Rewind: CEO Jim Farley on Ford's EV gamble

Support for the show comes from ServiceNow. AI is moving fast across the enterprise, but without visibility, it's just chaos. Different tools, different models, different teams using AI in completely different ways. ServiceNow turns that chaos into control. With the AI Control Tower, you see all your AI across the business in one place. What it's doing, what it's done, and what it's about to do, so you stay in control. To put AI to work for people, visit servicenow.com. Support for this show comes from Klaviyo. Imagine hiring two brilliant employees. The first, takes your marketing from idea to full campaign, email, SMS, push, in the time it takes to describe it. The second handles every customer conversation, 24-7, answering questions, recommending products, handling orders, both on-brand and always on. Your next hires, Klaviyo's AI agents. Get started at K-L-A-V-I-Y-O.com. When I got a new car, I thought my insurance premium would increase and empty my bank account. Like if a twin won the lottery. I've invested most of my winnings in chicken tenders because they're bomb. But bro, I bought a house and it's sick, bro. I'm thinking the floor's gonna be all trampoline, bro, with a helipad on the roof. The contractor said it would structure the undown, but they're just being babies. But switching to GEICO saved me hundreds, so my bank account is safe. It feels good to save some hard-earned cash. It feels good to GEICO. Hi everybody, it's Nilay. You might remember last year I took a break from Decoder after we had a baby. In my place, we had an excellent slate of guest hosts and we've been working hard to bring you those episodes in full video since we launched our official Decoder YouTube channel. So today, we're featuring a really great interview with Ford CEO Jim Farley, conducted by my very good friend, Joanna Stern. Joanna was still working for the Wall Street Journal as a columnist when she did this interview, but she's since left the Journal and launched her own new media company, New Things. We actually had her on as a guest talking about her new company earlier this year. We'll link that episode in the show notes. Joanna and Jim talked back in September of last year, right after Ford announced a major new manufacturing process for its electric car lineup. Since then, a lot has happened. The company took a massive $19.5 billion write-down on its EV operation, discontinued the all-electric F-150 Lightning, and lost EV and software chief Doug Field. The Verge has done a lot of seller reporting on what's going on inside Ford as it tries to pull off its transformation. We'll drop those links in the show notes as well. But back in September, as you'll hear in this interview, Farley very much saw the future of EVs at Ford as a gamble that would require some big risks. And we're obviously now seeing just how big those risks actually were. Joanna also pulled some exclusive news out of Jim at the time, including some really telling quotes about Trump's tariff policy, competing with Chinese EVs, and the company's stance on Apple CarPlay. You knew there was going to be some Apple CarPlay in this one, didn't you? Okay, Joanna Stern of New Things interviewing Ford CEO Jim Farley. Here we go. Jim Farley, you are the CEO of Ford Motor Company. Welcome back to Decoder. Great to be here with you, Joanna. So thank you for coming on my show. Obviously, this is not my show. This is Nilay's show. But I want to give you some background here. So I listen to Decoder all the time, and I love his car CEO interviews. But often I find myself saying, Nilay, why didn't you ask that question? So when he asked me to do this, I said, that's it. I'm going to bring on car CEOs, and I'm going to ask the questions I want. I see. And so you were back on the show in May 2021. Things have considerably changed in the world, in technology, in the country, at Ford. And I want to talk about all of those things. But something also changed for me. In 2023, I got a Mustang Mach-E, as you know. I leased one. And that lease is up next summer. Ah. I'll be reading about your decision process. Well, that's going to inform a lot of this conversation because I wanted to give you the chance to be the world's best car salesman to the most annoying customer. And so I'm going to, I think that's just going to set a lot of the backdrop of this conversation here. I love it. All right, so let's start there. Last month, you said at a press conference that the Mach-E is not so great, that it's not the future of Ford. Why should I stick with a Ford EV next time? Well, we just won the new revised Model Y versus Mach-E drive evaluation by a pretty respected magazine. So I'm still pretty proud of the Mach-E is, but, you know, we knew what we knew then, five years ago, and we now know what we know now. And those are, as you said, two different things. I would say that Ford, in the second inning of product development, has really understood more fully the opportunity to serve the EV market differently than we did several years ago and to execute a product with the right approach based on those lessons learned. And that's both the consumer because we've learned kind of what consumers are willing to live with and not, like charging on the fly as well as, you know, where in the market Ford should participate and put its limited resources. And I think you're going to find that the Ford EV product range will be much sharper, more specific, more valuable to customers than it was when you last shopped. So let's dig into the news you just announced, which is that you have something called Ford Universal EV platform. What is that and when is it coming? And more specifically for me, will it be out next August and will I be able to get that kind of new Ford versus an upgrade to my Mach-E? Well, you'll learn a lot more about the first product. It's a platform by next summer, will be out in 2027. So just a few months after that. You know, we learned so much from the Mach-E. We've been number two to Tesla, a long way behind them, but number two in the U.S. market in EV sales. Not that EV sales are the most important metric, but it does give you an indication that Ford has learned a lot and has served a lot of wonderful customers like you. We have all of the data coming off the vehicle, so we have learned a lot about, you know, customers. The platform that we shared in Kentucky last week is a breakthrough approach, we believe, to develop and deliver to customers an affordable electric platform where we'll develop several vehicles off that platform and launch them over the subsequent few years and that we can have a profitable vehicle that's sustainable in terms of the company's resources and make it in the U.S. But in order to compete with the likes of BYD, who we think are among the best in the world, we had to completely reinvent the platform for the customers. And there's a lot to that. I'm sure we'll get into it. But, you know, I would say in short, the evolution revolution of our thinking was to develop a vehicle for manufacturability, to radically reduce the cost and the complexity of the vehicle with all new thinking that is not embedded in a traditional car company. And to do that, we needed all new talent and we needed them to be separate from Ford, separate from our IT solutions that we use to develop and release parts, separate