Ford CEO praises Tesla in sobering talk about the challenges the company faces

In October, Ford CEO Jim Farley spoke to employees in a closed-door meeting and delivered a sobering speech about the company’s challenges.

Farley outlined what Ford is doing right and what they must change to compete and strengthen the company’s finances.

He made specific comparisons with Tesla and explained what Tesla is doing well.

“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.

Although the meeting was not open to the public, the Detroit Free Press did receive footage of it.

As per Ford employees who attended the meeting, this was not like a Farley rah-rah meeting.

One employee compared it to a winning football team coming into the locker room after the win only to see their coach going through what they need to improve on in the next week at practice.

“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. Their focus … after they launch the vehicle, their obsession after the launch of the vehicle, to make the customer experience better, to re-engineer the electronic components, to simplify, to address quality based on data coming off the vehicles, to reduce the bill of material based on how people actually use the vehicle, to drive vertical integration, so they do more and they solve the hardest problems at Tesla. And they manage every electron so they can be as efficient as possible with the expense of battery

Third, the product itself is highly differentiated from the rest of the ICE field and complexity is tiny, compared to OEMs,” Farley said, referring to automakers by their old-fashioned trade term, original equipment manufacturers.

Unlike most of his speeches to the company, Farley did not make any jokes and delivered a very sobering reality. He urged employees to be creative and look for opportunities to be more efficient, agile, and cost-effective.

“… That allows them to have enormous reuse. Reuse that we’ve never seen in our ICE business. Tesla can scale quickly because of that complexity reduction. They can drive cost down, which they have. They can keep processes simple.”

“Reflecting on what’s happening now, and looking into 2022, Farley said, “We need to be honest with ourselves about the market, the strength of our competition and the work we need to do together.”

Farley and Ford note that Tesla is the dominant automaker in the EV space.

“Look at this chart, the market is evolving rapidly towards electric. While we’re making progress, and we are, we have a lot of work to do. But our competitors are unbelievable in this space, something we have never seen.”

In addition, the CEO indicated that Rivian and Volkswagen are making gains and will be the significant competition over the next several years.

Ford is coming from a position of strength, but obviously, their leadership is not complacent in a very competitive EV industry.

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