DETROIT – CEO of Ford Motor Co. said the automaker has no plans to develop tram or internal combustion businesses, but are reinventing themselves by eliminating costs and ramping up large-scale sales of software and electric vehicles.
Ford CEO Jim Farley told Wolfe Research Virtual Global car technology Conference Wednesday that the company can achieve profit margins similar to Tesla by using electric motors, electronic components and other components across all vehicle sizes.
But to do that, Ford needs human talent that is completely different than it currently is, Farley said in a surprisingly candid interview with analyst Rod Lache. He also said the company has too many people and too many complications, and they don’t have the expertise to make the transition to battery-powered cars. “That’s the simple answer. There is waste,” he said.
Ford is headquartered in Dearborn, Michigan and has approximately 183,000 employees worldwide.
Ford, says Farley, can’t just pivot from the internal combustion engine to the battery supported media. The internal combustion engine organization is good in terms of bodywork, paint and manufacturing, and will be envied by start-up electric vehicle manufacturers.
But “I can’t turn to ICE and say, ‘Be Tesla,” Farley said. “They can do it on the body (automatically). They can do it in factory operations, but that’s not good enough,” he said, without giving specifics about the changes to come.
Ford has only 15% of the market in the US, so the switch to battery cars is an opportunity to attract new customers. But Farley said it needed to make the buying process simple and completely online, with no inventory in the system and home delivery.
Ford’s distribution costs are between $3,000 and $4,000 higher than Tesla’s, Farley said, and is looking to bridge that gap by attracting new talent with those skills.
Neither Ford’s internal combustion business nor Ford’s electric vehicle business is as profitable as it could be, Farley said. The company needs more talent to reduce structural costs and improve quality in its ICE business, he said, while also cutting material costs for electric vehicles.
The company can also make a difference by updating its software online so that customers understand how their vehicle is changing, and the company needs to keep customers on the service so that if they have a problem, mud or a problem arises within four or five years, they can be within the simple Ford system, Farley said.
He also said the company is working hard to secure raw materials like lithium and nickel for the production of EV batteries, and expects more announcements in the coming months.
Bloomberg news agency reported on Friday that Ford is looking to separate its electric vehicle business from its legacy combustion business to win the backing of investors like Tesla.
But Farley said Wednesday that’s not happening.
“We have no plans to cut off our electricity business or our ICE business,” he said. “It really revolves around focus and competence, expertise and talent.”
Ford shares close Wednesday down 2% to $16.95. They have lost about a third of their value since hitting a 2022 high on January 14.
