Ford Motor Co (NYSE:F) CEO Jim Farley on Friday wrote an article on X, detailing his long-standing love for gas vehicles and a newfound love for EVs, and rival CEO Elon Musk is excited. The sentiment, however, is not shared by EV owners across the U.S.
What Happened: “…as a lifelong petrol head, I was as surprised as anyone when I fell in love with electric vehicles,” Farley wrote on Friday. The change was not spurred by government policies or political beliefs but purely from a customer perspective, he said. The CEO drives a Ford F-150 Lightning Platinum EV.
Electric vehicles are not for everyone and every job, Farley wrote while also noting various “disinformation” around EVs. Innovation, though slammed initially, gets accepted if it has its edge, the CEO opined.
“When Ford said we were moving to an aluminum body in our popular F-150, our competitors aired commercials lampooning us. But customers knew better performance and fuel economy when they saw it,” Farley wrote. “It takes time for innovations to take hold. But when they do, the shift is profound and lasting.”
The next major shift in the field of automobiles will be toward software-defined and electric vehicles, the CEO said. Charging access and speed will improve, the average price of an EV is falling and the experience of an EV is different, he said, while reiterating Ford’s commitment to EVs while also making vehicles across fuel options.
Though the company incurred significant losses on EVs in the first quarter, it is bound to change, the CEO added.
“It's true that we are losing money on electric vehicles in the first innings of this transition, largely due to the upfront investment costs. But that too is changing. After all, what major technological leap forward wasn't challenging and costly at the early stages?”
Farley’s post aimed at clearing alleged “misunderstandings” around EVs comes on the heels of McKinsey & Co.’s 2024 Mobility Consumer Pulse study published earlier this month where 46% of EV owners in the U.S. said that they are likely to switch back to a gas vehicle. The consumer decision was mostly impacted by poor charging infrastructure and the high cost of EVs among others, the report said.
Musk Reacts: EV giant Tesla Inc‘s (NASDAQ:TSLA) CEO Musk shared Farley’s article on X with a short comment, “The CEO of Ford loves electric vehicles!”
Farley and Musk have a working relationship with Ford being the first rival automaker whose EV customers got access to the Tesla supercharger network earlier this year. In an interview earlier this month, Farley described the relationship between the two CEOs as a largely positive one with mutual respect.
Why It Matters: Ford's EV segment, called "Model e," experienced a significant increase in its EBIT loss, reaching $1.3 billion in the first quarter compared to $0.7 billion in the corresponding quarter of 2023. Revenue also fell 84% year-over-year to $0.1 billion, partly due to industry-wide pricing pressure. For 2024, Ford expects its EV division to post an EBIT loss between $5.5 billion and $5 billion, wider than the $4.7 billion loss recorded in 2023.
Ford currently has three EV models in production in the U.S.- the Mustang Mach-E SUV, the F-150 Lightning, and the E-transit vans. The Mach-E is the company’s best-selling EV this year in the U.S. as of the end of May with the company selling 18,737 units. The company also sold 13,093 Lightnings in the same time frame.
Ford is currently attempting to make lower-cost EVs to address customer demand while also beating competition from Tesla and Chinese EV makers who have more affordable offerings. Its launch timeline, Farley previously said, will be determined by profitability.
“…our Gen 2 vehicles we won't launch unless we can get to a profit and a return on that capital that we're investing there at the pricing environment that we now understand is reality," company CFO John Lawler said in February. The idea is to enable a profitable EV business capable of standing on its own, he added.
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