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Everything Electric Podcast
Ford CEO Jim Farley's fascinating 'take' on taking on Chinese car companies...
00:43:13
In this week's podcast, Jim Farley, CEO of Ford is back to talk to Robert about the latest developments at Ford and in the EV world! @fullychargedshow @everythingelectricshow Why not come and join us at our next Everything Electric expo:...
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- [00:00]
A
Hello and welcome to another episode of the Fully Charged Show Podcast. I can't help being a little bit sort of excited because one of the amazing advantages stumbling on to making a YouTube series about electric vehicles in 2010 was the People I've met doing it and the people I've been privileged enough to talk to about all the various changes we're seeing and the big shifts and the disruptive technology and the arguments and the toing and froing is that I get to talk to some amazing people. And today, I mean, this is the second time this person has been on the show and it was. I was blown away the first time I spoke to him and I'm even more blown away now. I'm talking about Jim Farley, who is the CEO of the Ford Motor Company. Global CEO. Like the boss. And he is the. Apart from the fact that he's a charming man, he is so hugely well informed about the global automotive industry, obviously very well informed about Ford, but he really has studied and understands what's going on around the world. And it is the most extraordinary conversation I've just. It was a. It was one of those things where I've got. I was really concerned to be prepped and to be ready to talk to him. And actually once we started talking, I didn't even worry about it. It was just an amazing conversation. So. And what Ford are doing around the world, I just want to reiterate because I do mention this in the, in the show, but the, the interest in what Ford had on offer at our show in Vancouver was very noticeable. And the amount of people that were queuing up to have a test drive in the Ford F150 Lightning was extraordinary. Just crazy. And I didn't get a go in it. I'm so frustrated. I still haven't driven one. So I, you know, I'm sure they're amazing. I'd love to have it going on. And they are very, you know, we know that they're very US centric, they're a great big truck, but they, we talked about all those things and hybrids and what's happening with hybrids and battery production and, you know, it's a fascinating conversation, so I really hope you enjoy it. So that's. Without any more ado of faffing about, please welcome to the Fully Charged Show Podcast. Jim Farley, CEO of the Ford Motor Company. This episode of the Fully Charged Podcast is brought to you by OVO's Charge Anywhere. Charge Anywhere helps you power your car wherever you are, plan your route and pay you'll have access to over 34 chargers across the UK's largest charging networks and more than 400,000 charges across Europe. Setup is easy. Just download the OVO Charge app, create your account, add payment details, hit the road and start charging. There's no need to be an OVO customer. Either simply pay as you go or benefit from up to 15% off your charging with monthly boost packages. OVOS charge anywhere. Power your next journey with peace of mind. Well, Jim, thank you so much for joining us. I mean, I just want our viewers and listeners to know this is a Saturday we're recording, so I'm very grateful.
- [03:19]
B
My pleasure. Love it.
- [03:21]
A
And I was following your recent travels around Europe in the E Transit, which looked amazing and I just wondered how you got on, what the experience was like for you.
- [03:31]
B
Yeah, I find maybe it's being American, but I just love a road trip and I always include one of my children. My daughter's in high school. So we drove from Cologne, northern Germany, all the way to northern Italy through Innsbruck and we visited dealers and salespeople. I went to competitive dealerships and I met a lot of our customers. I found driving an electric transit in Europe was much different than the United States. Right. I had a wonderful time and of course every hundred miles or some cultural change and as Americans, we're not used to that. But I absolutely loved it and I think it will be a lifetime memory for my daughter and myself. Not about the E Transit, just about a road trip through the Alps.
- [04:24]
A
Yeah. Wow. What a trip for her though. Your daughter must have been amazing. I mean, she'd not done anything like that previously.
- [04:31]
B
No. Last year I took my son and we, we took 1100 mile trip in an electric F150 lightning across California. And that was very different. Grace is very creative and she lived in London for seven years and so. But we had never, we had flown to places like Milan, but we had never driven all the way through Germany. And we had fun. I mean, we were laughing mostly about the driving styles in the different countries.
- [04:59]
A
Yes, I'm with you on that. Having done it many times. It's fascinating, isn't it? Honestly, there was a journey we did and as we crossed from France into Italy, it's like it was a curtain and suddenly it was different.
