Yahoo Finance Presents: Ford CEO Jim Farley

Ford CEO Jim Farley joins Yahoo Finance editor-at-large and anchor Brian Sozzi to discuss the new era of electric vehicle making at the storied auto giant, the start of F-150 Lightning production in Detroit, the battle against Elon Musk’s Tesla and why this moment is extra special to Farley and his family.

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BRIAN SOZZI: All right, joining us now is Ford's CEO Jim Farley. Jim, always great to get some time with you. Before we get going and talk about the Lightning, am I right-- you are powering this interview on your end from your electric Lightning truck?

JIM FARLEY: Yeah, It's unbelievable. We lost power at the Rouge, so now we're running all the cameras and the lights off our pro power onboard. So we can do it for about three days in case we need it.

BRIAN SOZZI: That is impressive there. That is very impressive. I want to talk to you a little bit about the Lightning here. It's a big day. First ones are rolling off the production line, big momentous day for Ford. Why are you comparing this to the launch of the Model T?

JIM FARLEY: Because it's a new era for Ford. We're the leader in light duty pickups. F-150's been the leader-- leading truck and actually the leading vehicle sold in the United States for decades now. And electrifying is just a huge moment for the company to go into this electric digital era. You could drive hands-free with the vehicle, we've got over-the-air updates of the vehicle, it's zero emissions, power your house or an interview for a few days-- we've never really had a product this innovative in a core segment.

Starts at $39 grand. So it's not a technology for the few. It's a technology for the masses, like the Model T was. And it's a really big change for our company.

BRIAN SOZZI: And, Jim, what's the mood like in the plant right now on a day like this?

JIM FARLEY: It's-- I just-- I've never felt like anything like this in the car business. I guess maybe it feels like that way [INAUDIBLE] during a launch. But I mean, the feeling of unity where our factory workers-- because we make every truck in the US. So we bet on the US.

Having our factory workers feel like they're going to have a job for decades to come because they're working on a vehicle with future technology, all the engineers have spent three years doing this in quiet, the scale of this-- we built 2,000 vehicles in the last couple of weeks. Some of our competitors haven't done that in total. It's really electric. It's really something special. Lightning has struck in the Rouge plant.

BRIAN SOZZI: I promise not to keep you for three days and test out the power on that truck. This is not going to be a three-day interview here, Jim. But I want to get into the specs of the truck and the outlook for Ford, but I didn't realize this about you and your own personal story. Your grandfather started at Ford in 1918. Talk to us a little bit about his journey at Ford and what this means to you.

JIM FARLEY: My grandfather was typical of millions of Americans. He was an orphan. He had no future. And Henry Ford gave him a job. He started-- he was the 389th employee, he was a factory worker. And all the education my family came from Mr. Ford and his job at Ford.

And I get to lead the company now. There's not a single day I don't think about my grandfather and paying it back to him.

BRIAN SOZZI: This must be a surreal experience for you.

JIM FARLEY: It is. I mean, I'm a volunteer. I worked at Toyota for 20 years. I came here because I want Ford to win. I want Ford to prosper. I want more families like my family here in America and overseas. And yeah, I'm a volunteer.

BRIAN SOZZI: The F-150 is an iconic vehicle in this country. It had to have been hard to say to the team, guys, we're making a lot of money off this truck, and now we're going to change the powertrain, we're going to switch it to electric. Take us inside the executive suite when you made a decision like this. Did you ever think that you weren't going to do this?

JIM FARLEY: Well, I'd say four years ago, I would handicap this as very likely chance of succeeding. First of all, we had a rogue group, team Edison, who are not part of the main company. We had to do that because our traditional team wouldn't have conceived a product like this.

I think the first estimate the traditional team had on a range for an F-150 electric was 100 miles, and now we're at 325. So we had to develop a special crew. They were really challenged. But I think, basically, all the great stuff in our industry comes from a small group working in the basement somewhere. And you know, this truck is no different.

They clawed, and pushed, and shoved to get 325 out of the range. We got the 0 to 60 to 4 seconds. We then put Pro Power on board, which our interview's run by. And then the president came and he loved the truck. I mean, it's an American story, but it's a story of an underdog project.