from a philosophy standpoint on how to radically simplify the vehicle and really get back to the basics of Ford, Henry Ford's idea of a universal car. Our first body style will be a pickup, but it's really not a pickup. It's a new silhouette, I would say. What I mean by that is it's got more room than a RAV4, the best-selling passenger car in the U.S., and that doesn't include its frunk and its pickup truck bed. It is very fast. It's rear-wheel drive, super fun to drive, and it has a digital experience that no one's seen, at least that we've seen, even in China. The digital experience is quite different for customers. I think the whole package of something has just not been offered in the U.S. or anywhere to date. And this first product, I think, is quite revolutionary. And this first product is what you're going to have out in 2027? Yes. And you've mentioned BYD, which is competitor out of China that is clearly making low-cost, very high-tech EVs. Here in the U.S., you're up against Tesla. You're up against GM. And you've mentioned that you are the second-best selling EV, but GM has seemed to have some real luck going on with the Equinox EVs, and they're quickly taking off because of price. Is all of this, this move to put this new platform out against this backdrop, is it enough? Is it enough to compete both here and in China? Well, for us to compete globally, no, it's not enough. But in North America, it's absolutely the right strategy. But it's not our complete strategy. You know, I think GM has 14 nameplates. We have three. We came out with our vehicles four or five years ago, and they're coming out with them now. So our product life cycle is completely different than them. What I mean by that is we're about to launch our second generation of products. They have their first 14 out now. I hope they outsell us. If I were them with the 14 nameplates, they should easily scale. I actually personally didn't think that we would be number two for three years with our simple lineup, but it seems to have worked so far in the first inning. No, the competitive reality is that the Chinese are, you know, the 700-pound gorilla in our industry for EVs. There's no real competition from Tesla or GM or Ford with what we've seen from China. They are, you know, completely dominating the EV landscape globally and more and more outside of China. They have 20 million units locally, about 11 million are EV or E-revs, so half their market. I mean, we're barely at a million vehicles here in the U.S. That's one-tenth of the China volume, and Europe's only twice as big as us, so that's maybe only one-fifth. And they're successful for good reason. They have great innovation, low cost. For example, they've bet on LFP technology, not these expensive lithium batteries. There's hundreds of companies. They're all sponsored by their local governments, so they have huge subsidies. And they're new brands, you know, it's BYD and Geely and, you know, companies like Nio and Xiaomi that have, many of them never been in the car business before, and that's a big advantage for them. And so in China, the brands that are winning are indigenous brands, and they're not global automotive companies. They're really, you know, Chinese companies. So to beat them is, you know, we really see a completely different approach. It's not a number of vehicles you have or the cost. It's, I mean, the price you offer the customer. Everyone's going to have affordable EVs. The question is, if you sell an affordable EV in the U.S. for $30,000, but it costs you $50,000 to make it, you could say you have an affordable one, but that's not a sustainable business. So three or four years ago, we kind of saw this affordable kind of life cycle, the duty cycle of the customer changing with our sales, and it became very obvious to us, or to me personally, that we have to go outside of Ford, create this Maverick group, give them resources and stay out of their way, but make sure that they deliver it on a completely new approach because the Chinese are so formidable. They have so much support from their government. Their customers have such a high expectation for digital experience that, you know, an incremental approach from Mach-E would never work. I love you telling it to me real straight here. And it's exactly what I was sort of thinking in terms of that, in some ways, I'm driving a dinosaur, right? Which is the whole reason I leased a number of years back, Yes, smart move. Oh man, so much to unpack here, and Eli's going to be so proud of me with all the decoder questions that are coming up about how you're going to structure this new effort. But I want to go back to price. I was charging at Electrify America last week in Connecticut and four out of the six stalls had these Chevy Equinox EVs in them. And I asked this woman, how does she like hers? And she said she liked it, but the thing she was really talking about was the price. She was really excited about the price. And she said, we like this car so much and the price, we actually got two. And she points to her husband who's in the other stall, which, of course, I'm not thrilled that this type of family is taking up all these stalls, but it's fine. I forgive them. And I'm wondering if this is one of your motivating factors right now, is just getting that price down so EVs can really finally take off in this lower, more affordable area. I think, Joanna, to your point, it was inevitable that the government support would wane. It was inevitable that, you know, the duty cycle of an EVV customer wound up being kind of, you know, people who use their car for commuting and, you know, shorter trips and occasionally taking a longer trip. But, you know, this happened in 1910s, you know, in the teens in our industry over a hundred years ago, steam was 10%, or 30%. Electric was 30%. The rest was internal combustion engine. And a few years later, it was totally different. But, you know, back then you could not call which technology would win. It's the same now. You know, the EVs came on at the high end. And I would even say $40,000 is expensive now for most people. You know, we don't talk about in the car business because more than, you know, two-thirds of the cars sold in the U.S. are used. And those two-thirds, we never really talk about, but their average price is, you know, around $30,000, something like that. The average new car is obviously much higher than that. So most of the vehicles that people are driving around in the U.S. that are, you know, five years old are going to be around $30,000. And, you know, this is the most important part of the EV market. It's not these expensive Lucids and Teslas and, you know, that's all interesting. But what really is going to move this market is a non-government subsidized, affordable EV that people can afford that's lower cost to use than a used Model Y because there's a lot of those around. And, you know, people in America who have a tough time with all their demands and want to go on vacation and want to put their kids through college and they want to have, you know, a house or whatever it is, $30,000 is the most they want to spend. And that customer you met, I think, is very typical. So this next inning, sorry to use a baseball analogy, is we're moving into this next inning, which is a completely different inning than the first inning where the fitness of the companies, it