This is the Chinese EV Ford’s CEO says it needs to beat ‘straight up in a street fight’
After announcing its electric vehicle business lost over $5 billion in 2024, Ford could face even more headwinds this year. Despite the threat of new tariffs and fewer government incentives, CEO Jim Farley stressed Ford is still “really confident” in its EV strategy. Farley said that Chinese EV makers are becoming a major global force, and even with tariffs, Ford needs to beat them “straight up in a street fight.” This is the electric car he was referring to.
Ford reported fourth-quarter earnings on Wednesday, beating Wall Street’s top- and bottom-line estimates. Despite posting $48.2 billion in Q4 revenue, Ford’s model e division reported an EBIT loss of $1.4 billion.
The EV business lost $5.1 billion last year after losing $4.7 billion in 2023. On the company’s earnings call, Farley said new competition led to increased pricing pressure. Ford expects Model e to lose another $5 billion to $5.5 billion this year. In total, the company is forecasting an adjusted EBIT of $7 billion to $8.45 billion in 2025.
Like GM, Ford did not factor in the potential impacts of tariffs or other changes in policy by the Trump administration.
Farley explained on the call that “There’s no question that tariffs at 25% level from Canada and Mexico, if they’re protracted, would have a huge impact on our industry, with billions of dollars of industry profits wiped out and an adverse effect on the US jobs.”
Ford’s CEO said he looks forward to working with government leaders to ensure they are “strengthening, not weakening our nation’s auto industry.”
The tariff situation, growing demand for the latest tech and software, and “the Chinese OEMs growing to become a global reality,” Farley said, “these dynamics will all play out for some time to come.”
Ford CEO warns Chinese EV makers are a global threat
Ford sells some electric cars outside of the US, including the new electric Puma, Explorer, and Capri models, launched in Europe, so it does have an idea of the changing market dynamics.
After accounting for 8% of car sales in the US last year, Farley said EVs are growing, and “people who buy these vehicles don’t go back to combustion.” He added that it is a “very vibrant market” and a “global capability for Ford.”
As a global player, it will need to compete with Chinese EVs, which Farley has previously called an “existential threat” to the industry. During the earnings call, Farley touched on the subject, saying they continue to expand and are becoming “a major force in our industry.”
After Morgan Stanley analyst Adam Jonas asked, “Do you think that U.S. tariff policies will be successful in keeping Chinese EVs out of the US market long term,” Farley said the topic “is really pertinent to us.”
Ford’s CEO added, “The level of subsidies that these companies have in China is very material as well as these are digital vehicles with digital footprints and really deep into people’s digital life.” Farley explained, “On the kind of unfair part or the subsidy part, I think we’ll have to sort that out as a country.”
At the end of the day, “the company has to stand on its own.” Ford will work with government partners to make it a level playing field, but “in the end of the day, it’s management’s responsibility to beat the SU7 straight up in a street fight.”
The SU7 is Xiaomi’s first self-developed electric car. After shipping one to the US and driving it for a few months, Farley called it “fantastic” and didn’t want to give it up.
After launching the SU7 last April, Xiaomi revealed it had already delivered over 135,000 models in 2024. The SU7 starts at around $30,000 (215,900 yuan).
Ford is betting on its low-cost platform, which is being developed by a team of former Tesla, Rivian, Lucid, and Apple engineers, to help it compete.
The first models, due out in 2027, are expected to be a smaller electric pickup and SUV, starting at about $30,000.
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Elon Musk said today that Tesla will double its electric vehicle production in the US in the next two years.
What would that look like? Let’s do the math.
Today, during a press conference to promote Tesla at the White House, Tesla CEO Elon Musk said the following:
“As a function of the great policies of President Trump and his administration, and as an act of faith in America, Tesla is going to double vehicle output in the United States within the next two years.”
This raises many questions, as Musk’s phrasing of the statement suggests that Tesla is planning to add previously unannounced production capacity in response to Trump’s policies.
However, the reality could be different.
What is Tesla’s current production capacity in the US?
We only know Tesla’s installed capacity, which is much different than its actual production rate.
This is Tesla’s latest disclosed global production capacity at the end of 2024:
| Region | Model | Capacity | Status |
|---|---|---|---|
| California | Model S / Model X | 100,000 | Production |
| Model 3 / Model Y | >550,000 | Production | |
| Shanghai | Model 3 / Model Y | >950,000 | Production |
| Berlin | Model Y | >375,000 | Production |
| Texas | Model Y | >250,000 | Production |
| Cybertruck | >125,000 | Production | |
| Cybercab | — | In development | |
| Nevada | Tesla Semi | — | Pilot production |
| TBD | Roadster | — | In development |
In the US, it adds up to 1,025,000 vehicles per year.
In reality, Tesla’s factories are operating at a much lower capacity.
Based on sales and inventory from 2024, Tesla is currently building fewer than 50,000 Model S/X vehicles per year compared to an installed capacity of 100,000 units.
As for Model 3 and Model Y, Tesla is currently building them in the US at a rate of about 600,000 units per year compared to claimed installed capacity of over 800,000 units.
Finally, the Cybertruck is being produced at a rate of less than 50,000 units per year compared to an installed capacity of over 125,000 units.
