We write about Ford a lot. It’s hard not to in this business—after all, the Ford Motor Company makes the country’s best-selling vehicle with its F-Series pickups, moving some 40 million of them since World War II. The Mustang remains a pony car paragon in 2021, still the default choice for tens of thousands of people every year seeking cheap speed and a patriotic V8 rumble with a warranty. Beyond the cars and trucks, though, Ford holds this particular place in the American psyche. Its own history is inextricably linked with that of the country, both rising as a global power to conquer the 20th century with a blend of innovation, foresight and unfettered ambition, for better or for worse. America is Ford is America. In the 21st century, though? In 2021? In many ways, it’s back to square one.
Obviously, Ford isn’t alone in facing the challenges of electrification, self-driving cars and shifting consumer preferences. Where it does stand solo is the way its tacked into those headwinds: by mercilessly culling its lineup to replace slow sellers with total fan service specials like the new Bronco, by taking a leap with the Mustang Mach-E and putting that storied name on its first electric SUV, by developing an electric F-150 that’s so goddamn normal in design and execution that it might as well be called the anti-Cybertruck, by slapping 37s on a Raptor. You can question the wisdom of dropping sedans or developing uber-trucks, but you also have to admit there’s an unusual amount of focus at Ford these days. Give people what they want—that was the mantra from CEO Jim Farley when I sat down with him for a one-on-one interview in August.
Of course, every automaker on Earth is trying to do that. How else do you sell cars? But just look at General Motors for a counter example of how that philosophy can lead you astray. With four brands to juggle, GM shoots for the widest possible target when developing new cars and trucks. It toys with interesting niches with things the rock-crawling Chevrolet Colorado ZR2 Bison, or the Cadillac CT5-V Blackwing—but outside a halo product like the C8 Corvette, it doesn’t commit to them in a way that captures the public’s imagination. Sure, plenty of people want a straightforward midsize crossover or a small electric hatchback. Plenty more want to feel like a car company is reading their dream journal and taking it as a serious operational mandate.
That’s how you get to a splashy year like the one Ford’s had. In the last 12 months, the company launched a new generation of the F-150 (whose brilliant onboard generator is one of the most genuinely useful technical advances in years), the surprisingly popular Mustang Mach-E, the reborn body-on-frame Ford Bronco and the smaller, Subaru-fighting Bronco Sport, with the small Maverick pickup still to come. It must be pointed out that Ford has had a spotty record for first-year quality issues, something that’s already reared its head with the Bronco, and it remains to be seen how these teething pains will grow or dissipate amid all these new models. Still, there’s much for Ford to brag about right now, though even more work to bend Wall Street’s ear (see: a ~$50 billion market cap, roughly 14 times smaller than Tesla’s).
Good thing Jim Farley is probably one of the few guys who can handle it. Ford seemed fairly screwed with a stale portfolio and underwhelming leadership just a few short years ago, and though the seeds for its current turnaround were planted before Farley took the helm as CEO in October 2020, the excitement and energy he’s brought to the company are undeniable. The grandson of a Ford employee and an unrepentant vintage racer, Farley is all in, in all aspects. He’s friendly, very direct, surprisingly wonky, and 100 percent committed to his cause. I met with him at last month’s Pebble Beach Concours d’Elegance to talk about the latest on the industry’s chip shortage, how Ford is using lessons from Mach-E to prep for the F-150 Lightning launch, why he won’t stop racing, what’s up with the new Mustang, and more.
The Drive: Do you mind if I record this?
Jim Farley, Ford CEO: Well, I don’t know.
TD: I mean, I could just make up the quotes, but…
Farley: Now that’s a passive-aggressive threat.
TD: Yeah, well.
Farley: That’s good, I like that. [Laughs] It’s very effective. No please, record everything. Of course.
TD: So I caught your races at [Laguna Seca] yesterday. I have to say, it is quite a sight to watch the CEO of Ford going over the kink at 120 mph in a vintage Cobra. You’re going to keep racing, aren’t you. No plans to stop.
Farley: Yes, yes.
TD: Do you think it informs your connection to Ford, to the business, what you feel when you’re in the car?
Farley: I don’t know about all that. Certainly, to the engineers at the company, it has some relevance. I just like meeting people in the pits, getting suggestions from customers. It’s my hobby, and I do want to win, but when I get back, I get to interact with lots of different people, and they give me lots of ideas. I meet other people from other industries that race, that’s also interesting. I guess our common thing is racing. Some people love it for other reasons, for me it’s the competition.
I think I make better decisions because I’m more relaxed after racing. But most of all it keeps me connected, and humble. Racing is a very humbling thing. It takes a lot of things to work to win. I think the same is true in business. It keeps me grounded. When I’m working with my mechanics, they don’t care what my job is. They’re like, you made a mistake. Don’t make that mistake again.