BRIAN SOZZI: Is he getting model number one, Jim? Where does that go? Because I know we talked at the time when the president drove that truck-- have you talked to him? Is he getting one of these?

JIM FARLEY: Yeah, the president's visit was kind of a game-changer for us. I mean, I didn't know he was such a car guy. And unfortunately, he owns a Corvette. But he really wanted to drive the car and the truck.

And the Secret Service was like, no, we don't do that to the president. But he was a president, right? So he's like, we're going over to the test track. I'm driving the truck.

And he asked me, know how should I test or evaluate? I just said, Mr. President, jam your foot on the accelerator. All you have to do is fully accelerate the truck. And he came back and said, man, this sucker's quick. And I think it's the best test driver we've ever had.

BRIAN SOZZI: How many of these will you make over the next 12 months?

JIM FARLEY: In 12 months, we'll hit a running rate of 150,000 units. We've increased the capacity of this factory twice. In fact, right now, we're already preparing for the second expansion. And we're just starting to launch the vehicle. So we think 150,000 units is about right.

We have the batteries to do that. We have 200,000 units of demand already. And orders-- we'll start to open up the order bank once we start ramping up our production and get a little bit further in the model year. And we think 150,000 is the right level to start with.

BRIAN SOZZI: Are they sold out? If I wanted to get a Lightning right now, could I get one?

JIM FARLEY: No. Unfortunately, I wish I could say, yes. Even if you know Jim Farley, it won't matter. We're sold out for at least a year or so. And we stopped taking orders, unfortunately, because we just don't want to infuriate customers-- take an order and then wait for two years-- that doesn't make sense.

So we're respecting everyone. We're delivering now later this week, we'll start delivery of F-150 Lightnings to our customers, our Ford Pro customers. And then we'll start our retail deliveries in a week or so. As I said, we built 2,000-- we're going to try to make as many of these as we can. But we're all going to have to be patient.

BRIAN SOZZI: You've made a lot of great progress on electric vehicles in your short time as the CEO of Ford. Do you still feel like an underdog compared to a Tesla? There's really nobody else to compare but Tesla, just given how far they are out in front in EVs more broadly. But do you still have that underdog mentality?

JIM FARLEY: You betcha. And we have to, because Tesla is way in front. And I think we can catch them. We're not going to compete or serve our customers the same way they are. We're going to do it differently. We're going to go after pickup trucks, commercial vans, Mustangs. We'll have the Detroit swagger in our product.

We'll scale. We know how to do that. It's not a big deal for us to build a new factory or ramp up [INAUDIBLE] But we have to really change the customer experience. It's got to go digital. It's got to go online-- no inventory. A remote pickup and delivery for all customer transactions.

We're going to do that to the dealers because we think a physical outlet is very important. We saw the net promoter score for Tesla customers after five or six years there-- they're not happy because they need a physical place to do service on their vehicle, even an electric vehicle. So we will compete differently.

We think we have a lot to offer for customers. No one has an electric pickup truck like this at $39,000. And so we'll compete differently. And I think we're ambitious.

BRIAN SOZZI: Talk to us-- last question before we let you go-- let's talk about jobs. You mentioned at the top that this is a job creator. And certainly behind you, I can see the Ford employees. But there's this notion out there-- EVs mean less jobs for auto workers.

JIM FARLEY: It's a great question. Technically, it's correct. If you just look at this facility where we build the final assembly of the vehicle, it's probably 20% or 30% less parts and 20% or 30% less labor hours. But that's not the full story.

The full story is to make these vehicles, just like Apple and Samsung figured out-- when the technology changes, you got to in-source key components, like batteries, motors, inverters, power electronics, e-axles. Those stuff we gave to our supply chain. We're now taking that back and building it in the company.

Most of the F-150 built here in Michigan. The batteries are built in Georgia. So when you in-source, you get a lot more job creation than actually you lose from the efficiency on the line.

BRIAN SOZZI: All right, we'll leave it there. Ford CEO Jim Farley, great to get some time with you. And being a fellow car guy, I know this is a very big moment for your company. We look forward to following your continued journey in EVs. We'll talk to you soon.

JIM FARLEY: Thank you so much.

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