doesn't rely on the government that we have to innovate. And I said it last week and I'll emphasize now, there are no assurances that we can do this. No one's ever built a car in three pieces. No one's offered a zonal electric architecture at this price. No one, you know, we've never done it. We've never had two large unit castings and high quality. No, one's done it. Tesla's talked about it, but they haven't done it. In fact, our manufacturing process has radically moved on beyond what Tesla has ever even shown in their unboxing. So there's a lot of risk here. This is not a guarantee at all that Ford's, you know, going to get this done. We need to take a quick break. We'll be right back. Support for the show comes from OutShift, Cisco's incubation engine. Today's AI agents operate in silos, which can limit their true potential. When it comes to AI advancement, companies out there have been focused on building bigger and smarter models, but scaling up is just one approach. To reach superintelligence together, Cisco says we need to do more. We need to scale out. To do this, they're going back to the blueprint from 70,000 years ago. Humans just didn't get smarter individually. Rather, the cognitive revolution transformed society because we began sharing knowledge, goals, and innovation. And Cisco says that AI agents are now at that exact same inflection point. They can connect, but they can't think together. That's why OutShift by Cisco is building the internet of cognition. Its goal is to transform AI from isolated systems into orchestrated superintelligence by creating an open, interoperable infrastructure. Cisco says OutShift is enabling agents and humans to share intent, context, and reasoning. The cognitive evolution for agents is here. Explore the internet of cognition at OutShift.com. That's OutShift.com. Support for the show comes from Qwo. When you're in that level-up mindset for your business, it's wild how much the basic stuff matters, like how you talk to customers and keep your team on the same page. That's why today's episode is brought to you by Qwo, spelled Q-U-O. The business communication system built so you never miss a call. With Qwo, your entire team can handle calls and texts from one shared number. No more missed messages or disconnected conversations. Everyone sees the full thread, making replies faster and customers feel genuinely cared for. And Qwo isn't just a phone system. It's a smart system. Qwo's AI automatically logs calls, generates summaries, and highlights next steps so nothing gets lost. It can even qualify leads or respond after hours, ensuring your business stays responsive even when you're finally offline. Make this a season where no opportunity and no customer slips away. Try Qwo for free plus get 20% off your first six months when you go to Qwo.com slash decoder. That's Q-U-O.com slash decoder. Support for the show comes from Rippling. If you run a company, you know how important it is to retain your top talent. But instead of worrying about who's staying and who's going, try Rippling AI. Rippling AI is built on your live global workforce data, giving you full visibility into your business and the ability to stay ahead of the curve. Just ask Rippling AI, who are my top performers this year? And you'll instantly receive a workforce report flagging potentially at-risk employees with supporting data like comp ratios, recent performance reviews, and engagement metrics. But it doesn't stop there. Rippling AI can turn these insights into a proposed retention strategy, including a recommended 10% spot bonus for your top performers. All you have to do is tap confirm, and the spot bonus is added to the next month's payroll. So don't settle for AI that's all talk. Head to rippling.ai slash decoder and get AI that turns insights into action. That's R-I-P-P-L-I-N-G.ai slash decoder. Sign up for exclusive access today. And why price plays such an important role in the electric car market. But now it was time to ask Farley the decoder questions. And in particular, how he thought about the structure of the team now responsible for overhauling Ford's EV strategy. Well, you've segued really nicely into some of my next set of questions, which are the decoder questions, which is really, you've set out to build something, and now you've got to figure out the structure to build it. You said you had to create a maverick group. It was separate from Ford. It was separate in terms of IT. And now you've got to take this skunkworks engineering team, which I believe is in California, and you've got to bring that into the big castle that is Ford. Yes. How do you think about integrating these new skunkworks ideas to this bigger system? I mean, do you have a map of how that's gonna happen? Yes, we've been working on that for a couple of years now. And, you know, one of the things that really helped us in that regard was that Alan, the leader of this team, Universal Platform, he was free to have Ford people on his team, but he had the rights to say no to anyone. And so he went through a very rigorous process. So we have in manufacturing engineering, the team that kind of is a scout for the manufacturing process for all this new stuff, you know, he's had them on the team for three or four years. And, of course, we've been kind of listening to them. And, of course, we have a lot of good experience at Ford, too, that knows how to handle risk and supply chain and risk and manufacturing and new processes, like the process we used with aluminum F-150. Different problem, but the same process of risk elimination. It's a plan that's come together, but like any plan, you know, it's important to have a plan, but pretty quickly you get out of the plan because you get surprised. The supplier isn't as good as you thought, or they're running late, or the software for this module is running late. And, you know, then you have to really de-risk. And so the de-risking is often, or the way we're thinking about it is, let's make a really simple one first. Let's not try to add all the complexity. Why don't we just make one color, one version, one spec at the beginning and massively de-simplify the task for everyone? So what is that basic level of software capability for the vehicle? We don't have to have all the singing and dancing, you know, hands-free automation from launch. Maybe we, you know, really focus only BlueCruise on a simple operating domain, like high-speed safety hands-off, you know, highway operations hands-off for the autonomy solution. Then gradually, as you verify the delivery of that base capability, whether it's the vehicle structure or the manufacturing process or the suppliers or even automation, and that we then start to introduce more complexity and more capability over time when we feel comfortable. And that makes it stressful for the go-to-market team because they frankly aren't sure what they're going to be selling in a year and a half. But that's really the only way to do this, I think, we've found. I want to stay on some more decoder questions and kind of call you out because in your first decoder interview in 2021, you dodged the question, how do you make decisions? In fact, I was listening to the episode in my Mach-E last week and I'm just screaming, Jim, you didn't answer. You answered the strategy of the company, but you didn't answer how you specifically make decisions. And I feel