Ford CEO Offers a Challenge to Elon Musk

When Elon Musk and Ford CEO Jim Farley flaunted their camaraderie last month during a live audio event on Twitter Spaces to announce an unprecedented agreement between their two companies, fans of industrial warfare were disappointed.

They thought then that the battle between the legendary legacy automaker and the disruptor Tesla would ultimately not take place. Ford  (F) - Get Free Report, one could have concluded then, was giving up and was letting Tesla and Musk slip away with the throne of the world leader in electric vehicles.

Ford, followed by GM  (GM) - Get Free Report a few days later, had agreed to adopt Tesla's charging connector which connects the electric vehicle to the charging station. Owners of the Blue Oval's EVs will only have to purchase an adapter which will cost around $100. This was a big win for Tesla and Musk, as not only did they find a new revenue stream, but their EV charging plug is set to become the standard in North America.

'Silicon Valley People'

A few weeks later, the story has a new twist: Ford and Farley have not said their last word. They even went on the offensive to win what is the most profitable segment in the automotive industry in the United States: pickup trucks. In this case, it will be electric pickup trucks.

This is what has just been declared by Farley, whose group was one of the first to offer a vehicle in this market: the F-150 Lightning, the electric version of the best-selling F-150. Tesla  (TSLA) - Get Free Report expects to deliver the first units of the Cybertruck, its first-ever pickup truck, by the end of September, if Musk sticks to the schedule he announced in April.

Farley just said loud and clear that Ford is the world leader in electric trucks and vans, and suggested that he is not afraid of the upcoming competition from Cybertruck. He even went so far as to say that the Cybertruck, which has a futuristic design – based on the prototypes seen on the streets of California -- caters to the wealthy of Silicon Valley, unlike the F-150 Lightning, which is aimed at deep America. For him, Ford builds electric vehicles for everyone, while Tesla and Musk aim at the limited audience of the happy few. Basically, the Cybertruck is a niche car.

"The reality is, America loves an underdog -- and we are the market leader for EV trucks and vans, and we know those customers better than anyone," Farley told CNBC in an interview on Jun. 21, when told that Ford was still an internal combustion engine (ICE), or gasoline car, focused company. 

"And if [Elon Musk] wants to design a Cybertruck for Silicon Valley people, fine,” Farley added.

Ev Truck Race

As a result, Farley says he's not worried about the Cybertruck stealing market share from Ford.

"It’s like a cool high-end product parked in front of a hotel,” he slammed. "But I don’t make trucks like that. I make trucks for real people who do real work, and that’s a different kind of truck.”

Farley's defiant tone suggests that a real battle between Ford and Tesla is expected in the coming months. This fight could give a clue as to who could emerge victorious in the electric pickup truck race, which also includes GM, with the electric version of the Chevrolet Silverado and the GMC EV Hummer, as well as the Rivian R1T  (RIVN) - Get Free Report.

The Ford CEO also confirmed the ambitious target of achieving an 8% profit margin based on earnings before interest and taxes for Ford Model e, Ford's unit in charge of EVs.

In 2021, the Dearborn, Michigan-based automaker unveiled a strategic plan called Ford+, and updated it last year. This roadmap separated the company's activities into three units: Ford Model e, focused on developing electric vehicles and related software; Ford Blue, which brought together the activities of gasoline (internal combustion) engine vehicles; and Ford Pro, dedicated to fleet customers.

The goal is to produce 2 million EV units per year by 2026, up from an expected 600,000 by the end of 2023. In total, Ford plans to spend $50 billion on electric vehicles between 2022 and 2026. It had previously planned to spend $30 billion in the five years ending in 2025.