Ford just had a strong Q3, much to the delight of shareholders, who have bid the stock 10% higher since the earnings were released on October 23.
But even CEO Jim Farley understands that his 122-year-old company is in a precarious position, thanks to the current economic realities.
2024: 2.08 million vehicles sold, +4.2%
2023: 1.99 million vehicles sold, +7.1%
2022: 1.77 million vehicles sold, -2.2%
2021: 1.9 million vehicles sold, -6.8% Source: Car Sales Statistics
Farley, 63, described Ford as an “industrial company in the middle of a geopolitical tariff war” with China, the world’s largest car market, “going after directly every job in the automotive industry outside of China,” in an interview on the “Office Hours: Business Edition” podcast.
But Farley isn’t feeling sorry for himself. He says the entire industry is facing the same issues and that Ford will remain standing.
Now the question becomes whether Farley is the right man for the job. Langley asked Farley about retirement, prompting him to reference a sports star from the past.
Ford CEO Jim Farley is an avid racer.Photo by Ker Robertson on Getty Images
Ford CEO Jim Farley got reflective during his recent interview on the “Office Hours: Business Edition” podcast.
Host Monica Langley asked Farley about the state of Ford following its third-quarter earnings release, and he was frank about the state of the company.
Related: Ford CEO Jim Farley raises alarm, says ‘we’re in trouble as a country’
“I believe each of these eras requires a specific kind of leader, and I think the board recognized the moment we were in. When I’m done, we’ll all know, and I know that this will be looked on as one of the most critical periods, if not one of the most awkward periods of Ford’s 122-year history,” Farley said.
This opened up the interview to questions about the future and whether Farley sees himself as the person to lead the company into that new era, or whether he feels like he’s ready to retire.
Farley, an avid racer himself, recalled an interview with open-wheel Indy Car racing legend Johnny Rutherford.
According to Farley, the three-time Indianapolis 500 winner said he knew it was time to retire when one day he came into the garage and he didn’t “sweat all the little details” about the previous race.
People on the outside assumed that he retired due to a horrific wreck on the track, but according to Farley, the real reason was that he knew that when he stopped sweating those details, “I was not going to be the best in the world.”
Rutherford came to that realization six months before he actually retired.
“We’re performance-oriented and we’re competitive, and so we all recognize we don’t want to lead when we’re not the best person to lead,” Farley said.
Farley also said that he still sweats those small details, and he doesn’t plan to retire as CEO of Ford anytime soon.
Ford CEO Jim Farley says he is the right man to lead the company into the future, and the future he sees is electric.
But Ford has lost about $5 billion a year over the past three years on Model e, its EV division. Still, Farley looks to his competitors to help fix the problem.
Related: Ford CEO Jim Farley shares ‘shocking’ lesson he learned from Tesla
“I was very humbled when we took apart the first Model 3 Tesla and started to take apart the Chinese vehicles. When we took them apart, it was shocking what we found,” Farley said.
Ford found that its own Ford Mustang Mach-E had approximately 1.6 km more electrical wiring than the Tesla, which added unnecessary weight to the vehicle, requiring a more expensive and larger battery.
While Farley didn’t speak much about the builds of Ford’s Chinese rivals, he did praise the government for promoting the EV industry in a way the U.S. does not.
Farley said that “EVs are exploding in China” because the government there has put its “foot on the economic scale.”
Ford CEO Jim Farley is a fan of electric vehicles. He has repeatedly said he sees the technology as the future of transportation, but the technology and consumer demand have not yet caught up to the industry’s lofty ambitions.
In September, Model e had its best month of sales ever, as buyers flocked to dealerships to take advantage of the $7,500 EV tax credit that expired in September.
Despite those sales, Model e lost $1.4 billion in the third quarter alone, due to spending on new products and increased competition, according to Ford.
According to J.D. Power, electric vehicles are on track to surpass a 12% market share in the U.S. for the first time, following a 2.6% year-over-year increase.
However, the expiration of the $7,500 EV tax credit has dampened expectations that such growth is sustainable.
Ford CEO Jim Farley stated during Ford’s Q3 earnings call that the company now anticipates EV adoption to account for approximately 5% of the U.S. market.
Related: US auto giants give car buyers mixed messages about EV plans