like you've had to make some big decisions here with this new platform. How do you do it? That's a very good question. In this case, let's just be specific in this case, I looked at the wiring loom in the Mach-E. It's a beautiful wiring loom, but it's 70 pounds heavier than the one Model Y wiring loom. And it's $200 a battery to carry that wiring loom around, that's 70 pounds. And I just had to ask myself the question, can my team do it? Take the wiring loom as a metaphor. Can my team beat BYD? And the answer I got personally, that I went to Bill Ford and the board and my team, I said, I love you guys, but I don't think we can do this. So the decision I got to, which was highly informed by meeting Doug Fields, was I think we had to do it separately, completely separately. And then when I started really asked Doug, you know, who's a Model 3 chief engineer, worked on the car project at Apple. He was one of the first generation software designers in AOS. He also designed the Segway early in his career. I mean, he's been at the forefront of a lot of technology revolutions time and time again. I asked him, you know, why can't Ford do it? He's like, Jim, your part release system, your IT, your CAD design systems, they're 25 years uncompetitive. There's no way you can beat BYD with that. You need real expertise. BYD has vertical integration. The batteries, the batteries are 30% cheaper than what we can buy from CATL. For us to beat that battery, to be even in the neighborhood of cost, we have to radically redesign the efficiency of the motors, gearboxes, inverters on the EV side. So it uses 30% less batteries because we can't beat BYD's vertical integration on the cost of battery. The only way we can beat them is with the innovation on the draw of the battery. And when I got the whole list of inventory from Doug about what we have to do to beat BYD even three, four years ago, it just became very obvious to me that I had to look my team in the eyes and say, eventually we're gonna come back to you for the industrialization of this product, but for now, leave these people alone. Trust that they don't have any prejudice to come up with something better. And if you wanna get mad at me, you can come in my office and shout at me, but don't waste their time. And I talked to Bill. I asked Bill to go, and I also do Gemba. So I make every big decision I ever make, I go in person. And so I went to that teardown and I went to look at every piece. I looked at the number of fasteners in a Model Y. It was literally a third of the fasteners that go into a Mach-E. And, you know, from a customer standpoint, you won't tell the difference, but from a manufacturability standpoint and a cost standpoint, you know, fasteners are kind of like, you know, it's an output metric for how elegant the simplicity of your engineering solution is. And when I looked at those fasteners, when I looked at the wiring loom, I knew I had no choice. Because I gembaed it and I really talked to people that knew. And I can't put the company's future at risk by making people happy. I have to do the right thing. And that particular decision, that's how I approached it. Can I interrupt you real quick to tell me what Gemba is? Gemba is something that I fell in love with at Toyota. Gemba is genji gembutsu, which is a Japanese word for go and see with your own eyes, learn with your own eyes. And it really is actually the five senses. The idea is before you make a big decision or before you want to understand a problem, even it's a tool in problem solving. You have to go and see the real problem where the waste is. So in my case, the waste was that wiring harness, those fasteners, you know, all the welds together front and rear structures that eventually unit casted, unit casting displaced. You see the waste. You look at it and you talk to the people, the engineers. Why are we, why do we have this waste? Why do we use a 25-year-old parts release system? And you, as a leader, you get down on the floor and you ask them the basic questions so you can visualize your decision. That's what Gemba is. Love that. Didn't know that before. I need to practice Gemba clearly. I want to talk about, you have to restructure your company now, but it also seems like you've been talking about restructuring the economy. You've been talking about a refocus on the essential economy, blue-collar jobs that are the backbone of this country. You wrote a LinkedIn essay in June about the focus of AI on white collar productivity, but that we need to do the same for blue collar work. So how are you thinking about automation at Ford? We have a complete crisis in the country that's not talked about. People like Mike Rowe will talk about it, but we have a crisis that's kind of not in the public debate. We have half a million shortfall of construction workers. We have a half a million shortfall in factory workers. Our emergency services, we don't have enough people to support our society when things go wrong. Firemen, ambulance, medical. The frontline people that make our society run, that we all take, many of us take for granted, plumbers, electricians, we call the essential economy. And we see that at Ford because we're in the edge of this software-defined vehicle, but we're also a heavy manufacturing industrial company. And whether it's a technician shortage in our dealerships to work on these vehicles or the shortage of our factory workers, I really learned as a leader during the UAW strike, you know, what a crisis we have as a country. And I see it with our customers. Our plumbers and electricians are constantly trying to get young people into those vocations. And there's no training. The trade schools and the apprentice programs are not there anymore that our grandparents automated this country so great, and we're very vulnerable as a country. The productivity, as you said, of those essential workers is way behind white-collar automation, AI deployment. You know, everything has happened for all the tools in white-collar. There's not the same, and there's very little training. Companies like Ford are, thankfully, have enough resources that we can put our backs behind this problem with trade schools and scholarships and stuff, but our society isn't doing it. In fact, we're going to have a conference here in Detroit in the fall in about a month where we're going to gather other companies that have the same problem, that really see it, solution providers in academia and creative people in government where we're going to try to start to work this problem. Is it a farm aid or a medical crisis like COVID? No, it's more, in a way, it's just as threatening to our society. And the way we're thinking about it is we're going to walk the walk ourselves, invest heavily. We have been. We've spent about a billion dollars on the dignity of workplace and safety in our plants. We've modernized our buildings. We're investing in trade schools and scholarships to recruit technicians for our vehicle repair as well as our factory workers, but this is a society problem. And the one that bothers me the most is cultural, where we kind of, as a culture, think that everyone has to go to an Ivy League school to be valuable in our society, and yet we all know that our parents and grandparents kind of made our country wonderful because of these kinds of jobs. And there's incredible dignity in emergency services, and