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  • FORD’S JIM FARLEY: EV plan ‘exactly what we need’
FORD’S JIM FARLEY: EV plan ‘exactly what we need’
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FORD’S JIM FARLEY: EV plan ‘exactly what we need’

Eleanore Beatty December 6, 2021 Article

DETROIT — In 14 months as CEO of Ford Motor Co., Jim Farley has displayed an affinity for baseball metaphors.

The industry, he likes to say, is in the “early innings” of electrification. On Ford’s third-quarter earnings call, he said the company was “taking big swings” with its new products and services.

If the pivot to electrification is like a baseball game, as Farley says, then Ford has some key at-bats coming up.

The automaker will begin producing the E-Transit electric van this month and is gearing up to start selling F-150 Lightning pickups next spring. In 2022, Ford also will begin construction on its Blue Oval City campus in Tennessee, which will include the company’s first new assembly plant in the U.S. in decades.

Farley, 59, spoke with Staff Reporter Michael Martinez and News Editor Nick Bunkley last month from his 12th-floor office at Ford’s Dearborn, Mich., headquarters. Here are edited excerpts.


Q: What made you confident enough to double your planned EV production to 600,000 vehicles per year? Was it the Lightning reservation numbers?

A: Demand is two to three times what we expected. And so that capacity had to be doubled — probably tripled if we could, but we can’t. Lightning, when we first got together we talked about volumes of 20,000 units a year. And I was like, no. So we capacitized something far north of 20,000, but it’s nowhere near the 160,000 units of demand we have today. Our reservations are approaching 200,000 units now and we’re moving those reservations to actual orders.

What percentage of F-150 Lightning reservations do you expect to convert to actual sales?

I think it’s going to be north of 80 percent, but we don’t know. The issue is that since we launched Lightning, full-size trucks have gotten a lot more expensive. So that price that we launched at is looking more and more attractive, so when people look at moving from a reservation to an order, I think it’s going to be extremely high — north of Bronco’s.

Have you gotten a sense for who wants to buy a Lightning compared with the gasoline truck?

It’s incremental so far. About 30 percent is F-150 customers, but 70 percent are new to the brand and new to pickups. It seems like a customer [for whom] the fuel economy or the image of a pickup didn’t work, but now that we’ve modernized it, they’ve found it more interesting.

If somebody’s new to EVs, what’s making them pick the Lightning over a Tesla or even a Mustang Mach-E?

It’s kind of like the modernization of the American horse. It’s a very positive image. Pickup trucks have a sort of unique feeling, even though it’s a mainstream product. I’m sure it’s upscale customers, and now they don’t have to worry about what people say in their neighborhood: “You’re buying a pickup truck? I thought you’d buy a BMW or something.” So it doesn’t have the stigma because it’s electric.

But what we’re hearing mostly is they like the Pro Power Onboard — the idea that if you lose power you can power your house; that’s the real breakthrough feature for those customers.

Since becoming CEO you’ve really accelerated Ford’s EV plans. Ultimately, does Ford need to go 100 percent EV in the U.S.?

We have a lot of rural customers at Ford that a lot of other brands don’t have. We have Super Duty customers who do heavy-duty towing: horse trailers, people in the energy business who are towing big-time loads over very long distances. It’s hard for me to imagine that all those customers will go electric in the next 10 years. They’re actually as interested in the technology as anyone, it’s just their use case is different than how we’ve designed the vehicles so far. It does feel, at least for Ford, the transition’s happening faster than we thought. But again, it’s the first inning of a maybe nine-inning game.

Beyond Blue Oval City, will you need new assembly plants as you transition to EVs or will you repurpose what you already have?

Obviously when you go 40 percent electric there’s a lot of optionality on the assembly side. We’ve announced this new plant; it’s going to be a huge site, and it’s going to build a vehicle we do not have today off a brand-new platform — a full-size pickup platform. We think it’s going to be incredibly high volume. What I know for sure that we have to build more of? Battery plants.

