Ford CEO Jim Farley: Smaller, profitable EVs are nonnegotiable; UAW 'relationship has changed'

Ford Motor Co. CEO Jim Farley on Thursday said the shifting market for electric vehicles has made it tougher to predict the profitability of those models but that the automaker needs to develop smaller EVs that can make money quickly.

"I've been in the prediction business in the EV business; it hasn't been a great journey," Farley said during the Wolfe Research Global Auto Conference in New York. "It feels great in the moment to say, 'it's 2027,' or whenever it is, but it's not reality anymore."

Ford in recent months has delayed billions of dollars in investments, cut production, walked back margin targets and essentially recalibrated its EV strategy in the wake of slower-than-expected growth in consumer demand. Farley last week said the company is changing tack to develop a smaller, more affordable EV platform that can be profitable soon after launch.

"It's nonnegotiable that we're going to allocate capital to a new affordable electric vehicle ... and you have to make money in the first 12 months," he said Thursday, recounting the message he gave his team. "And I don't want a bullshit road map. I want, like, a real plan. And if you can't [execute] that plan, we ain't launching the car."

Farley said the company made that decision because the economics on smaller vehicles makes more sense for consumers.

"What the customer has now said to us is, if you have [an EV] larger than Escape, it better be really functional or a work vehicle," Farley said. "But if you do the economics for a vehicle, let's say the Escape or smaller, it's totally different, it completely works. In fact, it's dramatically better operating cost than a Corolla or Civic or even a Maverick."

Farley promised that Ford eventually will turn around its money-losing EV business, likening it to overseas operations where the automaker used to lose billions of dollars per year but now turns a collective profit. The company has said it expects to lose $5 billion to $5.5 billion this year on EVs.

Farley said smaller, cheaper EVs are needed to compete with Chinese automakers, which the head of Ford's EV unit this week labeled a "colossal strategic threat." Those companies sell large numbers of EVs in China and are expected to eventually enter the U.S. market.

"If you cannot compete fair and square with the Chinese around the world, then 20 to 30 percent of your revenue is at risk," Farley said. "We have to fix this problem. We have to address this."

UAW relationship change

Meanwhile, Farley on Thursday suggested that Ford could move some production in the wake of a more expensive UAW labor contract reached after a contentious strike last fall, though he reiterated that the company can fully offset those increases through cost efficiencies. 

Farley said Ford had been proud of its prior strong relationship with the UAW and was disappointed when the union shut down multiple plants, including its highly profitable Kentucky Truck operation.

“That was a moment for us,” Farley said. “Clearly our relationship has changed. … Does it have a business impact? Yes.”

UAW President Shawn Fain has indicated that the union will take a more confrontational tone with the automakers in the future, saying “the days of the UAW and Ford being a team” to compete against nonunion rivals were over.

Farley said Ford understands that employing more UAW workers and building more vehicles in the U.S. than its competitors has a cost. The new contract could prompt some reevaluation as the business evolves, he said.

He added: “As we look at this EV transition and ICE lasting longer and our truck business being more profitable, we have to think carefully about our footprint."

Fain shot back late Thursday, questioning whether or not the company needed new leaders.

“This contract was a major victory for working families across this country, and if Ford is upset about that, that tells you a lot about the leadership of this company,” he posted on X.com. “Maybe Ford doesn’t need to move factories to find the cheapest labor on earth, maybe it needs to recommit to American workers and find a CEO who’s interested in the future of this country’s auto industry.”

He said the union was “moving forward” to raise standards across the industry, referencing his push to organize more than a dozen nonunion companies.

“We encourage Ford to stay focused on building the best auto industry in the world, and not on an endless race to the bottom,” he said.