USA TODAY International Edition
Ford CEO leads charge in electric vehicle war
Buoyed by Mustang Mach- E, Farley vows to be in front
Jim Farley, the new Ford CEO, arrived early for his appointment at the old Ford Piquette Avenue plant in Detroit, the building where the gasolinepowered Model T was born more than a century ago.
On this recent day, a Grabber Blue all- electric 2021 Mustang Mach- E was sitting in front of the plant, which has been turned into a museum filled with collector cars that shine like new.
People come here from all over the world to see and experience the past.
But Farley arrived at the plant to talk about the future.
“Ford has always been on the forefront of what’s new,” he said. “Now it just happens to be a Mach- E.”
This man is known inside and outside the industry as a gearhead, someone who eats, sleeps, breathes, talks and races fuel- burning cars. In November, he defeated teams racing in pairs while driving his 1978 Lola 106 mph solo.
He took the helm of Ford nearly four months ago, exactly 112 years after the first Model T was built on Oct. 1, 1908.
Production of 15 million Model T’s over 19 years transformed America forever. And now it’s happening again. With new leadership in Washington, the automotive industry says it will see rapid adoption of revolutionary changes.
F- 150 dominance
Ford, as the maker of America’s pop
ular F- 150 pickup, appreciates the tradition of pumping gas into the internal combustion engine, often called ICE, as well as anyone. The F- Series franchise is widely praised as a successful company within a company, generating an estimated $ 50 billion each year.
Yet more than a dozen state governments, led by California and its billions in spending power, as well as Europe and Asia, are pushing auto companies to build all- electric vehicles that require pumping electricity instead.
Not only are states and countries providing incentives to make the change, but they’re issuing restrictions on sales of vehicles that don’t. In California and several other states, electric vehicles can use speed lanes during rush hours and shorten commute times.
Tesla, run by billionaire Elon Musk, is established as the all- electric leader with four popular models that run on batteries, building a record 499,000 vehicles in 2020.
“The auto industry is undergoing the most significant technological change in nearly 100 years. If the established companies do not make this transition, they’re going to go out of business,” said John McElroy, “Autoline” host and veteran industry analyst.
“Tesla has shown that startups can thrive and steal sales from traditional automakers. We all know Tesla is the most valuable car company in the world. Tesla, alone, is bigger than the entire American auto industry,” he said.
Tesla is valued at $ 802 billion, compared with Ford at $ 45 billion or General Motors at nearly $ 79 billion.
For Ford, it is Farley, the grandson of a Model T factory worker, who is guiding the company through “the last days of the ICE Age” to electrification, a term used by Morgan Stanley analyst Adam Jonas in his Dec. 2 note to investors.
Strategic timing
“Financial markets, for sure, are seeing the e- mobility revolution happen,” Farley told the Free Press. “In December, in Europe, 1 of 10 vehicles sold was a pure electric. Not plug- in or hybrid but pure electric. China has been on this increase for a long time. This is a reality. Customers are moving to e- mobility.”
Ford has made fewer headlines than its crosstown rival GM in the race for electric dominance. GM CEO Mary Barra often wins praise from Morgan Stanley, Credit Suisse and others for her plan to bring 30 electric vehicles to market in five years.
Farley isn’t fazed by the attention heaped on competitors. He said Ford is focused in a way that others aren’t and while they talk about plans, Ford is not just executing but winning critical reviews for its first product specifically designed to challenge Tesla: the Mustang Mach- E, which began shipping from its plant in Cuautitlán Izcalli, Mexico, at the end of 2020.
“Ford’s electrification strategy is not like others,” Farley said. “We’re going to have very emotional vehicles. We’re electrifying our most iconic vehicles. Everyone knows what a Mustang sounds like and feels like. This Mach- E is a different kind of Mustang, but it’s still a Mustang.”
Now is the first inning of the electrification game, and the company isn’t planning to compete in every market
segment but instead dominate areas of established strength, he said.
Farley is pushing his team to break constraints and improve battery capacity, get more electric vehicles into the product cycle plan for future years and grow the volume of vehicles that can be manufactured given the anticipated demand for the Mustang Mach- E, E- Transit van and the 2022 all- electric F- 150.
Everything fuels the electrification strategy at Ford, including the Jan. 11 announcement to close three plants in Brazil. That move allows the company to reprioritize spending and bring customers “connectivity, electrification and autonomous technologies.”
The automaker has essentially abandoned cars to focus on trucks and SUVs, which have generated strong revenue and record per- vehicle transaction prices.
Ford will be electrifying its most recognizable SUVs too, Farley said, though he declined to provide detail. As the market floods with options, Ford wants to stand out and have its specific products established as nameplates before pivoting to electric nameplates.
“That’s very specific to Ford,” Farley said. “Mach- E is coming out after Tesla but before others. You don’t see any vehicle out there that has Detroit swagger that’s affordable. Mach- E is $ 35,000 with the ($ 7,500) federal incentive.”
Best in North America
Ford hasn’t released Mach- E sales numbers yet.
Emma Bergg, a Ford spokeswoman, said Thursday, “While we aren’t providing details, we expect sales to be around 50,000 globally in the first year of production.“
Over- the- air updates will add features including a hands- free driving system. Onboard navigation will plot cross- country routes for battery- charging stops. The base model can go 230 miles on a charge, extended- range models up to 300.