people can have wonderful careers, but our society doesn't celebrate those people like they do the latest engineer for AI. Yeah, and that's exactly where I wanted to ask you. I mean, this seems like such a reversal of decades of messaging in America, which is get out of manufacturing, go to the office. Is your advice to this next generation with AI, actually get a job in manufacturing? I think it would help all of us as a society. Look, my son is 17. He's a senior in high school, and look, he's got every opportunity that you could ever imagine. You know, he doesn't have to worry like most people. And I made sure that he had a summer job where he learned how to weld, he learned how to fabricate, he learned how to really work with his hands and relate to people, and he can make a choice. And I have no prejudice for Jameson. If he turns out to be the greatest welder or a mechanic working on our Super Duty diesel engines, I will be so thrilled as a parent. And I think we all need to kind of look at ourselves and decide what kind of society we want to build in America. And look, let's say our national defense, we're getting in a war somewhere. Google's not going to make the boots, but Ford will. And to defend our own country, we need these people. And now we're in critical, critical issues. You know, the average ambulance is 15 years old. We do not have enough emergency care people. Look at what the firemen are having to go through in California now with smoke and their own health. I mean, these are very dangerous jobs. And we have a shortage, and it's going to affect all of us in a lot of annoying ways. And if we don't really get serious about kind of readjusting our expectations for our kids and the younger people in our country to give them opportunities to grow, and these are great jobs. A factory job at Ford could be way over $100,000 a year. And you can bridge into a lot of other things. My grandfather was a factory worker at Ford, and he became a Ford dealer late in his life in his 60s. You know, think about the possibility. He was an orphan. He had nothing. He never went to college. It didn't matter to him. So, yeah, I'm really excited and energized about this. It's a much bigger problem than fixing Ford and making Ford a world-class company. It's important for our country, and we need to focus on this just as much as, you know, how exciting the new AI is and the new social media dance on Instagram. You know, let's get busy on these important problems. We need to take another break. We'll be right back. Support for the show comes from ServiceNow. AI was supposed to handle the parts of the job you hate. Instead, it just describes them, suggests what to do about them, and then leaves you to do it. That's not help. That's homework. ServiceNow's AI specialists are different. They're not a tool. Think of them as digital teammates who actually do the work from start to finish. Cases get resolved. Requests get processed. Loops get closed. And most importantly, no extra work for you. Because when you can truly delegate to AI, you can get back to the work only you can do. The work that requires a person with ideas and judgment. And, you know, a pulse. To learn how to put AI to work for people, visit ServiceNow.com. Support for this show comes from Klaviyo. There are only so many hours in a day. And Klaviyo's two powerful AI agents can make sure your team spends them on big things. The first Klaviyo AI agent turns your marketing ideas into reality instantly. Describe what you want. A holiday campaign, a VIP re-engagement series, and Klaviyo builds it instantly. Email, SMS, and push. All coordinated, on-brand, grounded in 14 years of Klaviyo marketing data. Nothing goes live without your say-so. The other Klaviyo AI agent keeps your customers happy at any hour. Brand-trained to answer questions, make product recommendations, and handle orders and returns. No hold music. Marketing that launches instantly. Support that never sleeps. Join more than 193,000 brands, including Away, Patrick Ta, and Dollar Shave Club. Already growing with Klaviyo. The autonomous B2C CRM. Get started at klaviyo.com. When I scraped my car in that parking garage, I was worried that it could be a long process to take care of it. Like a landscaper's first day trimming a hedge maze. I have definitely already been here. Now, was it left-right or right-left? Well, maybe I'll cut a path out and find my way back later. But it wasn't like that. I filed a claim in under two minutes on the Geico app, and they handled it from there. It was taken care of almost as quickly as it happened. It feels good to get help quick. It feels good to Geico. And we're back with Ford CEO Jim Farley. Before the break, Farley was really diving deep into his personal philosophy around blue-collar work in America and how he thinks, especially with the backdrop of AI, we need to be training the next generation of Americans to consider jobs in Ford's factories, in emergency services, and in trade work. But now I wanted to change gears and ask Jim a very specific question from a very special guest on my show. I do have a call-in question from a guest caller. Good. Hey, Jim, it's Eli. I'm very excited to be calling in with this question. So as you know, I'm a Mustang guy. I have a 2021 Mustang GT convertible. It's one of my favorite cars ever. People love this car because it's so easily moddable and tunable. You can just reprogram the ECU to make the car go faster. The new version of the gas Mustang, the one with all the screens running on your new platform, the ECUs are locked. People can't just reprogram them. And a lot of enthusiasts attribute the recent drop in sales of gas-powered Mustangs to the locked ECUs. So my questions are, do you agree with that, that the locked ECUs are behind the recent drop in gas-powered Mustang sales? And do you have a plan to let people unlock the ECUs and tune the car more easily? Thanks for answering the question, Joanna. I'm sure you're doing a great job. Yeah. I have no idea what that question means, so I'm going to give you... I'm going to set a timer. You get a minute to answer that. Well, I have this debate with my son, actually, because he has an older Mustang, and he didn't buy the new one for some reasons like that. So I would say the drop in sales, absolutely not due to that. Actually, we're doing really well with Mustang, and I think we're kind of the only one left, really, which we're quite proud of, and we're investing a lot in Mustang. And I think the thing that people don't get about Mustang is the global car. It's the best-selling sports coupe in the world, and we actually way outsell Mustang outside of the U.S. than inside the U.S. So when I look at sales for Mustang, I look at globally. And some of our biggest countries, like Australia and Sweden, other areas, the Mustang continues to grow because people want a little slice of that America. Everyone wants to do a burnout. And as far as the tunability of the vehicle, I think the call-in question is an outstanding question for this. This is a real dilemma for us, and there's no real easy answer. We want people to modify their cars, but we also have to take quality really seriously and, of course, privacy as well. I think he was talking more about the performance of the vehicle, and so our approach would be to give people, over time, an option to digitally adjust their