Ford CEO Jim Farley shares 'shocking' lesson he learned from Tesla

Earlier this year, Ford CEO Jim Farley had a humbling experience in Asia.

The Detroit automaker has sunk billions into Model e, its electric vehicle division, for decades, with little to show for it.

Ford Model e losses by year

• 2025: $3.6 billion (year to date)
• 2024: $5.1 billion
• 2023: $4.7 billion
• 2022: $2.2 billion

In June, he told author Walter Isaacson during a panel at the Aspen Ideas Festival that he made as many as seven trips to China over the past year.

“It’s the most humbling thing I have ever seen. Seventy percent of all EVs in the world, electric vehicles, are made in China,” Farley said. "They have far superior in-vehicle technology. Huawei and Xiaomi are in every car. You get in, you don’t have to pair your phone. Automatically, your whole digital life is mirrored in the car.”

But it's more than that, he said.

“Their cost, their quality of their vehicles is far superior to what I see in the West,” Farley added.

Despite China's lead in this category, Farley believes his company has no choice but to fight back.

“We are in a global competition with China, and it’s not just EVs. And if we lose this, we do not have a future Ford."

Now, Farley is back explaining what he's learned about EVs, not only from China, but also from one of his domestic-based competitors.

Ford learned a lot about EVs from taking apart a Tesla Model 3

Ford CEO Jim Farley had his first wake-up call about EVs after his team started taking apart vehicles made by Tesla and Chinese automakers.

"I was very humbled when we took apart the first Model 3 Tesla and started to take apart the Chinese vehicles. When we took them apart, it was shocking what we found," Farley told Monica Langley, host of the "Office Hours: Business Edition" podcast.

Related: Ford CEO Farley considers drastic decision after $1.4 billion loss

Ford found that its own Ford Mustang Mach-E had approximately 1.6 km more electrical wiring than the Tesla, which added unnecessary weight to the vehicle, requiring a more expensive and larger battery.

While Farley didn't speak much about the builds of Ford's Chinese rivals, he did praise the government for promoting the EV industry in a way the U.S. does not.

Farley said that "EVs are exploding in China" because the government there has put its "foot on the economic scale."

"A car is one of the most expensive consumer products a person will buy around the planet," Farley said. "In Asia, more than 20% of the time people spend in the cars is stationary. Not in traffic, it's like a place. It's like a new second or third place for people. Especially in busy China."

Farley sees cars becoming a "third place" for adults, beyond work and home, and for automation to further transform that experience.

Ford Model e is racking up billions in losses

Ford CEO Jim Farley is a fan of electric vehicles. He has repeatedly said he sees the technology as the future of transportation, but the technology and consumer demand have not yet caught up to the industry’s lofty ambitions.

In September, Model e had its best month of sales ever, as buyers flocked to dealerships to take advantage of the $7,500 EV tax credit that expired in September.

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Despite those sales, Model e lost $1.4 billion in the third quarter alone, due to spending on new products and increased competition, according to Ford.

According to J.D. Power, electric vehicles are on track to surpass a 12% market share in the U.S. for the first time, following a 2.6% year-over-year increase.

However, the expiration of the $7,500 EV tax credit has dampened expectations that such growth is sustainable.

Ford CEO Jim Farley stated during Ford’s Q3 earnings call that the company now anticipates EV adoption to account for approximately 5% of the U.S. market. However, he predicts that number to increase in the near future as EVs become more affordable.

Ford’s plan to reduce EV capacity is well underway

Despite government intervention through EV tax credits and greenhouse gas emission credit markets, Ford has been clear-eyed about the EV market in the U.S. for years.

Two years ago, the company began reducing its planned battery capacity by 35%. In 2024, Car and Driver reported that Ford canceled plans to build a three-row electric SUV and pivoted to a hybrid version.

Farley says the company is pouring the capital it would have spent on future Model e brands into Ford Pro, its commercial vehicle fleet, and fleet management business.

“Being number two to Tesla in EVs, we’ve learned a lot the last three years. And
having a full range of truck hybrids, we’ve learned a lot…. And there’s no doubt about it that we’ve had to change our EV spending and capital allocation pretty massively,” Farley said during the company’s second-quarter earnings call.

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