Ford's electric car suffered a huge loss, and the global CEO had an epiphany

There is an English phrase called "aha moment", which is commonly known as sudden enlightenment.

It was created by German psychologist and phenomenologist Karl · Buller more than 100 years ago. People often have a sudden, deep realization after a failure or deep thinking, which is called an "aha moment."

Ford Global CEO Jim · Farley

Jim · Farley, 62, global CEO of Ford, the second-largest automaker in the United States, has experienced many such "epiphany moments" over the past eighteen months.

According to the Wall Street Journal, Farley and other Ford executives have spent a series of visits to China over the past 18 months, in the course of realizing that China's electric vehicle revolution is reshaping the global auto market at a pace that many did not anticipate, and that Chinese automakers are taking the lead in the race for electric vehicles.

A few days ago, the Wall Street Journal published an article titled "What Scared Ford's CEO in China" (in China, what scared the Ford CEO?). Reports. This report details what Farley and his right-hand men were thinking after visiting the Chinese market.

"They got ahead of us"

In early 2023, after China reopened after pandemic restrictions were lifted, Farley and other Ford executives traveled to the Chinese market for an inspection.

It was also Farley's first visit to China in three years as Ford's CEO. In October 2020, Farley took over Ford and became at the helm of the 120-year-old automaker. In 2021, under the leadership of Farley, Ford proposed the global strategy Ford+ plan, which is to split Ford's automotive business into three units: Ford Blue, Ford Model e and Ford Pro.

According to the Wall Street Journal, Farley is a racing enthusiast with a wealth of automotive knowledge. However, unlike usual on the field, this time Farley tested a Changan electric SUV, with Ford's chief financial officer John · Lawler sitting in the passenger seat. After the test drive, Lawler, who was sitting in the passenger seat, said to Farley, "Jim, this is not the same as before, these people are ahead of us." ”

According to the report, Ford executives were shocked by the progress made by Changan Automobile, an electric SUV that has a smooth, quiet ride, luxurious cabin and a sense of technology.

2023 is also the third year that Ford's flagship product, the Ford electric horse, the Mach E, has landed in the Chinese market. As Ford's first all-electric SUV model, the Mach E is clearly not suitable for the Chinese market. For the whole of 2023, only 2,062 Mach E units were sold. During this period, the Mach E also underwent price reductions and remodeling. So far in 2024, the cumulative sales of the Mach E are 795 units.

The Wall Street Journal noted that the test run in early 2023 caused Farley and Lawler to abandon their attempts to regain Ford's leadership position in China. Ford will mainly use China to export vehicles to other markets.

In December 2023, Ford China officially announced that "as of 2023, Ford China's vehicle exports have officially exceeded the 100,000 mark." This is a historic breakthrough in the number of cars exported by Ford China from the mainland market to overseas markets in the year."

"Meeting Chinese standards is the most important priority"

The Wall Street Journal said Farley, who had recently returned from China, vented his anxiety after visiting the Chinese market in May in a call with board member John ·.

"Chinese automakers are moving at the speed of light. They use artificial intelligence and other new technologies in their cars, and similar products simply cannot be found in the United States. These Chinese EV automakers are taking advantage of efficient supply chains to offer better products at lower prices and are rapidly capturing overseas markets. ”

"In just a few years, BYD, a Chinese electric car maker backed by Warren Buffett, and other domestic brands are taking away a lot of market share from their once-dominant foreign rivals through means such as lower prices, smarter configurations, and rapid updates and iterations. Today, they are expanding rapidly in Europe, the Middle East, and other Asian markets. ”

According to reports, "Shortly after the inspection, Farley arranged for the electric vehicles of several Chinese brands, such as Xiaomi and Ideal, to be shipped to the headquarters in Michigan, United States, for the company's senior management to experience." Ford insiders are appalled by the diverse capabilities of electric vehicles in China."

One of them is Xiaomi's first electric car (jokingly called the "civilian version of Porsche" by netizens), and the price is between $30,000 and $40,000, which is lower than the price of the Ford Mustang. The Xiaomi car is equipped with a scent diffuser and infotainment system, and its smart connectivity function can also realize the integration of the car and the smart home, through which the smart home devices can be remotely controlled, such as turning on the lights or air conditioning in the home. ”

"There's also a $77,000 electric car from Li Auto. The luxury seats in the rear are equipped with heated armrests and leg rests, as well as large multimedia screens that can be controlled by gestures. Ford executives liken this setup to business class air travel or home theater. ”

The report quoted Farley as saying that "meeting Chinese standards is the most important priority". "Farley sees Chinese electric vehicles as a direct threat to Europe and other overseas markets and a long-term risk to Ford's profit growth in North America, regardless of the government's protectionist measures," he added. ”

When Ford introduced electric horses in the Chinese market in 2021, Farley said, "In the future competition of Ford in China, the new high-end car market and luxury car market will be the focus of our business." After the trip, Farley said that Ford will focus on small electric vehicles in China, and that large pickup trucks and SUVs will continue to be Ford's profit engine in the form of gasoline vehicles.

After an epiphany

The Wall Street Journal concludes the article with a bit of space to explain what kind of person Jim · Farley is.

"Farley is not a glamorous speaker, nor is he a typical CEO," the board member said. He won't trust you until you earn his trust."

"Farley doesn't believe in any market research either, he likes to observe on his own, to see what people are doing and what they're spending their money on."

Farley, a big fan of Mr. Jobs, said one of his favorite images of Mr. Jobs was of Mr. Jobs crouching on the floor of his office in the '80s and observing an employee operating a Macintosh computer. Prior to taking over Ford, Farley had a marketing career at Toyota, where he spent a full year researching around the country, doing market research for the new Camry and chatting with owners in the mall parking lot. ”

For the past 18 months, he's been doing what he's always believed in, watching the market and using it as an anchor to adjust the direction of Ford's big ship.

The board also said that "Farley's honesty sometimes offends some." Farley had been asked if he wanted to be kind if he could have a superpower, and he wanted to be kinder.

But Farley was just an ordinary man. However, compared to ordinary people, Farley is not so ordinary, after all, there are not too many people in this world who can shoulder the role of helmsman. Farley, who doesn't have superpowers, currently only wants to solve one thing, make a profit. Profitability is his top priority.

Ford reported that in the first quarter of this year, Ford sold 10,000 electric vehicles, and its operating loss soared to $1.3 billion, or an average loss of $132,000 per electric car sold, dragging down the company's overall profitability. Farley expects Ford's electric vehicle division to lose between $5 billion and $5.5 billion for the full year of 2024 due to ongoing pricing pressure and investment in next-generation electric vehicles.