vehicle from Ford so that we can maintain the quality but still have the user have their own kind of idea of performance, and that's different for everyone. And I think that vision will come to life in the coming years. The aftermarket is a real kind of... But it's also a big challenge for us because a lot of people like to write software in the control module that controls the powertrain that gets better performance, but what they don't know and what the user may not be aware of is all the reliability and the quality issues that they may be bringing up that are very expensive. My daughter's boyfriend is one of these people. He bought a brand new F-150. He's got a supercharger on it. And, you know, he recently had a bunch of error codes because he updated the ECU against Ford's standards, and now he has thousands and thousands of dollars of expensive repairs because the vehicle has started chewing its camshaft. And, you know, it was great that he could get 650 horsepower out of his EcoBoost F-150. He didn't think about what he was doing to the reliability of the vehicle, but we have to at Ford. So all I would say is it's a tough problem to solve. We always want to give customers the chance to tune their vehicles, but we actually know a lot about the reliability of the vehicle, and are we as a brand going to suffer our quality reputation to give that person the ability to modify the vehicle? I think that's a hard compromise for us to make. I actually understood most of it. I want to move on to the big T, the tariffs in the room. Last quarter, you operated at a loss despite record revenues because you took $800 million in tariff charges in Q2 when tariffs were actually lower than they were now. What are your conversations like right now with the administration? Well, they're very important. Ford is the most American company in terms of the quantity of vehicles we make in the U.S. We're over 80% of our vehicles sold here are made here, but we also are the largest importer of parts. And the discussion we're having with the administration today really covers three policy areas, tailpipe emissions, tax policy, and especially tariffs. On tariffs, the biggest issue is the bill, the $2 billion bill that we have for our imported parts. And because we make the most in the U.S., we import the most parts, and we have a lot of stackable tariffs. There's fentanyl tariffs, 301s from China. We have steel and aluminum tariffs that are now over 50%. So there's a lot of tariffs that a company like Ford gets because there are auto-specific tariffs and they're not auto-specific tariffs. They all stack up. And so we have this layering of all these imported parts. And to make an F-150 affordable, you know, there are a lot of parts that we can't make locally. Wiring looms, fasteners, thousands and thousands of parts that we have to import because we actually can't even buy them locally in the U.S. And if we did, the vehicle would be $100, $200 a month too expensive for customers. And our discussions with Washington are really clear. Look, you know, we both agree let's strengthen U.S. companies like Ford that are better in America. We have more UAW jobs than anyone. But don't penalize us for trying to make the vehicle affordable. And so we've had very productive discussions with Commerce and the President himself and the whole administration about how can we come up with a way to minimize this $2 billion so that it actually, we are advantaged as a company. And, you know, originally they were thinking that there would be high tariffs for finished automotive vehicles, 50% of all vehicles bought in the U.S. are imported through a port or through a rail across a border. And now the standard tariff, it looks like it's going to be about 15%, 12.5% from Japan. And that's not a fair fight. And, you know, we're just asking for a fair fight. So, look, if you're going to allow people to import with 15% tariffs that includes the parts in the vehicle or 15% tariffs, but you, you know, you put a 50% or 60%, 70% tariff on our aluminum and steel that goes into our U.S.-made vehicle, you know, hey, let's work on something, a process for, you know, tariff relief that would allow us to do that and still make the vehicles affordable. And that's what we're talking to the administration. They're extremely open. They're extremely supportive of us. They're also making a lot of policy changes on tailpipe emissions and tax as well. Look at the EV credit as an example. We can get to that if you want, but the tariffs are the most critical for our profitability. About 20% of our profit is evaporated now because of these parts tariffs. And we're highly engaged with the administration. We remain, I remain personally very optimistic that we will find a solution, but it is very expensive. I wanted to ask about the EV credits because between the tariffs, the EV credits going away, it feels like, is this administration on your side? Yet you also are adding more jobs than ever to manufacturing here in the U.S. You're doing the things the president wants. Yes. Well, I do believe that, you know, generally those three areas of policy are very important. We didn't, I guess, Joanna, we didn't really feel like we should get a $75, $100 check on an EV to make the transition successful. We do need support for the production tax credit on batteries so that we could be competitive with China on batteries because they have such a huge advantage. And we do need to onshore that IP and start to really scale battery manufacturing because you can't ship a battery overseas. It's very heavy and it's not a good shipper, what we say is a shipper. So we have gotten a lot of support from them for making batteries here in the U.S. The PTC credit is very important. We have changed our, you know, investment on EVs to not depend on the consumer tax credit from the government. And I think that, and we're fine with that. Other countries do support in Europe and in China their EV consumers. We didn't ever really expect that of Ford. We're kind of a lift ourselves up by the bootstraps kind of company anyway. So, you know, that was something we did anyways. But I'd say the relief of the fuel economy standards is, you know, a very important topic that the administration clearly has a point of view on. And we want one national standard and we want to be able to sell what customers really want and hybrids are really popular now. And so are EVs. So I think we'll find a tailpipe emissions that is more, you know, reasonable and sustainable and not have a bunch of states have, you know, unique standards that makes logistics for the cars a nightmare to send different states, different emission standard cars. And that's really expensive for customers too. I think the real area that is super critical for Ford and for companies like Ford, as you said, that are committed to the U.S. is this tariffs. Working through and making adjustments as the tariffs get announced and deals trade, bilateral trade deals get announced. You know, we need to find a landing spot that works for companies like Ford, where it's a playing level playing field from a tariff standpoint and the administration accomplishes what it wants to accomplish. And we're not there yet and that's why we're working really hard. I spend a lot of time on D.C. and there's a good reason for it. This is really important for our factory workers, for