- [05:14]
B
Yes.
- [05:15]
A
And suddenly someone cut us up and someone honked at us and everything and no one had taken any notice of us in France. They totally ignored us. But as soon got to Italy, Italy is very special.
- [05:25]
B
From game on.
- [05:27]
A
Yeah. But then what about the. So the. I'VE just recently done a trip right across France, so not as far as you, about, about a thousand miles altogether. And I hadn't done that for a while and it, and I, I think I, I'm just going to underline here. I wasn't in a Tesla because obviously there's the Tesla charging infrastructure which I have used in, in Europe. But I found, you know, the lowest problem that we had on that journey was charging. You know, when you're doing those drives, you, what we needed was, you know, a restroom, a coffee, you know, buy some wine for our friends we were visiting. That was the top priority. And then. Oh yeah, charging. Yeah. And I mean, I was amazed at the increase in charges on the route we took. It was extraordinary.
- [06:14]
B
Completely different than the United States.
- [06:16]
A
Completely agree with.
- [06:19]
B
That was my biggest takeaway. The chargers were, they weren't broken, they were easy to get to, they were relatively convenient. There was something to do when you were charging. I completely agree with you. It's an epiphany for me because in the us EV adoptions in a way stalled out. It's still growing, we'll talk about that. But yeah, the distances are much greater and the non charging experience, outside of the non Tesla charging experience is just not competitive. But Europe, it's different. You can absolutely own one car and it could be electric and you could take long trips and there are no issues.
- [06:59]
A
Yeah, it's extraordinary, isn't it? Because there was one like a supermarket that we went to, big supermarket with a huge car park. And the car one, the car park was covered in solar panels, so the entire car park was solar. But then I saw a load of Tesla chargers which we could use in the car we were in. But then I, and I just literally glanced to my left and there were 28 Ionity Chargers in a row. Some being used, some not. You know, and it was like. That is insane. So there were a total of 47 chargers, high speed charges in one place.
- [07:31]
B
Wow.
- [07:32]
A
Which is, you know, and it was not a special hub or anything, it was just a supermarket. And yeah, it's very different, you know.
- [07:40]
B
And then the next level of kind of curiosity, I don't know how you found is like, how much does this cost? Yeah, like that is kind of like at the gas pump you pull up and you, you know, there's, there's like, you know, big signs, Euros per liter or whatever it is. And, but the, the electrons is, it's kind of a mystery what's going on here.
- [08:01]
A
How much does this cost?
- [08:02]
B
What's My credit card bill going to look like.
- [08:04]
A
Yeah, yeah. I mean the one thing we worked out when I got back was we spent more on auto route tolls in France than we did on electricity for the whole journey. I mean that was about, it was about, I think we spent about equivalent of £85 on electricity and about 112 on auto route tolls. It's quite expensive driving on the auto routes.
- [08:27]
B
That is so funny. My mom was from Michigan and she was always really proud because Michigan has no toll roads and anytime we would drive through Ohio she's like, I just don't like Ohio. They, they force you to spend money when you go down the road. You shouldn't. Like that's against the law. Michigan, we just, you know, the motor City, you can't, you can't be charged to use your motor vehicle.
- [08:50]
A
Yeah, yeah, no, very different, isn't it? But I just wanted to say to you because we've, I've just come back from Vancouver. We, we had our big everything electric event in, in Vancouver. It was wonderful. How did it go from. It went amazing. I mean for us to go to more than double the size of a show in one year. So we did our first show there last year. This year it was way more than double the size. Huge crowds. But what was very relevant to you was there was a great Ford stand and I met a few of the team who were just, you know, like exuberant enthusiasts about what they were doing and they loved it. And the one there was a lovely guy and I wish I'd kept a record of his name because he deserves a pat on the back who was cry. He kind of came into our office and he said, ah, it's been so this is on the Sunday night like the last afternoon. So frustrating. And we were really worried, oh God, what went wrong? And he went, oh, I should have had more lightnings. So they, we did test drives, we did thousands of test drives of really a huge range of cars. But the F150 Lightning was hugely popular and I wanted to have a go in it. I'd never driven one and I couldn't even, I couldn't pull, you know, pull rank and get a go. So that was. There was a queue of people waste standing for a long time to have a go in one. It was extraordinary.
