Ford CEO Jim Farley told the Wolfe Research virtual global
auto technology conference Wednesday that the company could hit Tesla-like
profit margins by using common electric motors, electronic components, and
other parts across all sizes of vehicles.
But to do that, Ford needs radically different human talent
than it now has, Farley said in a surprisingly candid interview with analyst
Rod Lache.
He also said the company has too many people and too much
complexity, and it doesn't have the expertise to transition to battery-electric
vehicles. “That's the simple answer. There's waste," he said.
Dearborn, Michigan-based Ford has about 183,000 employees
worldwide.
Ford, Farley said, can't just pivot from internal combustion
engines to battery powered vehicles. The internal combustion engine
organisation is good at body, paint, and manufacturing, and would be envied by
startup EV makers.
But “I can't turn to the ICE organization and say ‘go be
Tesla,'” Farley said. “They may do it on the (auto) body. They may do it in
plant operations, but that's not good enough,” he said, without giving
specifics of what changes are coming.
Ford has only 15 percent of the market in the US, so the
transition to battery vehicles is a chance to attract new customers. But Farley
said it needs to make the buying process simple and all online, with no
inventory in the system and home deliveries of the vehicles.
Ford's distribution costs are $3,000 to $4,000 higher than Tesla's, Farley said, and is
seeking to close that gap by attracting new talent with those skills.
Neither Ford's internal combustion business nor its electric
vehicle operations earn as much profit as they could, Farley said. The company
needs more talent to lower structural costs and raise quality in its ICE
business, and cut the cost of materials for electric vehicles, he said.
The company also can differentiate itself by doing online
software updates so that customers understand how their vehicle is changing,
and it needs to keep service customers so if they have a fender bender or a
problem develops in four or five years, they can stay within a simple Ford
system, Farley said.
He said also the company is working hard to secure raw
materials such as lithium and nickel to make EV batteries, and to expect more
announcements in the coming months.
Bloomberg News on Friday reported that Ford is looking at
ways to separate its electric vehicle business from its legacy combustion
operations to earn the kind of investor support enjoyed by Tesla.
But Farley said Wednesday that's not happening.
“We have no plans to spin off our electric business or our
ICE business,” he said. “It's really more around focus and capabilities,
expertise and talent.”
Shares of Ford closed Wednesday down 2 percent to $16.95.
They have lost about one-third of their value since hitting a 2022 high on
January 14.
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