TD: Don’t do that, don’t do that.
Farley: There are a few people at Ford who will say that to me, but not as many as there should be.
TD: Shifting topics a bit, I wanted to ask you about the chip shortage. The latest impact on Ford is the Mach-E is now encountering a production delay of six weeks. Do you have any updates on the steps being taken to prevent these delays from cascading into other models? What’s the latest?
Farley: First of all, the chip situation is getting better.
As of late July, Ford still had at least 60,000 partially-built vehicles in storage awaiting microchips.
TD: It’s getting better? You can say that definitively?
Farley: Yeah. It’s very opaque, because if you read the announcements about this production going down, or this plant being idle for two weeks, it’s hard to see. But for sure, our wholesale is improving for this quarter vs second quarter. We lost about just under 55 percent of our production in the second quarter. We were particularly exposed to one chip manufacturer, Renases, their Naka facility—
TD: The fire.
Farley: So we were very exposed. We had a lot of single source components, to our body control modules etc from that plant. But they’re back at 100 percent now, and allocating back to where they were in 19. But kind of the rolling thunder now is that Covid hit Malaysia about two weeks ago, and there’s a lot of semiconductor processing, or even actual manufacturing in Malaysia, so they had to stop their operations. Nothing burned down, so once the labor gets back, they’ll start producing.
We’re not as exposed to that as maybe others are. I would say the most important chip supply issue is TSMC, the wafer and semiconductor manufacturer in Taiwan. They make about… autos are only about 4 percent of the global semiconductors, four percent. And they make maybe 80-90 percent of the industry’s semiconductors—TSMC, this one company. And they have absolutely ramped up production. So we are seeing better availability, but it’s not nearly what we need. We’ve guided in the second half, we see somewhere around 20 percent less [production] than we would’ve expected, but it’s very dynamic. Like with Malaysia. Even since we guided that, Malaysia has now come up, and we never expected that. So who knows?
Let’s take a bit longer view. I think what we as a company have learned is when you look at world-class companies like Cisco and their supply chain management for electronic key components, more than 50 percent of an electric vehicle is, you know, inverters, motors, batteries, and a lot of silicon. When I talk to my peer at Cisco, who doesn’t have any manufacturing facilities—the only control they have over their output is through the supply chain. They said, “Let me get this right. You ran a just-in-time system for key electronic components? You had no buffer stock?”
TD: Like, what are you even doing?
Farley: “Don’t you guys get it? We used to do that and it doesn’t work.” So we have like 10 or 15 things we’re already putting in place, and I think the bigger issue is it’s not just semiconductors. We have cameras, we have communication 5G modules, we have software, we have so many other things that mean we have to manage our supply chain differently than worrying about alternators and water pumps. That to me is more important. Is the company actioning that? Do we have buffer stocks for single-source components? Do we have off-the-shelf single source components with an alternative chip already engineered so we don’t have to waste the engineering time?
Does it cost extra? Yes. Does it give you optionality and insurance? Yes. Do we need to manage our supply chain differently than we have? Yes.
TD: So for example, the F-150 Lightning. Probably the biggest launch in, I don’t want to say in the company’s history, but—
Farley: Yeah, it’s big.
TD: It’s a big deal. Huge deal. And being an electric vehicle, it’s more computerized, there are more of those electronic components. Are you already taking action to build up stockpiles of those parts to meet demand?
Farley: I don’t want to get specifics about F-150, but I would say we absolutely are. You know, we’re a tight team, running a very important enterprise. Yes, we are absolutely learning a lot and actioning that immediately. Or else we shouldn’t be here.
TD: I guess that’s true. On the topic of the Lightning, can you talk about plans for branching that out as a family of vehicles? Say, with a Lightning Tremor? A Lightning Raptor?
Farley: I see, I see. That is the right question, because that is our strategy. We have Tremors, and Raptors, and Broncos, and F-150s, and there’ll be new icons we believe like Maverick… that is our strategy, and we are gonna double down on those. Just because we’re going digital—I don’t even want to say electric—going digital, that doesn’t change anything. We’re going to continue to bet on those.
I think the demand for F-150 is so robust right now, we really just need to do a great job launching that product. Is it exciting for us, and does it encourage us to make other investments? Yes, absolutely. The most exciting thing for us is this. Most people think of today as kinda the second inning of electric vehicles, the first inning of electric playing out over the last ten years—maybe even the last 100, but the last 10 were most prominent. The next inning that we’re entering, you’ve got vertical integration to bring the cost down to $80 a kWh. People are creating a software driven product, a digital product. There are a lot of things happening differently than in the first inning.