- [10:08]
B
Well, the lightning when we electrified the F150 which of course is America's best selling vehicle for over four decades now and actually if you add up the total revenue, F series revenue is second only to the iPhone in total revenue for a consumer product of all consumer products on the earth. And so it's like, you know, we make one every 53 seconds or something and more than a million a year. But when you're in F150, the combination of the frunk which you have lockable storage that's very sizable, bigger than a mid sized car or SUV and then zero to 60 in four or five seconds in an enormous vehicle, it's just, it kind of surprises people. They're like, how could such a large vehicle that you could live in go four seconds zero to 60.
- [10:57]
A
Yeah, yeah.
- [10:58]
B
It really, it brings the electric solution and changes the vehicle concept. Because so many vehicles like the model Y really still were like crossovers. But when we electrified the F150, it actually changed what a full size truck can do.
- [11:17]
A
Yeah, yeah, no, I'm sure it's cute to people. Yes, it was a huge interest in it because I mean the, there was a cyber truck on display. No one was test driving it. And I mean that's just a Marmite vehicle, isn't it? I mean you either, loads of people love it, think it's brilliant. And I stood looking at it going, I, I do not get it.
- [11:39]
B
Yeah, not, not everyone, not everyone aspires to buy a Lamborghini.
- [11:43]
A
Yeah, no, exactly, exactly. Which is fine. I mean, you know, I got, yes, I got over my initial shock and, and I know the technology in it is very impressive but you know, it is, I don't need to talk about that. But I mean the thing. So from when I last spoke, because I'd love to talk to you about the kind of global transition in the automotive industry because it is, it is obviously such a, it's big, it's happening and it's very disruptive. I think is, it would be a.
- [12:11]
B
Fair description since the last time we talked. So much has changed and so much hasn't. What hasn't changed is that electric cars continue to grow quickly around the world. What has changed is the winners and losers are changing dramatically and it will change the landscape of not only our industry, but the industrial manufacturing footprint around the globe. And that is very disruptive. We always thought the most disruptive part of our transformation would be going to advance electric architectures and software enabled cars. And although that is really transforming the industry, 70% of all electric cars made on the globe are made in one country. China.
- [13:03]
A
Yeah. Wow. 70%. I didn't realize.
- [13:06]
B
70%. Yep.
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A
Wow.
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B
And that, and then that market has, is starting to specialize where they have electric Vehicles for long range travel where the charging structure is not built out, called an E rev. It goes 150 to 200 miles, all electric. It's an electric car and it has a small industrial combustion engine that powers the batteries and that could power on one tank of gas up to 1000 to 1200 kilometers. But it drives this electric car. There's no transmission, there's no axles or differentials. It's a pure electric vehicle with a backup system in case you can't find charging. And in China it's the fastest growing subsegment of the EV industry. And now you have the geopolitics and the labor and, and everything connected to these second order issues with electric taking off and having the Chinese be so dominant around the globe in terms of cost and they see Europe and the UK and many markets around the globe as opportunistic and that is totally changing the global supply chain footprint. It's changing brand preferences, it's changing jobs. It will, it's going to transform our industry. And in the last year that's come into focus, Right?
- [14:34]
A
Yes, I think so. I think everyone's aware of that. I mean, I just wanted to say that when I last was in Australia earlier this year, my sister in law and my niece who are two people who. You couldn't find anyone with less interest in cars except they drive them, you know, because they use them. They've both got BYDs.
- [14:51]
B
There you go.
- [14:51]
A
And that was not. And you'd sort of think, oh well that's because they've talked to you, Robert. I never mentioned anything about it because they, you know, there's no point talking to them about cars. They're not interested. Interesting. So I keep. And that is, and that's. They are so common there already. I mean that explosion of their uptake is extraordinary in Australia and it's, it's.
- [15:09]
B
Included in the combustion world. I think the best selling SUV in Australia, which is a very important market as you mentioned, because it's completely open.
- [15:19]
A
Yeah.
- [15:19]
B
And yet people drive like Western Europe or even in the US in places. So it's a very important market. I watch it very closely.
- [15:27]
A
Yeah.