This adds up to Tesla producing 700,000 units per year in the US in 2024.
What will be Tesla’s new capacity?
Considering Musk mentioned that it will happen “within the next two years”, it is unlikely that he is referring to installed capacity.
The CEO is most likely talking about Tesla’s actual production, which would also make sense, especially considering he mentioned “output.”
Tesla currently outputs roughly 700,000 vehicles per year in the US.
Doubling that would mean bringing the total to 1.4 million units per year, which would be an incredible feat, but it’s not entirely a new plan for Tesla.
First off, Tesla has already announced plans to unveil two new, more affordable models this year. These models are going to be built on the same production lines as Model 3/Y, which would potentially enable Tesla to fully utilize its installed capacity for those vehicles.
That’s another 200,000 units already.
As already mentioned in Tesla’s installed capacity table, the company is currently developing its production facility for the Tesla Semi electric truck in Nevada.
Production is expected to start later this year and ramp up next year. Tesla has previously mentioned a goal of 50,000 units per year. It would leave Tesla roughly a year and half to ramp up to this capacity, which is ambitious, but not impossible.
Then there’s the “Cybercab”, which was unveiled last year.
The Cybercab is going to use Tesla’s next-gen vehicle platform and new manufacturing system, which is already being deployed at Gigafactory Texas.
Production is expected to start in 2026, and Musk has mentioned a production capacity of “at least 2 million units per year”. However, he said that this would likely come from more than one factory and it’s unclear if the other factory would be in the US.
Either way, Tesla would need to ramp up Cybercab production in the US to 450,000 units to make Musk’s announcement correct.
It’s fair to note that all of this was part of Tesla’s plans before the US elections, Trump’s coming into power, or the implementation of any policies whatsoever.
Electrek’s Take
Based on my analysis, this announcement is nothing new. It’s just a reiteration of Elon’s plans for Tesla in the US, which were established long before Trump came to power or even before Elon officially backed Trump.
It’s just more “corporate puffery” as Elon’s lawyers would say.
Also, if I wasn’t clear, we are only talking about production here. I doubt Tesla will have the demand for that, especially if Elon remains involved with the company.
The Cybercab doesn’t even have a steering wheel, and if Tesla doesn’t solve self-driving, it will be hard to justify producing 450,000 units per year.
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The average incentive package for a new EV was 14.8% of the average transaction price (ATP), or approximately $8,162, the highest level in more than five years, according to the latest monthly new-vehicle ATP report from Cox Automotive’s Kelley Blue Book.
Incentives for EVs are more than twice the overall market. A year ago, EV incentives were 10.2%. EV incentives, as a percentage of ATP, have increased by 44% in the past year.
In February, at $55,273, new EV prices were lower by 1.2% from January – generally aligned with the industry – and higher by 3.7% year-over-year. The January EV ATP was revised higher by 0.06% to $55,929.
Compared to the overall industry ATP of $48,039, EV ATPs in February were higher by 15.1%, an increase from the 14.9% gap recorded in January.
EV market leader Tesla increased ATPs by 1.8% year-over-year in February to $53,248 but decreased by 3.7% month-over-month from $55,315. Model 3, Model Y, and Cybertruck posted price declines in February compared to January; Model S and Model X saw month-over-month increases.
As sales cooled, the Cybertruck ATP in February dropped by more than 10% from January to an estimated $87,554.
Read more: You can lease a 2025 Polestar 3 for the same price as a Polestar 2 right now
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Environment
US President does infomercial at White House for company owned by his biggest political donor
Donald Trump, the President of the United States, performed what basically amounts to an infomercial at the White House for Tesla, a company controlled by his biggest political donor, a day after its stock crashed.
Yesterday, Tesla’s stock crashed 15% – resulting in a 50% drop from its peak in December.
Last night, Trump posted a message on Truth Social supporting Elon Musk, Tesla’s CEO and his biggest political donor. In the message, he called the Tesla boycotts “illegal” and he said that he would be buying a Tesla vehicle to show his support for Musk.
He has apparently followed through today, but he went a quite a bit further as he held a press conference in front of Tesla vehicles at the White House:
The President, who has previously shared misinformation about electric vehicles being “unusable,” praised Tesla’s vehicles and said that he would be buying a Model S Plaid.
He is not allowed to drive, so he said that he would let White House staff use the vehicle instead.
Tesla’s stock (TSLA) rose up 5% on the publicity stunt today, but it closed up 3.8% compared to being down 15% yesterday.
Electrek’s Take
When I write those headlines, I feel like I’m running The Onion in an alternative universe where satire is the reality.
But you can’t accuse me of “clickbaiting” because this headline is actually accurate.
For years, Trump has been one of the biggest promoters of misinformation about electric vehicles in the US. We have often reported on the ridiculous things he has said about them.
That hasn’t changed. In fact, Trump is still pushing hard against electric vehicles. We recently reported on Trump shutting down 8,000 EV chargers at federal buildings and he is pushing to remove the tax credit on electric vehicles.
This is purely transactional. Elon gave him $250 million, so now that Tesla’s stock is in free fall, he gives him a boost.
Like his Bitcoin pump, it isn’t likely to work. My hope is that it will at least help open the minds of some of his fans to electric vehicles, but I have doubts.
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