Ford: Tesla's price cuts are reminiscent of the Model T era

Ford CEO Jim Farley has his say on Elon Musk in this interview

Ford Model T

By: Eleonora Lilli

Published by: Brian Potter

Jun 8, 2024 at 3:26am ET

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Tesla has been successful, but the moment the brand is currently going through is quite complicated. Ford CEO Jim Farley is convinced of this, and in an episode of the UK podcast Fully Charged, interviewed by host Robert Llewellyn, he said that Elon Musk is currently in a similar situation to the one Henry Ford faced back in the Model T days.

The most sensitive issue is price. Excessive discounts could hurt Elon Musk's company, which Ford still considers to be the main rival in the electric car sector, along with China's BYD and Geely. He is not worried about General Motor, BMW or Volkswagen.

Ford recalls the Model T

The Model T was launched in 1908 with the aim of being accessible to all budgets and succeeded in conquering America. Almost 20 years later, undiversified production led to a drop in sales and the end of production in 1927, with over 15 million units delivered.

Today, "I think we're at the same point we were with the Model T. Henry Ford was only a year away from bankruptcy". Ford's CEO did not mince his words in reminding us that pricing policy is crucial. According to him, if you constantly reduce the price of a good, it ends up no longer being appreciated.

That's what Henry Ford discovered with the Model T: you commoditise your product when you say to people, 'Price is what really counts'," said Mr Farley.

Ford's plans today

Today, Ford doesn't want to make "commodity products", said Farley, but "innovate" to offer drivers "things they don't know they need".

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The aim is to produce more affordable electric vehicles and, to do this, Farley stressed the need to reduce the industry's reliance on the Chinese battery supply chain.

"We go to the mine, buy the raw materials and then organise the processing through to our battery factories, it's all new. When people buy an electric car, they probably have no idea of the scale of the changes that lie behind it.