Ford’s Farley believes he knows how to beat the Chinese on EVs. Wall Street’s reaction.

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Ford’s Farley believes he knows how to beat the ******** on EVs. Wall Street’s reaction.

Ford Motor Co. CEO Jim Farley sees the automaker as in a race against ******** manufacturers to make affordable, yet profitable, electric vehicles. Farley says that the key to winning is to downsize the vehicles and the price.

That might sound obvious, but it is also counterintuitive, given that the automaker’s first all-electric vehicle in recent years was the F-150 Lightning pickup. Also, Ford’s bread-and-butter moneymakers are the F-Series gasoline and hybrid pickups.

But Ford’s restructuring of its EV investments and strategy has become a repetitive mantra for Farley in recent weeks, as he tells Wall Street analysts the automaker is in good shape to develop a variety of vehicles and propulsion systems to meet customers’ range requirements and wallets. Most importantly, Ford is positioned to better compete against the ******** EV giants, especially BYD, which is known for high-quality, yet affordable, EVs. Those cars are currently barred from the U.S.

“We think that our battery strategy is more fit than our competitors,” Farley said at a Wall Street conference recently. “And we have understood BYDs through teardowns and future knowledge from the supply chain.”

While Ford deserves credit for tweaking its EV strategy to focus on smaller, more affordable EVs, some industry experts said all of the Detroit automakers should have recognized sooner that developing cheaper battery technology on smaller vehicles was the right way to gain widespread EV adoption in the United States.

“If anything, Ford was way too aggressive in capacitizing for more expensive vehicles and late to recognize that it needed the Skunkworks,” Sam Abuelsamid, vice president of Market Research at Telemetry Insights said.

Skunkworks is the team of engineers that Ford put together in California to develop a low-cost EV platform.

“Even Tesla was early in recognizing the need to take cost out of its EVs, and while affordability remains challenging with Teslas, they have found a path to profitability, something few automakers globally have achieved with EVs,” Abuelsamid said.

In its EV fleet, Ford currently sells the Mustang Mach-E, F-150 Lightning and E-Transit van. The company remains on target to launch a new, smaller EV, likely a midsize pickup, in 2027. It is expected to be priced below $30,000. In the fourth quarter,

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in the states rose 16% from the year-ago *******. For the full year, Ford sold 97,865 EVs, up 35% from 2023.

Farley told Wall Street to expect more news this year around Ford’s EV investment strategy and that one thing is certain: Exorbitantly priced EVs will not yield high sales volume or profits, so don’t expect to see them come from Ford, he said.

“For larger retail electric utilities, the economics are unresolvable,” Farley said during the company’s fourth-quarter earnings call with analysts earlier this month. “These customers have very demanding use cases for electric vehicles: They tow, they go off-road, they take long road trips. These vehicles have worse aerodynamics and they’re very heavy, which means very large and expensive batteries.”

Farley said retail customers have shown that they will not pay a premium for these large EVs, making them “a really tough business case given the expense of the batteries.” He told Wall Street that some of Ford’s competitors are continuing to bring expensive EVs to the market “that are not going to work.”

While he did not name those competitors, General Motors has launched newer EVs that include the GMC Hummer pickup and SUV, both starting at about $96,500 and the Silverado EV starting at $73,100. GM also offers the more affordable Chevrolet Equinox EV starting at $35,000.

Jim Farley, president and chief executive officer of Ford, talks with the media after Ford kicks off the 2025 Detroit Auto Show with a reveal at Huntington Place in Detroit, Thursday, Jan. 9, 2025.

Farley said Ford will make more profits from its larger vehicles if they are extended-range electric vehicles — which means they combine an electric motor with a small internal combustion engine — where “one tank of gas gets over 700 miles of range, but still drives most miles all-electric,” Farley said.

The “sweet spot” that has emerged for EVs, Farley said, are small and medium-size pickups and SUVs. They are good daily commuters and, because they require smaller, much lower-cost batteries, they can be priced reasonably.

Farley told investors at Wolfe Research Auto, Auto Tech and Semiconductor Conference held in New York earlier this month that Ford is in “good shape” after restructuring its EV investment strategy. That’s even after the automaker lost about $5.1 billion on its EVs last year.

In 2022, Ford established Skunkworks, where Farley said, “My badge does not work in that building,” alluding to the top-secret development happening there. He said Ford hired a whole new team in California, with many from competitive all-EV brands.

“They have developed a platform that we think is fully competitive with BYD,” Farley said.

Farley said creating Skunkworks proved to be effective from a cost standpoint. The automaker has developed a new platform at about a third of the cost than had Ford done it in-house.

“That will give us a huge benefit, because we believe that EV demand is still out there, that there is a very underserved group of people on the super affordable,” Farley said. “But these very large EVs that cost $50,000, $60,000, $70,000, we don’t believe in. We think (extended-range electric vehicle) or hybrid is a much better, more profitable investment in our capital.”

For that reason, Ford canceled plans last August to develop an all-electric three-row SUV. The high costs of producing a large battery for it would require a high-price tag on it and likely little, if any, profit margin.