- [15:27]
B
Maybe more than Norway these days. And also the bestselling SUV there is no longer Toyota or Ford. It's. It's Hovel and it's a Chinese brand. Yeah. So things are changing. Mexico. 25% of all sales in Mexico, which. It'd be a long drive but I could get there in one day from where we're doing this interview and.
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A
Right.
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B
And that's one out of four vehicles sold in Mexico is built in China.
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A
It's built in China. And these are not all electric, but a lot of them will.
- [15:59]
B
No, yeah, you're right. Half are not. But you know, the, I mean, it just happens in our industry. It happened with the Model T. You know, when a new technology comes, there's a fitness test for costs. And whoever has the lowest cost, like Henry Ford with the Model T. Yeah. You know, they tend to have the opportunity to sell into higher cost markets like Europe or Britain or Mexico or Australia. And that cost advantage is very material for the customer. It could be 25% savings. And in the world of tough choices where your car is the second most expensive thing, you buy a lot of customers, like, I'm willing to take a risk. And you know, Chinese manufacturing is, has really been proven to so many consumers and so many consumer product categories as being fully superior quality in many cases, in many categories. So it's not like the risk that some people would imagine even five years ago. So it's for the. Being the head of Ford. This is the topic that we discussed the most in the last year. How do we compete? Where do we want to compete? How do we win? What rights do we have to win? What capabilities do we have to build in the company to compete and survive?
- [17:20]
A
Yeah, yeah. And I mean, in a way, because I've sometimes referred to previous, you know, expansions of automotive manufacturing around the world from different countries. So like Japan, Korea, other Asian countries, that, that started to. That made a big impact on the American market. I'm talking particularly about America. You know, Toyota in the kind of early 1960s was a tiny company that made not particularly attractive cars. Well, they became massively successful. But what I feel is the Chinese, what's happening in China and the Chinese car manufacturing is kind of an order of magnitude different because Japan is essentially quite a small country.
- [18:01]
B
It is, you're absolutely right. Let's look at the numbers. The global new Automotive market is 90 million units.
- [18:08]
A
Right. So that's what's manufactured each year is around 90 million.
- [18:11]
B
Yes, 90 million. And Japan is between 4 and 5 million. So that's not even 5% of the global. You had Korea in there. It's even smaller market. China is one third. It's 30 million vehicles. It's twice the size of Europe and the UK combined.
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A
Wow.
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B
And they have 50 million, 58 million units of capacity built out already. So.
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A
Wow.
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B
So they can export 28 or 29 million vehicles. And that is larger than the Europe. All of Europe, all the UK and most of Mexico, part of the US and all the companies wouldn't have to build one vehicle and they don't have to build any more factories. That's the factories they have today.
- [19:00]
A
Right, right. That is huge, isn't it? Yeah. That is extraordinary. And I mean, what I think is, because you will have been aware of that since. For 20 years of that happening, but I think the general public have gone, how did they. How do. Where do all these Chinese cars come from? You know, because. And then you, you know, and I always go on, well, look, your phone, the router in your house, the cabling, the little clips that you there are. They're all made in China, as is your hat, your trousers, your shirt. You know, everything is. It's like that.
- [19:32]
B
Well, I think people maybe not realize this, but I hope they do. China made this commitment more than a decade ago.
- [19:40]
A
Yeah.
- [19:41]
B
Far before any of the Western countries fell in love with pure electrification. And companies like byd, they were very small when they started their journey. They're now much bigger than Tesla. They're the biggest in the world, as you mentioned, and they've been on this journey for 15 years. CATL, the biggest battery company in the world that makes batteries for your iPhone and most of the devices you mentioned, they're the largest battery company in the world. They were founded more than two decades ago. And Robin, who found that he's the largest battery maker, we're starting to make his batteries here in Michigan, and we'll be the first one with LFP chemistry in the us but they have IP that the rest of the world has not developed. It's not the old days where someone would copy a Western technology. The opposite is true when it comes to battery tech and the size of the market and the government's support for the companies and the enduring investment for 10 years plus to be a leader in the IP like battery tech and the whole raw material of batteries, plus all the processing of the raw materials that happens in the country. You know, that is a dominant move that happened a decade ago, and now everyone's seeing it on the street in front of their house. But it didn't happen overnight. The market was big enough for the last six or seven years where none of those companies needed to export.
