Chinese automaker BYD has gained a tremendous amount of market share across the globe in a very short period of time, largely due to the fact that it builds and sells EVs that offer far more for the money than much of its competition. Along with its fellow China-based rivals, BYD benefits from the fact that most of the raw materials used in EV batteries currently come from that very same place, coupled with massive investments in electrification, in general. Thus, it's no surprise to hear Ford CEO Jim Farley admit that it's currently impossible to compete with BYD on costs, specifically.
"BYD has vertical integration with the batteries. Its batteries are 30 percent cheaper than what we can buy from CATL," Farley said during a recent appearance on The Verge's Decoder podcast. "For us to beat that battery, to even be in the neighborhood in terms of cost, we have to radically redesign the efficiency of the motors, gearboxes, and inverters on the EV side so it uses 30 percent less battery. We can’t beat BYD’s vertical integration on the cost of battery. The only way we can beat it was with innovation on the draw of the battery."
Earlier this year, Farley touched on this particular subject as well, pointing out that disparities in individual component costs give Chinese automakers a huge leg up at the moment. It's precisely why The Blue Oval is working to become more vertically integrated as well, developing its own EV systems, inverter, motors, and gearboxes as a way to better compete in terms of costs and efficiency.
Additionally, during the same conversation, Farley also revealed that Doug Fields - Ford’s chief EV, digital and design - provided him with a shocking revelation when he joined the company some time ago, as it pertains to BYD - saying that "He’s like, ‘Jim, your part release system, your IT, your CAD design systems are 25 years uncompetitive. There’s no way you can beat BYD with that. You need real expertise.'”
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Farley is obsessed with China while european brands like Skoda, Dacia or VW have managed to produce cheap EV cars and are selling them successfully. Even with chinese brands in the market. If Farley isn´t able to be competitve against chinese or other world brands, then perhaps it´s time that Ford lets Farley go. Ford has lost market share. For example now Ford is way behind Hyundai and Kia (Korean, not chinese) while a few years ago had almost the same market share than VW (Europe´s sales leader). That´s not casual. That´s the result of the CEO´s very wrong decisions.
Why could Henry Ford sell the Model T so cheap drastically under selling all the competition Vertical Integration. Ford controlled 90% of the cost of making the Model T so he could turn out a good product as inexpensive as possible. The problem Ford has is almost all of the vehicles they make today is made by subcontractors providing nearly no control of quality and of costs. Chinese auto companies use Vertical Integration that way they sell their cars for a lot less than US automakers. Yes they get subsides, but the philosophy is sell as many cars as they can and take over the market and make the long-term profit. US companies only care about short term profits, and it is destroying American industry.
If this is actually true, then the Ford Family and the Board are the root cause of the systemic deterioration of the Company’s previous competitive strengths.
Would be a great “B School” case study.
Again, just because your name is on the building, that doesn’t make you uniquely qualified to run the company.
Farley is aware of China’s capabilities, and seems to have no problem talking about why China’s process can cost less. That’s not admitting failure or defeat, that’s being aware of the global competition and making the buying public aware. But, cheaper isn’t always best. Most of us, at one time or another, have bought something for more money than a competing product because we saw more value in it. That’s the challenge for Ford at this point. OK, so the Ford is going to cost more than the BYD, but show WHY it’s a better value. And… very importantly, actually BE a better value.
Also, for what it’s worth, BYD stated last year they don’t intend to sell passenger vehicles in the US market. Ford being a global company definitely looks at the bigger picture. They’re not a market threat in the US (for now) but on the big stage, they’re a player, and they’re not the only Chinese EV company in the game.
Maybe Farley needs to take a lesson from Henry Ford. Vertical Integration is what made the Model T such a low priced success story!
I do not work for any auto manufacture.
you think Farley would know the following!
NO US company will ever match the price of China!
BYD Chinese battery worker salaries are very low, with one report in early 2025 indicating that monthly income can drop to around 3,000–4,000 yuan, barely above China’s minimum wage, due to a shift to an 8-hour workday that reduces total earnings from previous levels of 5,000–6,800 yuan.
4,000 yuan a month, in dollars that’s $516.83ish a month!!!!
UAW-represented workers (Ford-owned plants)
Kentucky (BlueOval SK): A UAW organizing campaign in late 2024 aimed to secure higher wages for workers at the Ford-SK joint venture plant in Glendale, Kentucky.
Union proposal: The UAW’s contract with Ford would boost the starting hourly wage for production workers to $26.32, with the potential to reach over $42 per hour within three years.
Previous wage: Before the unionization drive, starting pay for production workers at this plant was just $21 per hour.
Ford can’t match this. Ford can’t compete here. Ford can’t produce a sedan at a profit. What the hell can Ford do? This is not the type of Babel that should be coming from a man that’s being paid 23 million a year to run the company.
Then just give up without a fight you fat faced f&&k.
If Failure Farley and a bunch of overpaid Ford Executives would take a huge pay cut (they should anyway since Ford has quality control issues) that could reduce but not eliminate the cost advantages of BYD. But why should it matter, the demand for EVs in America is weak and getting weaker.
American manufacturers need far more advanced robots and other manufacturing equipment. This ought to be the biggest problem to focus on for anyone who wants to see US manufacturers to become competitive again. Unless they can surpass China in productivity they can’t compete globally.