Ford Motor should overhaul its century-old business model – from cutting advertising spending to reworking its dealer network – if it is to earn enough profit on electric vehicles to rival Tesla and others, the automaker’s CEO Jim Farley said on Wednesday.
Talking at an Alliance Bernstein conference, Farley said that the shift from internal combustion vehicles to EVs is the most exciting land grab in the automotive industry since the Model T was introduced by Henry Ford in 1908.
“The industry is heading to a huge price war,” Farley added.
Farley said Tesla, which was founded 100 years after Ford, enjoys a significant cost advantage that has convinced the need to reduce or eliminate dealer inventories of unsold vehicles and following Tesla in selling some vehicles directly to consumers.
He said Ford may have “multiple tiers of dealers” and some are going to be more specialized as the company launches the second generation of electric vehicles in some four years.
Farley said he was unconvinced that the automaker needs to continue buying advertising, especially for new electric models like the F-150 Lightning, which is sold out for the first year.
Ford spent $3.1 billion on advertising last year, far more than Tesla.
“If you ever see Ford doing a Super Bowl ad on our electric vehicle, sell the stock,” Farley added.