Ford’s CEO Says Tesla Needs To Be Taken Seriously As The Dominant Player In The EV Market

November 6, 20213 years ago Johnna Crider 0 Comments

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Long gone are the days when Tesla and Elon Musk were at the butt of many legacy auto jokes. The silly notion of an electric car proved to be an idea that isn’t so silly after all. It’s ruthless and cutting edge. And legacy automakers still aren’t prepared for it. Recently, Ford CEO Jim Farley held an internal meeting with some 20,000 Ford employees, and a good portion of that meeting was about Ford’s competition, primarily Tesla.

The Detroit Free Press was able to get a copy of the video of the meeting, and according to it, Farley said that Ford needs to take Tesla seriously as the dominant player in the EV market. He compared Ford with Tesla while also using charts and graphs.

The article noted that Farley mentioned Volkswagen and Rivian as well. Farley’s main focus, however, was on Tesla. The article noted that Farley’s tone was rather serious while discussing Tesla and that he emphasized that Tesla was operating from a position or place of strength, using charts, graphs, and specific comparisons.

“If Ford was a trillion-dollar company, our stock would be worth about $250 a share. Think about the value creation of Tesla right now. And they have resources, smart people, the Model 3 is now the bestselling vehicle in Europe. Not electric. Flat out. It was the bestselling vehicle in the UK. Most months, it’s the bestselling vehicle in California. Not just electric, but overall. If we’re going to succeed, we can’t ignore this competition anymore,” Farley said.

“Look at Tesla, why are they doing what they’re doing and what can we learn from them. First, they have a direct model … There’s no one in between. They make it so easy. Three or four clicks configuring the vehicle with not a lot of complexity to delivering it to the customer. Simple, non-negotiated pricing. A large reservation system as well as remote service.

“Second, Tesla maximizes use of electrons in the vehicle. No one does it better than they do. Their customers pay less for a better battery. …

“Third, the product itself is highly differentiated from the rest of the ICE field and complexity is tiny, compared to OEMs.”

That isn’t all. The article noted that Farley pulled out a chart and said that Ford’s competitors are “unbelievable in this space,” and added that this is something Ford hasn’t ever seen before. Farley also mentioned that even though Ford’s investment in the EV startup Rivian is expected to pay off, Rivian is also a formidable competitor to Ford. He also spoke about Volkswagen and noted that it was the second-largest producer of EVs in the world — behind Tesla. (It’s actually third, but who’s counting? Or, well, it’s second if you count plugin hybrids.)

Will Ford Do Away With The Dealer Model?

The dealer model is pretty toxic to the auto industry. Before Tesla and its direct sales method came along, the only way you could buy a car was through a dealership or directly from the car owner. With regards to the latter, I know folks who got scammed from buying used cars off of Craigslist, but the former is highly toxic.

When Farley brought up the “direct model,” he was referring to how Tesla sells its vehicles. And his willingness to learn from Tesla indicates that he is considering changing how Ford’s vehicles are sold. He even admitted that there isn’t a lot of complexity, whereas how Tesla is selling and delivering vehicles to its customers is super simple. He noted that it has simple, clear pricing and that there is no negotiating. Farley is certainly aware of how many dealers scam their customers with markups and hidden fees. The question I have is what is he going to do about it? Will he follow Tesla’s lead and phase out dealerships?

Tesla leads the way #TSLA @tesla @elonmusk @ford
Ford’s chief financial officer is asked if Ford will eventually skip the dealership model, create their own parts & batteries, in their ‘road map to an electric vehicle future.’ pic.twitter.com/JagrCrVKK3

— Gail Alfar (@GailAlfarATX) November 5, 2021

Era of Change

We are living in an era of change. Change like this is something that is often written about in history books. I remember being in school and reading about historical figures and how some invented a life-changing machine that changed industries. We are living in that kind of time right now and are witnessing the evolution of the automotive industry as a whole. Volkswagen and Ford are opening up and both have admitted that Tesla is the leader here.

Not only are legacy automakers paying full attention to Tesla and its mission for sustainability, but they are taking note because they know that their survival depends on it.