The first inning, most of the logic was, well these are rational buyers like with the Prius, so let’s make some kind of compact, affordable electric cars. And what we found out was that what early adopters, the early majority wanted was the good stuff. So now we’re making the good stuff, like F-150, and E-Transit, which is very emotional for our van family.
So I think that’s definitely the direction. But we have to make sure we pull it off commercially. The most important part of that is the software part. Is that F-150 Lightning’s range 20 miles longer the year after it launches? The same truck. We gotta get out of this job one mentality, where anything good comes from an entirely new product.
TD: Right, there has to be a life after purchase.
Farley: That always gets better, every day.
TD: Through OTA updates.
Farley: Yes. And the experiences, it may be a physical experience, like pick up and delivery. Who knows. There are lots of things we’re thinking about on the physical service side that’s enabled by connected car. I think that’s the real test of our fitness. Not like, how many different versions of the Lightning we should make. That day will come, we think 40 percent of our lineup in a few years will be electric, and we’re building for that variety.
But for us right now, we got our heads down on what the second inning wants. And that’s iconic products, electrified not just in propulsion, but a digital vehicle. Power your house for three days—all that stuff is important. The most important thing is the fitness of the company to use that platform to make a better experience for the customer. That to me is a more important test than if we’re gonna have a Raptor Lightning.
TD: Fair enough. You mention the importance of getting it right. Are there any specific lessons from the Mach-E launch that you’re applying to the Lightning launch? Or lessons from the Lightning reveal that you’re already applying to the future? Something you learned where it’s like, oh, this is how we have to do it with an electric vehicle?
Farley: Yeah, yeah. We did the reservation system for Mach-E too late.
TD: Why do you say that?
Farley: Because we couldn’t impact the commercialization, couldn’t buy batteries at the higher level.
TD: Ah, to match the demand.
Farley: Yeah, we didn’t have the right spec levels, the GT was much more popular than we thought. We couldn’t react. It was like, the marketing team could, but the industrial system that creates the physical product, and the software team—they didn’t get the memo of this demand. I think Lightning has really helped us a lot. We have a big head start on the capacity increase now, knowing what people want. Many [Lightning buyers] are really new to us, so there’s gonna be a lot of pressure for us to get OTAs to these people. They’re gonna want more digital experience than Mach-E.
That was a big lesson, but probably the biggest one is vertical integration. We need to be involved in battery production, we can’t just buy batteries.
TD: I’ve read that you don’t think it’s feasible to get to an all-EV lineup until we transition to solid state batteries, or some other battery-tech leap that takes the chemistry beyond what we’re doing now. Is that still accurate?
Farley: I don’t know how to handicap it, but I know that [we have to look at] solid state and or an evolution of [the] NMC [lithium-ion chemistry], whether it be LFP, iron phosphate, or some other evolution that’s more affordable and safer. LFP is very popular in China because it has much lower thermal risk.
TD: And they make a lot of it, they cornered that market.
Farley: Yes they do. Now the negatives of that is [a lower] range, and they’re starting to address that. So I think an evolution of the current chemistry from lithium ion, plus solid state—I don’t know how to handicap them. In 1911, when we did the ocean-to-ocean race for Model T, electric was 50 percent of the U.S. auto industry. Five zero.
TD: Seeing those early electrics out there on the Concours lawn, it was a striking reminder. And that charger! That charger blew my mind.
Farley: Bingo. Yeah. Now that was a really compelling product. You don’t have to get out and crank it. But by 1913, Henry Ford was already making like, half a million Model Ts.
TD: I mean, you see the clouds of smoke coming out of some of those prewar cars as they’re being run for the judges, and it’s easy to understand why people would prefer an EV back then.
Farley: So why did the combustion engine dominate? I’m just saying, I don’t know what chemistry or solid state formula will win. We gotta push both.
TD: So with the Bronco launch, there’s obviously amazing interesting massive interest, but also—
Farley: Here’s the but part, yep.
TD: —but also some production issues, like with the hardtop replacements. Yes, there’s a but part. So how do you see that developing over the rest of the year? Is Bronco production going to smooth out?
Farley: Nothing’s more important than our quality. You can see it in our financial numbers, where we lost our way and had difficulty. We have to take our time. If it means less profit, if it means replacing customers’ roofs, I don’t care. We have to get it right. It’s a simple answer.
TD: Last one. The next Mustang is coming next year, right?
TD: Are there any broad goals for that car you can share now?
Farley: For my kid to have it on his wall. Or on his phone.
This interview has been edited and condensed for clarity. Got a tip? Send us a note: [email protected]
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