the future of our country, and for the shareholders of Ford. And we're gonna, we're not gonna rest until we find a solution. I wanna come back to me. This is really, this whole podcast is about me, obviously. And, and, you know, where are we at? You know that one of the main reasons I decided to get the Mach-E other than it had good range and I love the way it drives was the fact that it had CarPlay. Some of your competitors have abandoned CarPlay. A lot of the newer upstart car companies have their own software like Rivian, like Tesla. I wanna talk about this new digital experience you guys are working on, but I wanna just cut to the chase about CarPlay. What about CarPlay Ultra? Are you considering that? We are. We, we don't like the execution in, in round one of Ultra, but we're very committed to Apple. I've talked to Tim many times about this. Ford does not have the rights, in my, our opinion, of disrupting someone's digital life when they get in their car. We want you, Joanna, and all the customers to bring, whether it's a, you know, whatever phone, whatever digital life you bring in, we want it to make it as easy as possible. We don't think we should restrict that to make money off the customers. We don't want it to be a hassle. We don't think we're, we don't think we can design experiences, you know, that's going to displace your phone. And yet at the same time, where there's automated systems or the way a trip gets planned, there are things that Ford is working on to add on top of that digital experience of Google and CarPlay that will make it even better. And we're highly informed by what's going on in China right now, the customer experience part of China. Let's say an AI system in the car, very important for Ford. We think that every customer should have an AI assistant in the car, not just a voice to move to your, you know, phone-based AI system, but something specific and that you can talk to almost like a companion. We really believe it's a more complicated journey for us to execute, to allow everyone to bring their digital life into the car and have it seamlessly integrated. And then also put on top of that, whether it's a productivity software, we're now up to a million subscriptions now for our pro customers, or whether it's, you know, Blue Cruise or whether it's how you plan a trip, the auto-specific things Shopping, you know, you'll make that choice. We'll all read about it. But I think, you know, that's our philosophy. Now, other companies have different philosophies, but we believe that our philosophy is the most customer-centric. But it seems like with the Ford digital experience, which you have rolled out to some cars, it's based on Android Automotive, that you're going to have to choose if you're going to do this Android Automotive experience with the things you're talking about building on top of, or are you going to pick a CarPlay Ultra experience, which is really going all in on Apple? I see what you mean. Yeah, it's a really good question. I don't know where Apple's going to go. I think Apple has to make a big decision. It's not a Ford decision, actually. And then, based on their decision, we will decide. You mean Apple has to make a decision. Are you going to allow this to also run in combination with other operating systems? Yes, not only that, but are you going to allow OEMs with, you know, the control of the vehicles? Like, how far do you want the Apple brand to go? Do you want the Apple brand to start the car? Do you want the Apple brand to limit the speed? Do you want the Apple brand to limit the access? We're doing that now for our Pro customers. If you're a Pro customer, you can limit access to the car, the vehicle on the weekend, because many of our plumbers and electricians, they have a company vehicle, and they're not really allowed to use it on the weekend. Or we allow speed control now. You can't go above the speed limit. You know, is Apple going to want to do that? If Apple wants to do that, I think we're going to have a tough time with that, because then the digital experience gets really messy. And we'll have to decide between Google and Apple, to your point. Now, Google has two different layers. They have the Google Automotive Services, which is kind of a curated services digital experience in the car, but they also have Android Auto, which is actually an operating system that we can build our own experience on top of. And so Google, as a platform company, gives us both. Apple's had a totally different approach. And again, I've talked to the Apple team, and our team is in contact with them. I think Apple has to decide, do they want control of the entire experience inside a vehicle? If they do, they want to follow Ultra and the Ultra2 or whatever it's going to be next. Then I think Ford will have to make a big decision. And I kind of know where we would go. We don't want, we just believe ADAS integration with your entertainment system is so critical when you're flying down the highway with your eyes off the road, you know, in three or four years at 80 miles an hour on the I-5, and, you know, you're watching a movie or whatever we're going to be all doing or having a ChatGPT moment or having a wearable on, you know, we just don't think that a system from a tech company who's not integrated the car is going to save your life. But it sounds to me then that you're really forced with the reality that you've got to build your own. Yes, yes. But the good thing is now versus five years ago when or a couple of years ago when you and I talked, you know, the Google Google Android Auto is really advancing nicely. And we've we've learned a lot about how to build the experience on that. So for us, a lot of OEMs, I hear a lot of OEMs say, well, it's about control of the customer. I don't want Apple to be able to, you know, that's not a big deal for us. Like we just want it to be easy for customers. But if those companies want to control the vehicle, like I, I just, I think that's a bridge too far. And in that in that case, we do have to, we do have to invest a lot more in a Ford experience. I hope that doesn't happen, by the way. I look at what has happened with Huawei and Xiaomi in China. It's amazing. Those companies are totally all in on auto. You know, when you're a Huawei or Xiaomi customer, you know, you either buy a Huawei system in someone else's brand or you buy a Xiaomi car and it's completely seamless. And I wish our car, I wish our tech companies had approached the auto industry that way, but they haven't. You said something really interesting about how you want to have an AI companion in the car. And I am actually spending a lot of time in the car now talking to ChatGPT, not listening to Decoder. I have my, yeah, I have my iPhone Bluetooth. It's coming through CarPlay. It's Bluetooth paired. And I've got my ChatGPT app. I'm not looking at it. It's safe, right? And I'm just have it in voice mode. And I'm, you know, I'm driving to a meeting, driving a meeting to meet you. I say, tell me a little bit about what I should know about Jim Farley, where he's been in the news. And it's, it's a very interactive conversation, almost like I'm on the phone. How do you think about this? Does that, does Ford have to be a part of that relationship? It's a good question. I think, yes, especially for the transportation related. I want to go somewhere. I want to know about