“We learned quickly,” Farley said at Wolfe. “We adjusted our capital spending in line with where we think the market is going.”

Farley did not address the fate of the F-150 Lightning in any of his recent comments to Wall Street. But the EV is a big pickup that starts at $47,780, which would not fit his expressed vision for Ford’s EV future. A Ford spokesman did not immediately respond to a request seeking comment on the Lightning’s future.

But industry follower and host of the podcast and webcast “Autoline After Hours,” John McElroy, told the Free Press that he thinks the Lightning, in its current form, is likely to go away.

“Ford will almost certainly let the current Lightning fade away when it comes to the end of its product cycle,” McElroy said. “Though it’s a good truck, it never sold very well, mainly because it couldn’t carry heavy loads or tow for long distances. It will probably be replaced by an electric truck with a range-extender gasoline engine. And we’ll see if Ford decides to use the Lightning name on that.”

For all of last year, Ford sold 33,510 Lightning trucks, a 39% increase from 2023 sales.

Ford spokesman Ian Thibodeau said the Lightning remains an important part of Ford’s lineup.

“Lightning sales grew last year — and we continue to learn a lot about the evolving electric vehicle market by having been in the game early with a full-size electric pickup truck,” Thibodeau said.

He added that Farley was referring to the need for better efficiency in ******* batteries, which will come as the technology evolves. Also, Farley believes in the importance of growing the EV market more rapidly through the introduction of more affordable vehicles, Thibodeau said.

Overall, U.S. automakers face a serious challenge to catch up to ******** automakers that have the benefit of government support not just encouraging the technology but almost mandating it, said Sam Fiorani, vice president of Global Vehicle Forecasting at AutoForecast Solutions LLC.

Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions in Chester Springs, Pennsylvania, raises questions about the future of the Ford Edge built at the Oakville Assembly Plant in Ontario, Canada. This photo was taken in March 2019.

“By building an industry around battery electric vehicles, China positions its companies as global market leaders rather than having to find openings in the global (gasoline-powered) vehicle market or by establishing their brands as low-cost, entry-level offerings, Fiorani said. “Brands like MG and BYD are carving out their own niche in many markets and will be well-positioned as buyers find they can live with EVs.”

China automakers’ head start will snowball because they can put revenue back into research and development to make better batteries, which keeps them ahead of the profit-focused automakers in Europe, North America, Japan and South Korea, Fiorani said.

“Unless there’s a huge shake-up among the ******** automakers, this lead isn’t going to diminish,” Fiorani said.

It should come as no surprise that smaller, less expensive EVs make sense, Abuelsamid said. For that reason, he stops short of giving Ford too much credit for refocusing its strategy, saying it’s what Ford and its Detroit counterparts should have done all along.

“All you have to do is look at China and Europe where those form factors are thriving as EVs,” Abuelsamid said. “Unfortunately, for Ford and the rest of the U.S. industry, they have become so utterly dependent on large trucks and utilities they overcommitted to electrifying those segments and put way too much resource there.”

Abuelsamid concedes that GM did have affordable EVs as part of its plan from the beginning with the Chevrolet Bolt and, later, the Equinox. CEO Mary Barra has said offering an EV at under $30,000 was the key to widespread EV adoption. The Equinox EV was supposed to start at under $30,000. Unfortunately, it got more expensive when battery material costs spiked in 2022, Abuelsamid said.

But the Chevrolet Bolt was available starting at about $27,000 in its last two years of production before GM halted it at the end of 2023. The new Bolt, due out this year, is supposed to start at under $30,000.

For Ford and GM, the move to EVs was initially an opening to transform the legacy car companies into technology companies, Fiorani said. He said the companies knew that years of undervalued stock prices were not going to be turned around by simply making a faster Corvette in GM’s case, or a more capable F-150 in Ford’s case. But the stock could be improved if the carmakers morph into modern technology firms by engineering EVs. There was just one problem, he said,

“GM’s ‘all-in’ approach was a bit too premature for the public and Ford’s direction to appeal to established nameplates like Mustang and F-Series was a good first step, if only people were ready in huge volumes,” Fiorani said. “Both automakers saw the need to appeal to everyday buyers with the Chevrolet Bolt and Ford’s Skunkworks vehicles, however, that also anticipated millions of buyers looking for an EV but only turned off by price.”

Fiorani said the widespread volume of EV buyers is years away, and until then, automakers should be offering “lower-cost models that use gas, mostly because that’s what they know and appreciate.”

Abuelsamid said Ford, GM, Stellantis, Rivian and Tesla should have paid more attention to what was happening in China with vehicle sizes and battery technology. For example, lithium iron phosphate — a type of lithium-ion battery that uses iron phosphate instead of cobalt and nickel and is cheap to produce — and extended-range electric vehicles were both created in the United States, he said. But Abuelsamid said U.S. automakers largely ignored them instead of developing the technologies.