Was Ford too conservative during the beginning stages of COVID in canceling chip orders you didn’t think you’d need?

In retrospect, absolutely. But who would have known? I was in Dearborn Truck when we shut it all down. I was with [UAW President Rory Gamble] and he said that people were scared to come into work. I looked at John Savona and Kumar [Galhotra] and said, “Let’s shut it down.” How would I have known?

You had floated the idea of shipping unfinished vehicles to dealers. Are you past that point?

I think we have to remain very open. We’re discussing it today still. I think we trust our dealers; they’re one of our biggest advantages. If we had to do that and we did the right quality assurance and process, I wouldn’t hesitate at all. We haven’t been in that situation so far; early on it looked like we would, but I wouldn’t count that out yet. We think this will last through 2023 to some extent, and who knows what next year holds for us?

Ford’s stock has nearly tripled under your watch. Why does Wall Street like what you’re doing now?

Ford works best with a plan. You’ve got to have a plan. We have the Ford+ plan; everyone knows what it is. We’re executing against the plan. We’re turning around our automotive operations, our quality’s getting better, our launches are getting better. And if there’s one thing I want to leave you with, it’s that I don’t want to change this plan. It’s a good plan. It’s exactly what we need. But what keeps me up at night, as always, is execution. How do we get to be No. 2 in the next few years in the U.S. for battery electrics? That’s execution.

Would you consider spinning off the AV or EV business, or even Ford Pro?

Everything is on the table at Ford. Whatever’s going to be best for Ford. We’ve already said we’re now very open to having Argo be available to capital markets, that’s a big change for us. Everything’s on the table to make this transition and create this value. No one and nothing is sacred. In the last 14 months, we’ve gotten out of Brazil manufacturing and the same in India.

Does Ford need to do a better job educating dealers on EVs? If so what are you going to do about it?

Absolutely. First of all, you have to understand Ford’s market representation and dealer network is very different from our competitors. We have an enormous strength in commercial. Commercial dealers is like a totally different thing than retail dealers. If you look at a commercial dealer — Brian in Cleveland — he doesn’t sell anything other than white trucks and vans. And 100 percent of his profits come from service. He’s open 24/7 and he does business with people all over Ohio. So Brian’s dealership is going to change a lot. But the battery-electric vehicles we’re going to distribute and the services we’re going to sell at Ford Pro are going to be really different than retail. We’re going to sell telematics services, we’re going to finance our small customer’s shop itself, not just the vehicle fleet. We’ll have a full charging solution for the customers we’ll get.

We want to be the Supercharger network for depot charging. Those dealers’ businesses will be more and more remote service, and they’ll be heavily integrated into the service portfolio at Ford Pro. Their business will become a lot more specialized. Our retail dealers, this electric change is a big change for them and their staff. They also have to go remote for servicing the vehicle. And the questions they’re going to get as we really [use over the air updates on] the vehicle are going to be totally different than the questions they get today from customers. It will be more of a kind of Genius Bar relationship with customers. Probably more on your phone, on calls, than going into the dealership. A lot of the business will be remote, the way the customer wants it to be. As far as knowledgeable about the vehicle, yes, we have a huge job to do. But we’re doing that now.

Ford Motor Co. shed brands during the Great Recession. Have you given any thought to expanding Ford’s brand portfolio?

I think we kind of are with Broncos and Mustangs. But instead of a vertical brand like Mercury, we’re doing it horizontally, where we’re creating these families of vehicles. Some ICE, some digital. So yes. I think Maverick will be a new franchise. Just think about what we just did. It’s a $20,000 hybrid vehicle and the response has been completely out of control. Could we make other affordable vehicles as a Maverick family? Yes, of course we could. I think we will need those kind of brand extensions, but they’re going to stay within our icons.

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Tags: FARLEY, FORDS, Jim, plan

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