. “That’s probably the biggest fitness test of my management team: Can we do that with an affordable EV, as an American manufacturer?”

A recent deal to allow Ford car drivers to access Tesla’s 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. “Our 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.”

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