New Zealand markets open in 7 hours 51 minutes
  • NZX 50

    +56.59 (+0.48%)

    +0.0009 (+0.15%)

    +84.60 (+1.08%)
  • OIL

    -0.57 (-0.69%)
  • GOLD

    -60.30 (-2.50%)

Ford: T3 EV will ‘have technology no one's ever seen,’ CEO says

Ford CEO and President Jim Farley joins Yahoo Finance Live’s Brian Sozzi to discuss the challenges of sourcing and building batteries, the expectations for the automaker’s ‘T3’ EV truck, disrupting the EV market, autonomous driving, and the road ahead for Ford.

Video transcript

BRAD SMITH: All right, well, to quote the great Marcia Griffiths, it's electric. That's what Ford would probably say if you were to ask about its future and the vision for it. The automaker banking on new production methods for its latest electric vehicles to address its biggest challenges. Yahoo Finance's Brian Sozzi goes under the hood of the automaker with CEO Jim Farley. And here's what he had to say about the challenges of sourcing and building batteries.

JIM FARLEY: First of all, batteries are the constraint here. It won't be the manufacturing site behind me. And the lithium ion batteries that we use, both lithium and nickel are really the key constraint in commodities. We normally get those from all over the world from South America, to Africa, to Indonesia and Southeast Asia. We want to localize that here in North America, not just the mining, but the processing of the materials. Actually, even if they're mined-- let's say, in the US, nickel-- most of it is sent back to China to get processed. So the big change is going to be to onshore all that capability of processing, but also mining back here in the US. It'll be a huge job, just like it has been for semiconductors.


BRIAN SOZZI: Can you get the materials you need, batteries, workers, to achieve your electric vehicle goals? And what are some of those goals?

JIM FARLEY: Yeah, we're going to build-- I mean, we build about 5 million vehicles around the world. At Ford, we're going to build an extra 2 million with our EV business. That's why we call a Model E a startup because we're going to grow the company's revenue by 30% or 40%. And we're already number two in EV in the US. Most of the customers are new to us.

So this is a growth business. We have to get these materials from around the world until we localize the supply chain, which is what we want to do. By the end of this year, we'll secure all the raw materials to make the two million batteries by 2026 that we're going to need to go in our vehicles. So we should be in good shape here. A lot of other companies are going to have to hustle to get that, but we're in good shape because we've been working on it for a couple of years now.

BRIAN SOZZI: We'll talk more about the EV outlook in a second, Jim, but talk to us about the new truck that you teased, the T3. Is this some form of autonomous super truck? What is it, and when does it launch?

JIM FARLEY: It launches in about 30 months, so just over two years. We haven't shown anyone the truck yet because we don't want to give an advantage to our competition. But it is a built for tough, real work vehicle. But it'll have technology no one's ever seen in any of these electric trucks. We're the best-selling electric truck now with the Lightning. This will be a lot better. It'll be fully software updatable. So every part, we can ship software to the car over the air. Your trucks are going to get better every time you get in it and move every morning. In fact, we think we're going to be able to land a semi-autonomous system.

So you'll be able to go to your sleep, sleep in your truck while you're traveling on the highway. And it would be, I think, the first, maybe one of the first vehicles you could do that safely in the US. And we think that kind of advantage is a big deal for truck customers. A lot of them work. They use their vehicle as an office. And to be able to do more work, bid out more jobs inside their truck while they're commuting to the worksite is fantastic.

BRIAN SOZZI: Jim, you know I'm a car guy. You and I have talked about this before. You're a car guy. How do you-- how are you going to drive in a truck-- the truck is going to drive by itself and you could fall asleep in it.

JIM FARLEY: Yeah, I mean, you know. You're a car guy. On a sunny day on a highway, we have the technology. We're just finalizing it now. We took 600 engineers out of Argo, and they've been working on a autonomous feature that while you're on the highway on a sunny day, you know, which is a lot of miles for Americans, you'll be able to drive. We have the most successful hands-free system now. We just now need to make it even more reliable so you can take your eyes off the road, not just your hands off the steering wheel. And that technology is right around the corner. And you'll be able to do that in this kind of truck. That's why we're making it completely software enabled. We're doing the whole electrical architecture and all the software. We're bringing back in-house at Ford.

BRIAN SOZZI: We've also talked in the past about your focus on making the automobile subscription oriented. In this truck, will I have to pay for heated seats? What will I have to pay for every single month?

