Ford CEO Jim Farley says there is a shifting picture of winners and losers as the industry shifts from ICE vehicles to BEVs.
Just days after Ford inked a partnership with Tesla that opens up the latter’s fast-charging network to Ford’s battery-electric vehicles, CEO Jim Farley lays out his overview and vision for how the BEV market is going to evolve over the next decade: new emerging global brands, pain points, profitability and infrastructure needs.
In sharing his BEV vision, Farley says two events happened in the first quarter that point to “shifting winners and losers”: The Tesla Model Y was the world’s top-selling BEV, and China became the No.1 exporter of vehicles globally. Chinese companies such as Geely, Great Wall and BYD are making headway in Europe where Ford and General Motors have dialed down their businesses. “It’s a new world order,” Farley says.
Farley says the most important point of competition going forward is not over battery costs or infrastructure, it’s a “global talent war.” The CEO, who came to Ford in 2006 from Toyota as chief marketing officer, says, “And there is no reason we can’t win in that talent war…and not just against other OEMs” but also against tech companies.
Farley is investing and emphasizing Ford’s dedicated commercial-vehicle business, Ford Pro, because he believes it is an area of leadership that is the hardest for competitors to attack. “It’s an incredibly complex business,” the CEO says.
The F-Series truck and Transit van business, the customization of the vehicles and the evolving professional software support is incredibly difficult for other companies, Farley says. Referring to the Toyota Tundra that Farley launched before coming to Ford, he says, “We tried at Toyota, and we ended up with half an empty factory.” Even last year, Toyota sold just 94,000 of the fullsize pickups.
Among the cost-saving services Ford Pro customers like are predictive maintenance alerts that help maximize uptime, speed limiters for fleet vehicles and tracking fuel consumption against gas-card expenditures by drivers, which eliminates costly and rampant gas-card fraud, Farley says.
Some highlights of Farley’s “fireside chat” at the Alliance Bernstein 39th Annual Strategic Decisions Conference:
While Tesla and BYD will have their third-generation BEV platforms in market by 2026, Ford’s will not come until around 2030. EVs will not reach cost parity with internal-combustion vehicles, at Ford at least, until after 2030. After 2030, cost savings per BEV will come primarily from labor savings and savings from distribution because online selling will be far more common. The recent $5,000 price cut on the Mustang Mach-E was planned two years ago. Farley told his Mach-E team to get working to cut $5,000 of costs per vehicle as soon as it launched. Incremental income from e-services will come primarily from apps connected with productivity and driver data that will factor into revenue realized from the insurance space. Farley says it won’t come from infotainment services. He says the future of insurance services could be worth $2,000 per vehicle. Ford has 600,000 subscribers to its software services, triple the level of last year. Some 400,000 of that is productivity-centered software for commercial fleet customers. “We see even greater loyalty to our software support services than we do the vehicles themselves, Farley says.” Ford Pro also includes a global network of 24/7 repair facilities. About 200,000 retail customers are paying for BlueCruise Level 2 hands-free driver-assist technology, and availability will expand to 500,000 vehicles by 2024. A Level 3 system, which is also called conditional or unsupervised autonomy, will be available in Ford’s next-generation BEVs, including Transit vans. Cooperation deals like the one between Ford and Tesla will proliferate to spread electrification costs across greater volumes, especially for smaller companies. The industry must focus on reliable, fast-charging infrastructure, not bigger, heavier long-range batteries that can move a vehicle 500 miles (805 km). Farley says the fleet will and should include vehicles of various ranges, but with an extensive charging network to make recharging as fast and convenient as filling up with gas [Hence the Tesla deal]. “250-kw batteries are ridiculous,” says the CEO, comparing the size and weight of such battery packs to a Mazda Miata. Farley says the current proposed rules by the EPA that the federal regulator says will lead electrified vehicles comprising 60% of new-vehicle sales by 2030 is not reachable without continued federal regulatory support. Even with steady, consistent support, it’s a reach. In Europe and China, though, the CEO says 50%-60% of new-vehicle sales is a viable target.
The “rest of the world,” which includes South America, India, the Middle East and Asia, may see EVs achieve perhaps a 30% share of new-vehicle sales by 2030, with EVs representing 10% of sales in India as a stretch goal, Farley says.
Asked where the industry is in the transformation from ICE to BEV, Farley turned to his favorite comparison: “We’re in the second inning of a nine-inning game.”
Keyword: Ford’s Farley: Brace for New Winners, Losers in BEV Era