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A
Yeah.
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B
And then, and then it wasn't big enough. And then everyone started to notice. But for a company like Ford, you know, this is something we have been watching for a while, but I've had two trips to China in the last two years that were Literally epiphanies where I walked away, the last one was about the Xiaomi product. Because in the west, our cell phone companies are not into car. They don't have car companies. But in China, both Huawei and Xiaomi, the two biggest cell phone companies, are inside of every vehicle that is made. In fact, Xiaomi, the Apple, you could argue the Apple of China. They actually make their own car, the whole car. And now it's one of the best selling cars in, in China.
- [22:02]
A
Yeah. No, it's. It is. When you think of the sort of amount of our media attention and discussion and hypothesizing about the Apple car.
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B
Yeah.
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A
Which we never.
- [22:15]
B
Twice as big. The market is more than twice as big in total. And the electric part of the China market compared to the US or Western Europe is like 20 times bigger. So exactly what you said. It's like everyone's talking about the Apple car, but the Xiaomi car, which was.
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A
Being, which now exists and is on.
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B
The road, which now exists tens of thousands and it's Fantastic. They sell 10,000, 20,000amonth. They're sold out for six months.
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A
Wow.
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B
You know, that is an industry juggernaut and a consumer brand that is much stronger than car companies. I, I don't like talking about the competition so much, but I, I drive the Xiaomi. We, we flew one from Shanghai to Chicago and I've been driving it for six months now. And I don't want to give it up.
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A
Right. Wow, that's. That's extraordinary thing to say, isn't it?
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B
Yes.
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A
As you know, I mean, I can, I totally understand it. I mean, I think it's, I think it's great that you do in that sense that you're experiencing what, you know, you're not saying. Because I do remember seeing a load of BYD cars at the Geneva Motor show and I think about 2009. And I thought, these are not good. You know, they're not well made. They look weird. They just didn't look right. But my goodness, now you look at what they're doing. Anyway, we don't have to talk about.
- [23:31]
B
No, I'm, I'm fine too. Because I think this was all something that I processed. We process as a team and we were not naive to and we did look the other way. And why is that the case? Well, I worked at Toyota for 25 years. When I joined Toyota in the US there was 500 people at the company.
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A
Wow.
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B
And we were like a marginal brand. No one even knew of us, as you said, outside of kick. I worked there for 20 years.
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A
Right.
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B
My family was not happy. They wouldn't talk to me here in Detroit because they were ashamed that I worked there. And there was a huge social cost in the Midwest of the US for the success of Toyota. So many jobs were lost, including many people, my family and you know, I, I can't unlearn that as a young man. I can't unlearn the, you know, the fact that the Detroit three really never had a plan. Yeah. And we're not going to miss this one. Bill Ford and I shook hands or embrace whatever metaphor you want to use. And we said this one, we're going to have to get it right from scratch. And that's why we created the Skunkworks team in California. Because I felt like the institution of Ford would have a really tough time competing with byd. So we needed a ground up team with a similar approach as Kelly Johnson's SR71. Skunk works in California. My badge didn't even, doesn't even work there. I can't even get in the building. Wow. And that.
- [25:08]
A
Seriously, wow.
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B
Oh, yeah. No, and that, that's, that's how extreme of a approach, a different approach. We needed to compete against BYD because the traditional industrial company, look at, you know, VW with MEB and so many other companies in the west that tried to compete in China and now are just adopting Chinese platforms because they couldn't do it. We all saw that coming. And so we said we got to take a different approach.
- [25:42]
A
Right. Because I mean, the two big models you have at the moment, and I'm assuming, you know, I know there's a lot of other stuff coming down the line and I did see the, the, the Capri EV at Goodwood Festival of Speed, which I just, as soon as I saw it, I went, please make more of these because it's a bit smaller and it's a bit more, you know, I can see that selling well in Europe. Definitely.
- [26:07]
B
Yes.
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A
But, but presumably that, that the challenge of, that, you know, of competitive. What's so crazy is I think if you'd said, say on a TV interview 10 years ago, we've got to compete with BYD. 99% of the audience wouldn't know what you were talking about. Yeah.