JIM FARLEY: No, we're not going to charge a subscription for heated seats. But for productivity, actually, it turns out we kind of know what the first three shippable software to the car is, kind of like when we all first got our smartphones in '09 and '10 with music or email. And it is productivity. So we can now do telematics, predictive failure, driving coaching, even predict a failure of components on the truck. That's one thing, productivity.

The second thing is partial autonomy. So that could be hands-off, like we offer today, even eyes off in the future. And the third one is going to be safety and security. Like, think of your Ring or your Nest at home. We're going to be able to record video. If someone takes something out of the back of the bed of the truck or someone takes your vehicle, we'll be able to have the video content and send alerts when you go over the speed limit. Whatever it is, those are the three softwares that we'll be able to ship to this kind of vehicle.

BRIAN SOZZI: All right, good to know the price of a warm butt is included in this truck. That is always good to hear. I just wanted to get that word out there. Now, Jim, you had a teaching event. The CFO in your team down at the New York Stock Exchange really went into great detail on new reporting structures for the business. Now we talked to the CFO, your CFO, John Lawler. And he broke down the longer term operating margin for that EV business, 8%. Now, I got a question. Well, Tesla's at double digits. Why is that the case?

JIM FARLEY: Well, Tesla hasn't had any competition until Ford and others came along. Now their prices are down like $7,000 in one year. So there's going to be more price competition in that market. And we're counting on that. When we say 8%, it won't be at the prices we see today. And what we have to do is we have to design the truck differently. We have to scale with the plant like Louisville City here in Tennessee.

We're going to have to have a more efficient distribution with no inventory, online configuration. You can buy the vehicle and configure it online. And then we need to have a different manufacturing process with less labor content in the vehicle. When we do all those things, we'll make an 8% margin. If it was today, we'd make more than 8% because there's not as much pricing competition as I know there will be.

BRIAN SOZZI: What are you seeing in the market right now for EVS? So all of your EVs have gotten really, really high marks. But you have a Tesla out there now cutting prices. What has been your response? What are you seeing in the marketplace?

JIM FARLEY: Yeah, it's an interesting dynamic. The market is actually changing more than we expected, but that's a good thing. First of all, we have really no competition for Lightning and E Transit. Both are best van and truck in their segment, electric. And we haven't cut or adjusted prices at all. On the Mach-E, the Mustang Mach-E that competes with the Model Y, our sales continue to go up. We've had to adjust the prices down, but we also have a new affordable battery coming from the Mustang Mach-E, and we're now doubling production. And that's starting to hit our showrooms now. So the demand is really strong for us.

It is not the case for everyone, though. A lot of other EVs aren't selling. So I think, like always, it comes down to the best product wins. And I'm sure glad we're paying to our strengths. You know, Mach-E is a Mustang. That transit, Transit's a van, and we do really well. And people love Ford trucks. So we're just playing to our strengths. We think that's the right move.

BRIAN SOZZI: And Jim, you have an amazing look into the EV industry. Not only you're the CEO of Ford, but you're also on that Harley-Davidson board of directors, a company I know very well. And they have also pivoted to electric vehicles and electrification. How difficult is it to make that pivot to EVs with these legacy companies? Can you bring us inside these boardrooms a bit?

JIM FARLEY: It's a really interesting question. And I would say that the common thread between Harley and Ford, these iconic companies that are changing, first, you've got to play to your strengths. You know, if you're going to go into a new market like electric vehicles or motorcycles, you've got to play your strength. You've got to go after segments, even if they're new customers, for things that you know really well. Like, our Lightning will power your house for three days. It's got a huge trunk. Those are the things that the challenger brands didn't really know about because they don't know the customers.

The other thing is you got to organize differently. You need focus. These are new businesses. You can't use your prejudice of the past. I can give you 1,000 examples, like our wiring harness on the Mach-E. It's 1.6 kilometers longer than it needs to be because we used our internal combustion engine engineering standards for that wiring harness. But in electric, all that math changes with that heavy battery. So you need to set up a separate business with more focus. That's what Livewire is doing. That's what we're doing with Model E. And I think that's the only way to reinvent the company like we're doing. You have to approach it as a startup.

BRAD SMITH: That was Ford CEO Jim Farley alongside Yahoo Finance's Brian Sozzi.