Ford CEO predicts industry consolidation: ‘There's a shakeout coming'

Ford Motor Co. CEO Jim Farley on Wednesday said that he expects to see industry consolidation happen at nearly every level in the coming years and that Chinese companies could be among the big winners.

Speaking at the Bernstein Strategic Decisions Conference, Farley predicted that dealership groups, suppliers, electric vehicle startups and traditional automakers could merge, fall out of the market or form new joint ventures as the transition to EVs changes the industry.

"No doubt about it, we're going to see very large consolidation," Farley said. "Big changes."

Farley said some smaller, traditional automakers simply won't be able to afford the transition and that EV startups' portfolios will get "simpler" over time.

"I just don't see the addressable market these companies are going after being big enough to justify the capital they're spending," he said.

Farley said Chinese EV makers are poised to make gains in the North American market, noting that many new players based in the world's largest vehicle market have very low EV manufacturing costs and have not yet looked into exporting.

"There's a shakeout coming," he said. "I feel like that shakeout is going to favor many of the Chinese new players."

Farley said he thinks the coming consolidation would likely focus on more mergers than joint ventures.

"Partnerships are hard," Farley said. "We've been in business for 118 years, and we probably have one partnership that worked really well: Ford Otosan in Turkey. Often they come down to the character of the leaders."

The automaker currently has a partnership with Volkswagen Group, which Farley did not mention. Ford recently abandoned a tie-up to jointly produce a vehicle with Rivian and canceled a planned joint venture with Mahindra.