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B
They would say this CEO's bonkers.
- [26:27]
A
Yes.
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B
Check his blood sugar level. Yeah, absolutely. Yes, absolutely.
- [26:34]
A
Right.
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B
Yeah, yeah. No, so I think how, what happened here is that two things happen at the same time that the global traditional OEMs kind of misinterpreted. The first thing is EVs we knew were going to be a big part of the future. And so we all invested. Ford has been number two to Tesla in the us, our home market for two and a half years. So we were one of the first to scale here. And we're an order of magnitude less than Tesla, but we sell a lot of EVs with number two to model Y and number three. So what happened is we made that judgment to invest right before COVID And when Covid happened, no one could build vehicles because of the semiconductor shortage, except for Tesla, because they had built an electric architecture that allowed them to be relatively independent of silicon supply. All the rest of us had 1500 chips in our cars that were from all over the globe. And we were 20 or 30% short. So we couldn't make anything and people couldn't buy anything. So there were no stock. The prices shot up and we thought that is how life would be forever. What turned out to happen is as soon as we all got chips and we started to produce in EVs, like us scaling some of the manufacturers in Europe scaling like vw, we found out that the mainstream customers were completely different to the ones that bought during COVID and they were not willing to pay any premium for an electric car.
- [28:16]
A
Right.
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B
And that, that was a total game changer because when we invested, we have a four year life cycle, the year or two before COVID and then of course felt really comfortable with the prices during COVID that four year period of ignorance, let's call it that. Yeah. Meant that we, we over contented our vehicles, made the batteries too big, didn't experiment with battery chemistry, didn't experiment with advanced engineering or manufacturing. And the Chinese were by the way. And so we found ourselves like upside down by 20 or $30,000 in terms of what the customer was willing to pay versus what it cost. So what happened after that? And it depends on every company I could certainly explain. The fourth thing is that we got real. We were like, okay, now we have to design a vehicle that's basically the same cost as a combustion hybrid vehicle in our case. And we cannot use a traditional approach like our Gen 1 products. So the Gen 2 products we've been working on for about two years, radical left turn in terms of our approach of engineering them and which segments will compete.
- [29:22]
A
Right. Because that, I mean, could you explain, because this is a thing that mystifies me. It might be only me, but you know, when you look at the kind of engineering and mechanical straightforwardness, I won't say simplicity, but straightforwardness of an electric vehicle. You know, the motor, the transmission, much more, much smaller and more compact and less moving parts. And then the, you know, the battery pack and the motor control and battery control system. That looks to me as an amateur observer of engineering simpler than a combustion engine which has hundreds of moving parts and is made up of thousands of different bits. You'd think that would always, always be more expensive. But the fact that you can build a hybrid car with all the engineering complexity that's in that cheaper than you can buy an electric car. And clearly it's universal. This isn't specific to Ford. I mean all hybrids and petrol cars are cheaper than electric cars across the world. I don't understand. Is that just, is that just scale of manufacturing that you've been manufacturing combustion engines for so long you've got. It's a super cheap, super economic process. Is that the reason?
- [30:38]
B
It is. It's industrial ballet. When someone. It's a shame that we couldn't show everyone how a car is built, a combustion car is built. But it is a thing that takes your breath away when you see the whole process. Because we have become so efficient at producing this very complicated device and we have rung the neck of efficiency for 100 years.
- [31:09]
A
Yeah.
- [31:11]
B
Through automation, through smarter engineering, through common parts, through. Because through a shared supply chain. Just in time arrival of parts. You know, if there's a, if there's a, if there's a problem on the Ambassador Bridge here in Detroit between Canada and Detroit within an hour, are we running out of seats for the F150? Because the seat manufacturer across the bridge in Canada is making their seats about 45 minutes in front of the vehicle.
- [31:52]
A
Wow.
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B
That's how tight to get that efficiency that. And, and, and then when you. I, I love combustion vehicles. I love going to Goodwood. I love, you know, I love it all. I love going to the Red Bull and Milton Keynes and seeing the technology there. But the reality is the EVs have 40% less parts. They have much less labor content. And the parts that are reliable on EV are the parts that break and are really expensive in a combustion vehicle.
- [32:21]
A
Right.