The hot new SUVs won’t fill dealerships; they’ll be made to order. This was the first time Ford had ever launched a product through a reservation process, anticipating intense demand. California is leading that demand in the U. S.
The Golden State accounted for 256,800 electric vehicle registrations or nearly 47% of the national total as of the end of 2018, according to IHS Markit data. Washington state came in second with 28,400. Michigan had just 4,210.
“GM, Ford and Chrysler face an existential threat,” McElroy, the analyst, said. “If they don’t figure out how to compete in the electric market, they’re going to go out of business.”
The fact is, GM saw its stock price climb to historic heights – past $ 50 – after its CEO gave a keynote speech on Jan. 12 at the Consumer Electronics Show outlining plans for the future.
“GM has a pretty damn good strategy and it’s way ahead of Ford and everybody else right now,” McElroy said. “Among traditional automakers, GM is clearly in the lead. Ford is definitely behind.”
Farley offered a different perspective. “We are the first and only company that I see that will offer an electric van and an electric pickup truck in 24 months,” he said. “That’s not come from behind. We’re the first. We are the dominant player.”
Nonetheless, Jonas wrote to Morgan Stanley investors on Nov. 25, despite Ford’s “sense of urgency” the automaker’s electric vehicle strategy “is still not fully clear to us.”
There’s no turning back now.
“It’s getting more and more serious,” McElroy said. “Cities and countries are actually banning the internal combustion engine. England moved up from 2035 to 2030. Automakers all of a sudden are like, wait, what do you mean a ban? Market forces aren’t driving this tipping point to EVs yet.”
The industry, though, also is seeing a historic shift in how it makes money. For more than a century, automakers profited solely off vehicle sales. Now the business model is patterned after Facebook and Google, which monetize data and information about consumers.
“That’s where the world is going,” McElroy said. “BMW is toying with the idea of having a monthly charge for when customers want to use electric heated seats” instead of just buying the option once, for example.
White House effect
With a new administration that acknowledges the science of climate change and vows to invest in transitioning the auto industry to cleaner technology, analysts say this can only help the Detroit Three and the industry overall.
For now, Tesla is a big player in California, home to 1 in 6 consumers.
The landscape will change dramatically if President Joe Biden fulfills his goal to invest in charging stations and consumer incentives to reduce greenhouse gas emissions.
Already in California, Ford has been recognized by Gov. Gavin Newsom as an ally in the push to improve air quality.
California dreaming
While Ford, Honda, BMW and Volkswagen sided with California in July 2019 in an effort to set its own clean air standards, GM, Fiat Chrysler Automobiles, Toyota and other automakers sided with the Trump administration’s attempt to overturn the California standards.
Bill Ford, executive chairman, an advocate of sustainability since 1979, played an instrumental role in his company’s decision to stand with California.
Opposing the state’s efforts was a shocking strategy for GM and Toyota, given their vocal commitments to sustainability, California officials said.
After Biden won the election, GM switched sides. CEO Barra put out a letter that her company would no longer support the Trump administration and urged other automakers to do the same.
‘ Gone crazy’
If early orders are any indication, the Ford message is finding traction out West.
Ashley Valletta, general manager and vice president of The Ford Store Morgan Hill, California, located south of San Jose, said last fall the demand for electric cars was insatiable. “Tesla has just gone crazy in northern California and the Bay Area, in general.” But in her market, the leading brands are Toyota, Honda, Tesla and Ford – in that order. Tesla outsells Ford by the thousands.
“We see the Mach- E as being a competitor to Tesla,” she said, with more than 50 orders in the system.
Then and now
Back in Detroit, on that cloudy afternoon earlier this month, Farley looked at his watch and wondered about Piquette Plant visitor hours, thinking he might be able to walk the museum, which is no longer owned by Ford but has been run as a nonprofit for 20 years.
“Do I have time just to look through the cars?” Farley asked David Flatt, executive director of the museum, who nodded.
The executive zigzagged among dozens of Fords – Model A, Model B, Model C, Model F, Model K, Model N and Model R, Model S and Model T. He zeroed in on the fancy Model K, built before the Model T and selling for $ 2,800 at the time.
The Piquette Plant was the first factory to build more than 100 cars in a single day, which began with the Model N. Everyone knows the Model T because it was the most successful of the letter cars, which initially sold for $ 850 and eventually dropped to $ 265.
Farley read placards aloud and laughing and shared his own stories about Ford history and evolution of the vehicles, materials used to make them and prices. He talked about mistakes and discoveries to an aide in an otherwise empty museum near closing time.
“Did you know snowmobiles came from Model Ts?” Farley said, pointing to a car on blades. He went off for a bit, to be alone with the cars then returned.
No looking back
“I grew up with the internal combustion engine and I race cars. I love cars, love working on them,” Farley said.
“The electric car, I would just say, is a better car, in a way. You eliminate 30 to 40% of the parts. Those are the ones that break and are expensive to repair. The inside has more room. You get new space up front, a frunk, a front trunk. You can make the car better with over the air updates,” he said.
“It’s just a better car.”