my car and the condition of the car. I think we either have to be part of the conversation or we have to supply that. We actually think, not to be arrogant, because the safety control and the vehicle control, we think that, you know, we can't provide a chat experience that is added value beyond your non-vehicle experience. But to your point, we don't want to burden the customer with two different experiences. That would be really arrogant and really bad for the company. And, and I think just in general, what you're bringing up, Joanna, and you've been on this for many years, but I think people are starting to realize why you've been on this, is that the difference between car companies when you have a software-defined vehicle, is not going to be what your sheet metal looks like. It won't be how powerful your EV motor is. That's all math. All the cars look nice. It's going to be this digital experience of why someone buys this or that. And so we have to sort this out really thoughtfully. Now in China, I think China, NIO has an AI companion in the car. It's like a physical thing. It's like a little person that you're companion. And it works really well and customers love it. So I think if you look at China being ahead of the West in terms of integrating AI as a companion in your vehicle, the early indications are that a companion-like functionality from the OEM done really well, can add a lot of value to people's lives. And that, and that's the direction we're going, similar to not investing in level four autonomy and robotaxi, but putting our effort in the AI space for automation driving into level three high speed eyes off. So similar kind of bet. Just pick a few places where Ford has, can add value, but don't make the customer go backwards. That's kind of our philosophy. To be clear there though, you are, you're more focused on that highway driving experience right now with BlueCruise. Yes, for sure. Our number one priority is to have, to not be the first one to do eyes off level three highway driving, but be the best and the most reliable and the safest and the one that you want to use for you and your loved ones. And we're, we, we took all the Argo people and we gave them a choice, you know, do you want to do highway high-speed eyes off, push a button, you know, watch a movie, whatever people want to do. We could do this podcast in your car, you know, whatever. That's where all of our AI deployment for autonomous driving. Cause we think that's a cooler problem to solve for most average Americans than a robotaxi. Even though robotaxi is a really cool problem. I love being in a Waymo, you know, we think that highway miles are a bigger society opportunity. My last question here, you get to play car salesman. It's next August. I got to get rid of this Mach-E. What do you, what do I do? You need to buy another Mach-E. We've improved it a lot since your last one. It's a lot more affordable. We have some wonderful new experiences and I'm going to give you a run for your money in terms of value. It's a, it's a, it's a really, really incredible product that we've refined over four years now. And the Mach-Es we're making now are pretty radically different than the ones we have OTA'd your car. And I know the improvements in that, but the new vehicle, the compute power on board, the efficiency, the quality, the, you know, the improvements to the finish are all material enough that I think you should absolutely test drive and see what we have. There's a reason why we just beat the revised Model Y, which is the best-selling alternative, not that you would just use that as, as your benchmark. But I think you're going to have a lot of fun shopping. And I think I'm going to learn a lot like the rest of America as you go shopping. And if you go, really what I would love for you to do is wait six months. All right. Because I want to show you this, this new universal car and you're going to go, Jim, I'm so glad you told me to wait. See, that's what you can really do for me. You can give me an extension on the lease. This is what you, what you should have been doing for me. This is, this is where I would have sold inside your car. So I hope you don't mind if a few of our software engineers call you. Yeah, they should call me and I, you know, again, not sponsored. I have been very happy Mach-E driver. I've been in it a lot this summer and I can't believe, you know, we didn't get to it, but the charging infrastructure has improved so much since. And I charge for 30 minutes at Electrify America. Electrify America has gotten better. Isn't that amazing? We should have that CEO on here. I charge. I'm, I'm on my way. I drove 350 miles up to New Hampshire last week. Oh, good. Good. So like I've been happy. I just, we got some software things to deal with. We didn't really get into that, but it sounds like you're working on it for me. Yeah. Thank you for the time, Joanna. All the best to you. You too. I'd like to thank Jim Farley for taking the time to speak with me and thank all of you for tuning in and letting me cosplay Neelay Patel. I hope you enjoyed it. If you'd like to let us know what you thought of the show or of me, I guess, or what else you'd like to see us cover, drop us a line. You can email us at Decoder at The Verge. The team really does read every email or hit me up directly. I'm at Joanna Stern on all platforms. And don't forget, I've got a book called I Am Not a Robot coming out in 2026. It's all about the year I let AI take over my life. You can subscribe to my newsletter all about that too at joannastern.com. The show also has a TikTok and Instagram. Check those out at Decoder Pod. They're a lot of fun. If you like Decoder, please share it with your friends, your family, your AI chatbot, and subscribe wherever you get your podcasts. Decoder is a production of The Verge and it's part of the Vox Media Podcast Network. The show is produced by Kate Cox and Nick Statt. It's edited by Ursa Wright. The Decoder music is by Breakmaster Cylinder. See you next time. Rock and roll. We all do it. You have a night for yourself but don't like the sound of the silence, so you turn on the TV just for the ambiance. It's a little trick that helps you feel like you've got company and aren't alone. And other insurers, well, they may make you feel alone. But when you switch to Geico, you've got claims reps available around the clock. So whenever you need, you'll have people around to help. And let's turn on the washing machine, just for good measure. Isn't that soothing? It feels good to have support. It feels good to Geico. Business trips are great. The baggage that comes with them is not. Things like not finding the hotel you want, collecting paper receipts, and dealing with post-trip paperwork. What a waste. Navan deletes all that grunt work so you can actually focus on the business part of business trips. More than 12,500 companies, including Box, Anthropic, and Crate & Barrel, refuse to work the old way. They chose Navan to make business travel better and make the manual expense report extinct. So if you want to find up to 15% savings, yes, 15% on your travel budget, check out navan.com. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web. Like restoring a vintage motorcycle from a 50-page restoration blog or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up require compatibility and availability vary. Safety plus.