Ford CEO Jim Farley described being 'very humbled' after his team dismantled Tesla's Model 3 and Chinese electric vehicles, revealing shocking differences in design. The findings prompted a major overhaul at Ford, including splitting the company into EV-focused divisions. Despite heavy losses, Farley sees it as essential for competing in the EV market.
On Tuesday, Ford CEO Jim Farley shared insights from a pivotal teardown process during an appearance on the 'Office Hours: Business Edition' podcast. He recounted how engineers compared Ford's Mustang Mach-E, then the number two bestselling EV in the US, to Tesla's Model 3. The analysis uncovered that the Mach-E's wiring loom was 1.6 kilometers longer than Tesla's, adding 70 pounds of weight and costing an extra $200 per battery due to the need for additional capacity to carry the load.
'I was very humbled when we took apart the first Model 3 Tesla and started to take apart the Chinese vehicles. When we took them apart, it was shocking what we found,' Farley said. This realization highlighted how traditional manufacturing lagged in the EV era, where battery costs dominate. 'All the math changes with an EV with that huge expensive battery,' he added.
The discoveries drove Ford's 2022 decision to restructure into Model E for EVs, alongside Blue and Pro divisions, to address these fundamental differences. The move has been expensive: Model E lost more than $5 billion in 2024 and faces a similar projection for 2025. 'I knew it was going to be brutal business-wise,' Farley acknowledged, emphasizing accountability to investors.
Ford remains third in US EV sales through the third quarter of 2025, trailing Tesla and Chevrolet, but the gap is widening amid fierce global competition. Chinese makers like Xiaomi, BYD, and XPeng are surging, with Xiaomi delivering nearly 49,000 EVs in China last month compared to Tesla's 26,000. Supported by over $230 billion in subsidies since 2009, they hold more than half of global EV sales.
Farley has personally experienced Chinese innovation, flying in a Xiaomi SU7 for daily use despite 100% US tariffs blocking imports. 'I try to drive everything we compete against,' he defended on X, calling Xiaomi an 'industry juggernaut' and 'the Apple of China.'