“For full-size pickups, the emphasis should have always been on the commercial sector where 300-plus mile ranges just aren’t needed,” Abuelsamid said. “The focus should have been on products like the Lightning Pro and they should have launched from job one with cheaper lithium iron phosphate batteries to keep the cost down where it was originally promised.”

The commercial use of all-electric pickups offers big cost savings in both fuel and service. But for consumer vehicles, all-electric pickups do not make sense because of towing expectations, which severely hinder range, Abuelsamid said.

“On the other hand, the GM approach of a ridiculously large battery gets the range, but the cost and weight are just too high to be a viable product,” Abuelsamid said.

According to

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, the 2025 Silverado EV can tow up to 12,500 pounds and it gets an estimated 460 miles of range, but its starting price is $73,100.

GM spokesman Shane Levy sent a statement in response to the idea that GM’s batteries are large and costly. He noted the results from

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in which EV sales soared 125% for the quarter to 43,982 EVs sold compared with the year-ago *******, roughly doubling GM’s market share over the course of the year.

“GM’s battery platform is powering the most diverse portfolio of EVs on the road today, including the segment range-leader Chevrolet Silverado EV which has an EPA-estimated 492 miles of range,” the statement read. “With our diverse portfolio, we continue to innovate on our battery technology to deliver even greater choice to customers — aligning performance, cost, and range with customer needs.”

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Stellantis actually had the right solution with an extended-range electric truck, Abuelsamid said, and should have planned to launch that first. In January, Stellantis canceled its long-range version of the RAM 1500 REV electric pickup and delayed the launch of the all-electric model to 2026 so that it can instead focus on the Ram 1500 Ramcharger, which will use both gas and electric power.

Abuelsamid said Stellantis announced plans at its investor day last year for a Jeep EV, to be priced starting below $30,000, due to market next year.

Then there’s Hyundai Motor Group, which has also offered a much wider array of EV models in the United States than any other automaker.

“While Ford likes to tout being the No. 2 brand, it only sells EVs under the Ford brand (no Lincolns) while Hyundai has three brands and sold about 26% more EVs than Ford in 2024 and 2023,” Abuelsamid said. “The Hyundai Kona EV starts at $32,000 and offers up to 260 miles of range while the range spans up to the three-row SUV Kia EV9 and the upcoming Hyundai Ioniq 9.”

Abuelsamid said because the domestic industry has put so much emphasis on selling large pickups and SUVs, “they painted themselves into a corner” and tried to convince consumers that they don’t want smaller vehicles.

“The marketers also put too much emphasis on range, so they had to commit to using nickel-rich cell chemistries that increase costs compared to the lithium iron phosphate batteries that are dominant in China and growing in popularity in Europe,” Abuelsamid said. “The reality is the commitment to building expensive premium EVs was a huge product planning mistake.”

Sam Abuelsamid, vice president of Market Research at Telemetry Insights, speaks during the Wards Auto User Experience Conference at the Suburban Collection Showplace in Novi.

He said there was never going to be enough demand for $100,000 EVs to justify the capacity the automakers wanted to build.

“GM’s target of 400,000 electric trucks and Ford’s expansion of the Rouge Electric Vehicle Center to 150,000 capacity along with BlueOval City was never likely to pay off,” Abuelsamid said. “Now they may have a harder time selling smaller EVs to American consumers.”

More: Ford cuts stock middle manager stock bonuses; bosses told to pick who gets them

Ford builds the F-150 Lightning at the Rouge Electric Vehicle Center in Dearborn.

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sold was nowhere near the 150,000 capacity. Ford’s BlueOval City is a 4,100-acre campus under construction in Tennessee to make batteries, electric trucks and other EVs.

If the industry had invested in a charging infrastructure, smaller EVs, cheaper lithium ion phosphate batteries and extended-range electric vehicles, Abuelsamid said, EV adoption would be further along.

At the Wolfe conference, Farley assured investors that Ford is “doubling our EV volume this year.”

“We still have a vibrant business in Europe, the Puma electrics coming out,” Farley said. “We’re going to go from 100,000 to 250,000 to 260,000 EV (production). So we have a lot of growth, but it’s not in America so it’s not as obvious to investors.”

He said the innovation at Skunkworks is to design a vehicle for “manufacturability.” That means to have the “simplest, smallest footprint in a plant with the lowest labor content and that drives a lot of complexity reduction,” he said.

All in all, Wall Street was pleased with Farley’s message, saying at least “there’s a pilot on the plane navigating,” Dan Ives, managing director and senior equity research analyst at Wedbush Securities, told the Free Press.

“Ford was late to game with the rest of the crowd, but has been ahead of it with its 2027 strategy plans with a smaller, cheaper EV,” Ives said. “Farley is trying to get his arms around the EV strategy, but we believe heading in the right direction with all the changing headwinds in the Beltway.”

Jamie L. LaReau is the senior autos writer who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at *****@*****.tld. Follow her on

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This article originally appeared on Detroit Free Press:

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#Fords #Farley #believes #beat #******** #EVs #Wall #Streets #reaction

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