News
Ford CEO on the future of EVs, Detroit and his relationship with Tesla’s Elon Musk
Inside a 111-year-old former Detroit train station, Ford (F) CEO Jim Farley is charting a path for the auto giant’s next 100 years.
Just don’t expect it to include electric trains.
“The building has really been revitalized physically, but what’s important is that there will be software people here, the future of our professional and EV business will be here,” Farley tells me in a new episode of Yahoo Finance’s Opening Bid Podcast (video above).
We’re sitting right in the middle of Michigan Central Station in Detroit’s Corktown neighborhood. Built in 1913, the station operated trains for about 75 years before officially closing in 1988 due to declining ridership — a byproduct of declining production in Detroit.
The 472,000-square-foot building, decorated with early 1900s architecture, sat abandoned until 2018. Led by Executive Chairman Bill Ford, Ford purchased the building and several surrounding sites for $90 million, with a vision of reestablishing Detroit as a bullish epicenter – technology jobs.
After nearly $1 billion in renovation work, the renovated Michigan Central Station is now the center of a new mobility innovation district.
The central building will house Ford employees working on autonomous vehicle projects. Google (GOOG, Google) also signed on in 2022 as a founding member of the district.
Google will share its cloud technology for the site’s various mobility projects. The company will also provide on-the-job development training for local high school students and job seekers.
Over time, Ford envisions the mixed-use site to include hotel and retail options to attract vital technology talent to the redeveloping city.
Farley says the development should help the company attract the best and brightest to develop autonomous and electric vehicles.
Built in 1913, Detroit’s Michigan Central Station has reopened after 36 years thanks to nearly $1 billion in investment from Ford. (Brian Sozzi)
The reopening comes at a critical time for Ford and race car driver Farley, who will reach his four-year mark as CEO in October.
Ford shares have fallen over the past two years as the company has dealt with issues such as quality control, a slowdown in the EV market and losses in the EV business. Under Farley’s watch, Ford debuted the Mustang Mach-e SUV and Lightning F-150 pickup truck to compete in an EV market led by Tesla (TSLA).
It has also partnered with Tesla to allow Ford EVs to charge at its Superchargers using adapters. That partnership created a relationship with Tesla CEO Elon Musk, who Farley says he texted the other day asking for more charging adapters.
“I think there is a mutual respect,” Farley said of his relationship with Musk.
The story continues
Ford shares have fallen 14% over the past two years, according to Yahoo Finance data, lagging the S&P 500’s 28% gain. Shares of its rival GM (GM) gained 12% in that period, supported by share buybacks and aggressive cost cuts.
Farley changed as market conditions evolved.
The company said in April that it would delay the launch of its three-row electric vehicles from 2025 to 2027. It is also delaying EV production at the massive BlueOval City EV campus in Tennessee from 2025 to 2026.
In October 2023, Ford postponed $12 billion in planned electric vehicle spending, including the construction of a new battery plant in Kentucky. But the company has committed to making more hybrids to bridge the gap during the EV transition.
A more cost-conscious Ford is starting to appear on the company’s balance sheet.
In April, Ford guided toward a $10 billion to $12 billion upper limit for full-year operating profits. Adjusted free cash flow guidance was raised to $6.5 billion to $7.5 billion from $6 billion to $7 billion previously.
“If Ford can continue to execute in the coming quarters, shares should benefit from positive EPS revisions and an increasingly compelling case for multiple expansion following last year’s resegmentation – all anchored by a strong B/S and improved conversion of FCF,” Citi analyst Itay Michaeli wrote in a recent client note.
Still, the EV division will likely be the one driving the stock’s narrative — although the narrative has not been rosy.
The Model e division (Ford’s electric segment) lost US$1.32 billion in the first quarter, with sales of US$100 million (down 84% compared to last year). The number of vehicles sold to the division fell 20% year over year as consumers moved away from EVs despite price cuts.
The Model e division is on track for operating losses of $5 billion this year.
Farley said he has a date in mind for electric vehicle profitability, but declined to share it.
“We wouldn’t allocate capital if I didn’t think it would be profitable,” he said.
See what Ford’s longtime competitor, General Motors, is doing in a recent episode of Yahoo Finance’s Lead this way. CEO Maria Barra Said it’s not backing down on EVs.
Brian Sozzi is the executive editor of Yahoo Finance. He is also the host of “Opening bid“podcast. Follow Sozzi on Twitter/X @BrianSozzi and so on LinkedIn. Tips on business, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com. Are you a CEO and want to participate in Yahoo Finance Live? Email Brian Sozzi.
Click here for the latest stock market news and in-depth analysis, including events moving stocks
Read the latest financial and business news from Yahoo Finance