Why Fords EV Overhaul Draws on Tesla and China Lessons

Ford’s EV Tear-Down Strategy Reveals Shocking Cost and Efficiency Gap

Ford CEO Jim Farley made a bold move to understand his electric vehicle competition. He ordered his engineers to completely tear down a Tesla Model 3. What they found was a costly and humbling revelation for the American automaker.

The discovery prompted a major corporate restructuring. It also highlighted the fierce global race for electric vehicle dominance.

The Humbling Tesla Teardown

Inside Ford’s benchmarking lab, engineers stripped the Tesla down to its parts. They found the Model 3 used far less wiring than Ford’s own Mustang Mach-E. The Ford EV had an extra 1.6 kilometers of copper wiring.

This extra weight forced Ford to use a larger, more expensive battery. The cost difference was significant. According to Reuters, this efficiency gap was a key learning moment for Farley and his team.

Farley described the experience as shocking. He knew Ford had to change its approach to building electric vehicles. The traditional methods were no longer competitive.

A New Division Born from Necessity

The teardown findings led to a dramatic corporate shift. Ford created Model E, a standalone electric vehicle division. This unit operates with its own engineers and profit-and-loss accountability.

The financial results have been challenging. The Model E unit lost over $5 billion in 2024. Similar losses are expected for the next year.

Farley remains committed to the strategy. He believes taking on hard problems publicly leads to faster solutions. The company is investing heavily to catch up.

The Chinese EV Challenge Intensifies

Ford’s investigation did not stop with Tesla. The company also tore down electric vehicles from Chinese manufacturers. The results were even more alarming.

Farley stated Chinese EVs are “far superior” in many aspects. Companies like BYD are dominating their home market. They are now expanding globally with highly competitive products.

In China, about half of all new cars sold are electric. This compares to just one in ten in the United States. The speed of innovation in China has forced Ford to accelerate its plans.

Ford’s Counter-Strategy and Future Plans

The company’s response is a new, affordable electric truck. Ford is developing a midsize electric pickup priced around $30,000. This vehicle is designed to compete directly with Tesla and Chinese models.

The project focuses on lean manufacturing and cost efficiency. Ford aims to apply the lessons from its competitor teardowns. The goal is to build a profitable, high-volume electric vehicle.

This strategy acknowledges a cooling US EV market. However, Ford sees global competition as the ultimate priority. The company cannot afford to cede the electric future to overseas rivals.

Ford’s hands-on investigation into Tesla and Chinese electric vehicles provided a crucial, albeit painful, education. The company’s future in the electric era now depends on its ability to close the efficiency gap and compete on a global scale.

Info at your fingertips

What did Ford learn from tearing down a Tesla?

Ford engineers discovered the Tesla Model 3 used significantly less wiring. This made it lighter and more efficient. The finding revealed a major cost advantage for Tesla.

How much has Ford’s EV unit lost?

The Model E division lost over $5 billion in 2024. The company expects similar losses for the following year. These investments are part of a long-term strategy.

What is Ford’s plan to compete with Chinese EVs?

Ford is developing a new, affordable electric truck. The goal is a $30,000 midsize pickup. It will be built with cost-efficient methods learned from competitor analysis.

Why did Ford create a separate EV division?

CEO Jim Farley launched Model E to accelerate electric vehicle development. The standalone unit has its own engineers and accountability. This structure aims to foster innovation and speed.

How do Chinese EVs compare to American models?

Farley has stated that Chinese EVs are “far superior” in some areas. They often lead in efficiency and cost-effectiveness. This has created intense global competition.