Ford CEO Recalls Being ‘Humbled’ By Tesla. Now EV Sales Are Stagnating.

Ford CEO James Farley said “it was shocking what we found” on taking a close look at the first Tesla Model 3. (Tasos Katopodis / Reindustrialize Conference /Getty Images)

Key Points

• Ford CEO Jim Farley noted the Tesla Model 3’s wiring was 1.6 kilometers shorter than that in Ford’s Mustang Mach-E, highlighting Tesla’s efficiency.
• Ford’s Model e division reported a third-quarter loss of $1.4 billion, equating to approximately $28,000 per electric vehicle sold.
• Despite EV losses, Ford shares have increased by about 36% year to date, while Tesla’s stock is largely unchanged.

It’s always been hard for established companies, with long-established systems and culture, to compete with startups that start with a clean-sheet design and dreams of disruption.

Ford Motor versus Tesla is just the latest example of that.

Ford CEO Jim Farley recently spoke with Monica Langley for the Office Hours: Business Edition podcast. He opened up about several topics, including competition with Tesla.

“I was very humbled when we took apart the first [Tesla] Model 3…and started to take apart the Chinese vehicles…It was shocking what we found,” said Farley. “On the [Mustang] Mach-E, for example, which at the time was [the] number two best-selling EV in the country…just the wiring in the vehicle was 1.6 kilometers longer than the Tesla wiring loom.”

Ford’s history of building internal-combustion-engine cars and competing against the likes of General Motors left it with a heavy, inefficient vehicle compared with its most dangerous electric-vehicle competitor. Tesla, with a minuscule history as a manufacturer, had developed better electrical systems than established players. (Tesla first sold its Model S in 2012 and the Model 3 in 2017.)

Farley’s realization is partly what led to the creation of the Ford Model e division, which he hoped would create pressure for Ford engineers to learn to produce profitable EVs without falling back on the profitability of the long-established F-150 pickup trucks.

Ford is relatively unique among traditional automakers in explicitly reporting its EV results. It hasn’t been easy. Ford’s Model e division lost $1.4 billion in the third quarter, or about $28,000 for each all-electric car sold.

Ford hasn’t solved the EV equation yet. Still, its shares were up about 36% year to date through midday trading on Thursday. Tesla stock was basically flat.

That’s a reminder for investors that longer-term strategic issues don’t always affect stocks immediately or as expected. Other factors are always at work, too. In this instance, EV sales have stagnated in the U.S., amid a rollback of Biden-era policies by the second Trump administration. That’s been good for the sale of traditional vehicles, which have held up better than most expected despite rising prices that are partly a result of new tariffs.

That doesn’t mean investors should ignore strategy or disruption. It’s one part of the puzzle when forecasting earnings and the direction of stocks in the short and medium terms.

Ford stock dropped 1.3%, closing at $13.28 on Thursday. Tesla stock lost 6.6%, closing at $401.99, on a tough day for the market. The S&P 500 and Dow Jones Industrial Average both dropped about 1.7%.

Write to Al Root at allen.root@dowjones.com