by Impressions from Competitor Teardowns
Like many other automakers with a long history, Ford is feeling increasing pressure from Tesla in the domestic market and the increasingly active wave of Chinese manufacturers abroad. These new players are proving to be more flexible, often leading in electric vehicle design and software integration — areas where traditional automakers like Ford are struggling to keep pace. CEO Jim Farley does not avoid acknowledging the scale of this challenge.
Key Findings
Shocking Analysis Results
Shortly after the Ford executive noted that the threat from Chinese automakers now exceeds that posed by Japanese manufacturers in the 1980s, Jim Farley described a “shocking” moment that prompted him to rethink the company’s direction. He recounted that Ford engineers were stunned when they began tearing down both the Tesla Model 3 and several Chinese electric vehicles, realizing how far these manufacturers had advanced in terms of cost, efficiency, and software integration.
I was deeply humiliated when we tore down the first Tesla Model 3 and started tearing down Chinese vehicles. When we took them apart, we were shocked by what we found.
Ford’s Internal Discoveries
Ford engineers quickly discovered that the Mustang Mach-E had an extra mile of electrical wiring compared to the Model 3, adding extra weight and complexity. This discovery and others like it convinced Farley to separate the company’s electric operations into a separate division — Model E — in 2022.
Electric vehicles exploded in China, Farley said, noting that the Chinese government “stepped on the economic scale” in support of battery-powered vehicles. We cannot abandon electric vehicles not only for the USA, but if we want to be a global company, I am not going to just concede this to the Chinese.
Financial Implications and Future Plans
Financially, the decision to create the Model E division has not yet borne fruit, as it incurred losses of over $5 billion last year. However, Farley is not ready to give up.
I knew from a business standpoint it would be brutal. My principle is to tackle the hardest problems as quickly as possible and sometimes do it publicly, because that way you solve them faster.
Adaptation Strategy
Last year, Farley revealed that he drives a Xiaomi SU7 daily and praises this electric car. Clearly, he understands not only the importance of responding to the threat from China, but also how quickly Ford must react. One of the company’s most important future projects is a mid-size electric pickup priced around $30,000. Built on a new architecture designed to underpin several future models, it represents the next test of whether Ford can match the speed and efficiency of its competitors.
These events highlight how the global automotive industry is undergoing a profound transformation, where innovation and efficiency are becoming crucial factors for survival. Ford’s experience shows that even established players must radically rethink their approaches to compete with new technology leaders. The speed at which Chinese manufacturers innovate could define the future market landscape, forcing traditional companies to seek new ways to remain competitive.