- [32:21]
B
You know, you break a valve spring or something deep in the transmission, it takes just, it's just impossible to fix. And those things don't break on electric vehicles as much. But the battery is huge and it's expensive. And in our industry there was natural law in our industry that the larger the vehicle you make, the more money you make on it in the combustion side. But the exact opposite is true on Electric vehicle.
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A
Right.
- [32:53]
B
The larger you make it, the larger the battery. The larger the battery, the more battery you have to actually have just to carry around the battery. And so, you know, the heavier the vehicle is, the much less you make. And of course, if we lose money, it's not sustainable. And so all of our batteries were way too big. And of course we didn't have the latest IP on chemistry. We were all putting these expensive high density lithium batteries and they're great, but there's a lot of fire risk because there's so much energy in those lithium batteries. Whereas iron phosphate, for example, the battery chemistry that's dominant in China, as you know, has much less energy density. It could be charged twice as long, twice as many charge cycles, so it can last twice as long. Very attractive for commercial customers who charge fully charge every day. And that chemistry has almost no fire risk. And so you don't need any countermeasures, you don't need software, you don't need fire blankets and all the other stuff that you have to put on a lithium battery. And of course this is just, this is just the first generation of products and we're now getting that second generation of breakthroughs.
- [34:10]
A
Yeah, absolutely. And I mean, I think that is the, one of the things that maintains my interest in this whole area is the kind of technological development, you know that when I first drove an electric car, it was a lithium ion battery. I didn't, I didn't even think about it. I went, oh, that's like in my phone, you know, sort of, it's not quite, but it's similar. And then you gradually. And then as I've learned more, you go, this stuff is, we barely scratched the surface. This stuff is at the very, totally. It's almost at model T level technology.
- [34:41]
B
You know, it's absolutely going to be absolutely right, totally.
- [34:44]
A
And is that what's happening at your, at the Skunk Works are developing battery technology, motors, I mean, presumably everything they're looking at.
- [34:51]
B
So this is really interesting that you brought this up and I haven't really talked about it, but you know, we talked about it in general. But since you're so close to the evolution of the industry and your listeners are so educated about it and curious, you know, what we found is that when you, this always happens in our industry when you have a big advantage like byd, they build their own batteries, cells and they, their lithium iron phosphate batteries and an alternative lithium as we talked about. And they're very affordable because they pay no margin to a supplier and they have A lot of advancements inside the company. And so they're. But when you look at the efficiency of their motors, inverters, gearboxes, you know, when you have something really cheap, like a cheap battery, you know, maybe they aren't as efficient as they could be. So what we found in kind of trying to compete and beat the Chinese OEMs that are fantastic, the benchmark. We found some opportunities that we didn't expect to, but it required, you know, people outside of our industry to be staffing that team. Most of the team came from Tesla and Formula One. Many of them came from the UK and the Formula one ecosystem that you have in your country because there's no better aerodynamicists in the world.
- [36:16]
A
It's extraordinary. I think that's an unknown skill set. Even in this country, people don't realize the incredible level of skill of those engineers.
- [36:26]
B
They are unbelievable. The wiring, the predictive failure, components using software, all of these things come into play in a Formula one race. Adrian Newey and kind of country engineering heroes in your country who really are thinkers on a different level that our auto industry didn't really avail themselves of.
- [36:51]
A
But just before you go, because the one thing I'd love to pick your brains about is the. I think it's partly journalism and reporting, but there's a kind of. Certainly in this country and I think in the US there's a big thing of Hybrids are the answer. We should go for hybrids. Let's forget electric cars. Electric cars. You know, there was a headline in this in the UK recently, you know, electric cars don't work. Hybrids are the obvious answer. And you go, well, you know, I think hybrids, you know, it's such a strange attitude. But, you know, I don't know, I don't even know how to argue about that. But I mean, is that good? Because you. There's been. Yeah, I mean, there is. Are you. There is a bit of a shift of focus onto hybrids at Ford. Would that be a reason?
