A Donald Trump victory won't shake Ford's commitment to its electric future, CEO Jim Farley told investors on an earnings call Wednesday. Regardless of temporary regulatory rollbacks, Farley says Ford has to keep pace with Chinese EVs if it wants to build a strong, sustainable long-term global automotive business.
"We believe that the fitness of the Chinese in EVs will eventually wash over our entire industry in all regions. And so we believe, as a company, even if there were short-term adjustments we could make to a compliance-led, lower-requirement lineup, we're not going to approach it that way. We really believe what I said, which is that many Americans would find an electric vehicle lowering their cost. Not everyone, but a high percentage," Farley said, in response to an analyst's question about how the election would affect Ford's strategy.
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The Great EV Slowdown
Softening demand for EVs and the spectre of a second Trump administration have given many automakers cover to dial back their EV ambitions. Ford has canceled some projects, but its CEO insists that the company is forging ahead to become an EV leader, regardless of who the President is.
At the same time, however, Farley recognizes that Ford has to keep adjusting its approach. He noted earlier in the call that—after 2 and a half years as America's second-best-selling EV brand—Ford has learned some hard lessons about the future of the EV market. For starters, he said, EVs are likely to be smaller on average than their gas-powered equivalents. Part of why ICE vehicles got so huge is that it's not much more expensive to make a bigger vehicle, but you can sell it for a higher price. EVs flip this relationship: Bigger EVs require bigger batteries, and consumers aren't willing to pay what that costs. It's hard to stomach a $96,000 Silverado, even if it goes 400 miles on a charge. So Ford is pushing forward with small, affordable EVs in the pipeline.
Yet challenges remain ahead. Farley noted that Chinese companies benefit from much cheaper battery prices and have demonstrated a rapid pace of innovation. On overall cost, he said, "China and Tesla are the benchmarks." For now, Ford doesn't have to worry about Chinese EVs in America. Biden's 100% tariff on Chinese cars—likely to be maintained under a second Trump presidency—makes them uncompetitive here. But Farley says it would be a mistake to ignore them altogether.
Chinese innovations, he said, will ripple out throughout the car industry. Ford also has business in China, and it sells cars in plenty of markets where Chinese EVs don't face the same kind of steep tariff wall. The software-defined future of vehicles—both electric and internal-combustion—is already assured. So Ford needs to make sure it can win in that space, and not slow down just because the government gives it permission to.
"We believe that to be fully fit globally, whether it's our Ranger business, our commercial business, anything, really, we have to find a way inside the company to be fully fit with lots of partnerships on the supply chain side," Farley said. "And so this is an enduring strategy at the company. It is not a strategy where we handicap to the Presidential election, and the next one, and the next one, and see what we can get away with with the EPA. That is not how we run Ford. Because Ford didn't go bankrupt. It has been enduring. And the only way, we believe, to be enduring is to make money on small Evs and commercial [sales]."
It's a strong statement from Ford. While many car executives bemoan tightening regulations, Farley's comments capture the reality: Legacy car companies are already behind on software-defined, cost-competitive EVs. Meanwhile, even without subsidies the cars are now often cheaper to own than internal combustion vehicles for many people. As the infrastructure improves and wariness fades, consumers are going to want good electric options. Slowing down may be legal under a new Trump administration, but that won't make it smart.
Contact the author: Mack.hogan@insideevs.com.
