Ford CEO Jim Farley, the chief of the 122-year-old firm that democratized the automobile for on a regular basis Individuals, stated carmakers are going through three “perfect-storm moments” that might show existential.
Farley took over as CEO in 2020, however has labored on the automaker since 2007. Earlier than that, he spent practically 20 years at Toyota.
Now, he thinks the three-fold transformation barreling at carmakers represents a “come to Jesus” second for the business, they usually must both meet every of the challenges or face the results, he advised Rolling Stone.
China
The primary risk is Chinese language carmakers. As just lately as 2022, Western firms dominated the automobile market on this planet’s second largest financial system, stated Farley. However in 2023, Chinese language automakers surpassed Western rivals’ China automobile gross sales for the primary time, the Wall Road Journal reported.
Volkswagen was the market’s largest participant for a decade. The German automaker offered a excessive of 4.23 million models in 2019, however the market’s rising choice for EVs and homegrown choices led to regular declines that reduce VW’s gross sales down about 36% to 2.69 million in 2025.
Ford has additionally seen its personal declines in China, the place gross sales fell to 288,000 in 2022 from a peak of 853,000 in 2016.
Farley is aware of firsthand the potential of the Chinese language automobile business. In 2024, he spent six months driving a Xiaomi SU7, the primary EV created by the Chinese language tech firm higher recognized for its good telephones, and didn’t need to give it up.
China’s carmakers have excelled partly due to controversial state subsidies, he stated, but in addition due to engineering excellence.
“They have the most subsidies from the government, plus their OEMs [original equipment manufacturers] are really good,” he advised Rolling Stone.
After success domestically, a few of China’s largest carmakers are increasing worldwide, with BYD surpassing Ford in international gross sales final 12 months—whereas promoting solely EVs and hybrids.
Design
Second, automobile firms are additionally going through the problem of higher complexity thanks partially to the rise of EVs and a shift in engineering towards “software-defined vehicles,” based on Farley.
“The systems for safety, driver assistance, and controlling the vehicle, are so sophisticated and there’s so much software in the vehicles that are sensing devices,” he stated.
These autos are rather more difficult and costly to construct than conventional autos, they usually require a unique set of experience than that which automakers have historically employed to construct their autos.
An instance of this battle is Ford’s F-150 Lightning, an electrical pickup truck that Ford discontinued in December after solely three years in manufacturing. A part of the issue with the car was that the corporate approached it in a standard approach, as a substitute of resetting their strategy adjusted to constructing an EV.
“It didn’t take us long to learn that our internal combustion engine prejudice was so high that we actually hadn’t designed the cars right,” he advised Rolling Stone.
In the meantime, when evaluating the all-electric Mustang Mach E to the Tesla Mannequin Y, the Mustang was 70 kilos heavier as a result of Ford had approached the interior wiring in a extra conventional approach.
Elon Musk’s carmaker thought of designing its car otherwise, he added.
“They said, ‘Let’s design the vehicle for the lowest, smallest battery.’ Totally different approach,” he stated.
Rules
The third and probably largest storm, Farley stated, is the regulatory whiplash that has accompanied the march towards decrease carbon emissions.
“Everyone thought the first inning or the second and third inning would be pure electric vehicles,” Farley stated.
As a substitute, costly batteries and the Trump administration’s weakening of emissions requirements have modified the calculus. In December 2025, Trump decreased the obligatory annual enchancment for automakers’ emissions from the Biden administration’s 2% per 12 months to a fee of 0.5% that steadily drops to 0.25% in 2031.
The Nationwide Freeway Security Administration predicted the transfer will carry down the typical miles per gallon for light-duty autos to 34.5 miles per gallon by 2031 from the 50.4 miles per gallon common that may’ve been reached underneath the Biden-era requirements.
“What that really means is, if there are no regulations, then every OEM is going to go back to their cultural norm,” Farley stated.
But, Ford is hedging its bets. If emissions requirements can change underneath Trump, it’s seemingly they are going to change underneath the subsequent president.
So Ford moved away from its plug-in EV enterprise and scrapped its F-150 Lightning in December. The corporate is betting its future on hybrids, extended-range EVs (EREVs), and a smaller, inexpensive EV platform.
“If we don’t put our chips on the right number and the right color, Ford could maybe not exist,” he stated.