- [37:35]
B
Well, first of all, hybrid, you know, Ford is. It's interesting topic. First of all, we're number three to Toyota, Honda here in the US in hybrid, but our hybrids are on our trucks. We're 80% market share of hybrids in the US for hybrids on pickup trucks. In fact, I would say the F150 Hybrid, none of our competitors even have it. 30% of our of our mix will probably outsell the Prius this year. That's how high volume our hybrids are now. But we use it for exportable power. So truck customers are different than a Prius customer. And so they like having tailgates or bringing energy to the job site. So we turn that battery into an exportable power. And of course, everyone reads about the floodings in Texas and the wildfires in California and all the grid goes down. Now you can, you can get an F150 hybrid and power your house for seven days. And Americans find this kind of independence from the grid very interesting. Part of a hybrid, but how I look at hybrid, how we look at hybrids, is they're all electric customers. In the future, they are finding electric interesting. They don't want to change their habits. They can't do the math about resale value, insurance costs, repairability. So hybrid is an easier answer for their math. But it is a gateway. And many of those customers, especially as companies like Ford, offer new, more affordable, but very attractive EVs. Not compliance EVs, we sell them. They're not very nice cars, but like really aspirational, affordable vehicles. A lot of those hybrid customers are going to go, I'm going to go the whole thing. I like this sense of acceleration. I like going past a gas station. And so it's, you know, we need to look at all those customers as, you know, transitioning.
- [39:33]
A
Yeah, yeah. Jim, look, it's been. I just want to. Would love to be able to do a podcast with you every month.
- [39:40]
B
Yeah, it's changing that much.
- [39:43]
A
It's changing that much. It wouldn't. We wouldn't have to. We wouldn't have to repeat ourselves. It's been an absolute joy talking to you today. Thank you so, so much. It really is brilliant. And the last one we did, the last time we did a podcast with you, it was very popular, had amazing feedback, I think. I don't want to flatter you too much, but you were very popular and people really appreciate your take on things. It's fantastic.
- [40:04]
B
I'm a converted car guy. I mean, I have a 73 Bronco, I have a 1936 Lincoln 12 cylinder, and my favorite car is my 1928 Bentley 4 1/2 liter. But I love electric cars because as a car person, the joy of driving is coming back. And everyone kind of sold these as rational kind of point A to point B products. And I just totally disagree with that. Totally disagree. And people like you are not satisfied with understanding this transition at a superficial level. You're going to make the investment to educate people about what's happening and how it's changing so that people can make informed decisions and have the right kind of conversations. And that's Why I love investing in time with you and because I learned something always and more importantly, I think your bridge, your bridge between what we could do at Ford, what we should do at Ford and what customers could potentially want.
- [41:14]
A
Yeah. Yeah. Fantastic. Fantastic note to end on. That's really brilliant, Jim. Thank you so much. Well, hope to see you again before too long.
- [41:23]
B
Yes, the same to you. And please enjoy your beautiful country and your children. And I look forward to having a conversation soon and I'm sure we'll have more surprises and more exciting things to talk about. But until then, congratulations on your, on your Vancouver.
- [41:40]
A
Thank you.
- [41:41]
B
Event. That's, that's great to hear and hopefully I can get to it someday.
- [41:45]
A
Yeah, please do. Well, please come to one of our shows. Would be amazing to have you, to talk to you on stage would be a wonderful privilege. Yeah, that would be great. Well, I really hope you enjoyed that. I can't tell you how much fun it is talking to Jim. Isn't he a great guy? I'm amazing. What an amazing job he's got as well. I mean it must be, you know, he's really into all that and he's got an amazing job. I'm very excited to see what they come up with because they'll definitely be, I think it's fair to predict one of the big old companies that will still be around in 25, 30, 40 years time making amazing electric cars. I think Jim is having a very critical role in that, in that process because I think it's fair to say, I think we all know there's going to be quite a few well known brands that have been making cars for 50 to 100 years that are not going to be around in 50 years time. Anyway, that's all. Please, please do tell your mates, your friends, your family, your skeptics, your annoying auntie. Because I often say annoying uncle aunties can be annoying too. I want to be balanced. Who goes down extra? Cows aren't ready yet, they're just not there yet. Obviously they wouldn't speak like that. They'd speak normally but I couldn't help doing that. And subscribe yourself if you haven't because we have amazing people on like Jim Farley, the CEO of Ford. Hello. And as always, if you have been, thank you for listening and watching.