Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Ford Pivoted From the Model T to Electric Vehicles
Transcript
- Lucas: When Henry Ford decided to build the Model T in 1908, he made a bet that most people today forget was a massive pivot. The early auto industry was all about custom craftsmanship — wealthy hobbyists buying hand-built cars. Ford's idea of a single, standardised, affordable vehicle for every American was seen as naive or arrogant. Luna: Right, and the irony is that the company that invented mass production is now trying to reinvent itself away from mass production as we knew it. Lucas: Exactly. And that's the thread I want to pull on today — Ford's latest pivot, from an internal-combustion giant to an electric-vehicle leader. It's arguably the most consequential transformation in the company's history since the Model T itself. Luna: I mean, Ford has pivoted before. The Model T ran for nineteen years, but by the late 1920s, they had to shut down production and retool for the Model A because consumers wanted more variety. So they've done it. Lucas: They have. But the current shift feels different in scale. In March 2022, Ford announced it was splitting into three distinct business units: Ford Blue for the legacy combustion business, Ford Model e for electric vehicles, and Ford Pro for commercial and fleet services. That's not a minor reorganisation. Luna: And the price tag was huge. I think they said eleven billion dollars over several years to build out the EV infrastructure and platforms. Lucas: Eleven billion. And that's just the capex. What's fascinating is how CEO Jim Farley framed it — he said Ford Blue would be the 'profit engine' funding Ford Model e's losses. In other words, the legacy business is explicitly subsidising the pivot. That's a very different strategy from, say, General Motors, which tried to spin off its EV business as a separate entity called BrightDrop. Luna: But doesn't that create tension inside the company? The guys running the combustion side are essentially working to make their own jobs obsolete. Lucas: That's the classic innovator's dilemma in real time. And it's not just theoretical. In early 2024, Ford actually delayed about twelve billion dollars in planned EV spending, citing slower than expected adoption. The Wall Street Journal reported that dealers were pushing back on the required investments for charging stations — some of them costing hundreds of thousands of dollars per location. Luna: So the pivot is happening, but it's not a straight line. It's almost like a controlled retreat while reloading. Lucas: That's a great way to put it. And this is where the numbers get specific. Ford's second-generation EV platform, which they're calling the 'skateboard' architecture, is supposed to launch in 2027 or 2028. The target cost is to reduce battery pack cost by fifty percent, and the goal is to produce an electric crossover that starts under thirty thousand dollars. That's the holy grail. Luna: Because right now, the cheapest Ford EV is the Mustang Mach-E at around forty thousand dollars. So they need to chop ten grand off the price to really compete with Tesla and the Chinese imports. Lucas: And they're doing something really smart — they're licensing their battery technology to other automakers. In 2023, Ford signed a deal with a Chinese battery company, CATL, to build a factory in Michigan. That's controversial for sure, but it gives them access to the lowest-cost battery chemistry, lithium iron phosphate, without having to invent it themselves. Luna: So they're not trying to be Tesla. They're trying to be the Toyota of EVs — reliable, affordable, high-volume. Lucas: Exactly. Farley said explicitly, 'We're not playing the same game as Tesla. They're a luxury brand. We're going for the mainstream.' And look, Ford has a structural advantage that Tesla doesn't: the F-150. The F-Series pickup has been the best-selling vehicle in America for over forty years. If you can electrify that, you capture the most profitable segment. Luna: The F-150 Lightning is already out. How's that going? Lucas: Mixed. In 2024, Ford sold about seventy thousand Lightnings globally. That's impressive for a new EV, but it's a fraction of the nine hundred thousand F-Series trucks they sell each year. And they had to cut production in late 2024 because demand slowed. The early adopters bought in, but the mainstream truck buyer is still skeptical about range and charging infrastructure. Luna: So the pivot hinges on infrastructure as much as the vehicle itself. Ford is spending heavily on building out its own charging network — I think they announced over a thousand fast-charging locations through a partnership with Tesla's Supercharger network. Lucas: That's a huge strategic move. In 2023, Ford was the first major automaker to adopt Tesla's North American Charging Standard, or NACS. That meant future Ford EVs would be able to use Tesla's Supercharger network. It was a massive competitive concession, but also a pragmatic one. Farley said, 'We can't build the whole charging ecosystem ourselves.' Luna: I think that's the key lesson in this pivot: humility. Ford is a hundred and twenty-year-old company, but they're admitting they can't go it alone. They need Tesla's network, they need CATL's batteries, they need dealer cooperation. Lucas: And they need the workforce to change. One of the most underreported parts of this pivot is the cultural shift inside Ford's plants. The company has been retraining thousands of workers to build EVs. The Rouge Plant in Dearborn — the iconic factory that once made the Model T — now builds the F-150 Lightning. But the assembly process is completely different. Fewer parts, more electronics, new safety protocols for high-voltage systems. Luna: Speaking of the workforce — there was a big strike in 2023, the UAW strike against the Big Three. How did that affect Ford's pivot? Lucas: It was a significant headwind. The UAW won a historic contract that included a twenty-five percent wage increase over four years, plus cost of living adjustments. That raised Ford's labor costs considerably, which puts pressure on the profitability of EVs, which are already losing money. Ford's EV division, Ford Model e, lost about four point seven billion dollars in 2024 alone. Luna: So the pivot is bleeding cash. And yet they're still committed. That takes conviction. Lucas: It does. And this is where I think the parallel to the Model T pivot is most striking. In 1908, Ford didn't have a guaranteed market. He was betting that if he built a cheap, durable car, Americans would buy it. He was right, but it took years. Similarly, Farley is betting that if Ford builds an affordable, reliable EV with good charging access, the mass market will eventually adopt. But the adoption curve is slower than he hoped. Luna: Which brings us to the question: is this pivot credible? I mean, there are plenty of skeptics who say Ford is just hedging — keeping one foot in combustion while pretending to go electric. Lucas: I think 'hedging' is the wrong word. I'd say they're managing a transition. The combustion business still generates massive profits — Ford Blue did about nine billion dollars in operating profit in 2024. You don't just walk away from that. But you also can't ignore the regulatory pressure. In Europe, the EU is banning new combustion car sales by 2035. In California and several other states, similar rules apply. So Ford has to keep investing in EVs even if the short-term economics are ugly. Luna: Let me ask you this: if you had to point to one single decision that defines Ford's pivot — the moment that showed they were serious — what would it be? Lucas: I'd say the creation of Ford Model e as a separate unit, with its own leadership and its own P&L. That was a declaration of intent. It forced the company to treat EVs as a distinct business, not just an R&D project. The first head of Ford Model e was Doug Field, who came from Apple and Tesla — a clear signal that they wanted outside expertise. And when Field left in 2023, Farley took over the unit himself. That's a level of CEO involvement that says, 'This is my priority.' Luna: Another sign: they've started to spin off some of their combustion assets. In 2024, Ford sold its stake in a joint venture that makes engines for heavy trucks. Small steps, but they're pruning the legacy tree. Lucas: Yes. And they've also been investing in adjacent technologies — like Ford Pro, which handles software and fleet management for commercial customers. That's a high-margin, recurring-revenue business that isn't tied to any specific powertrain. So the pivot isn't just about replacing the engine; it's about redefining what Ford sells. A fleet manager might buy an electric van from Ford, but they also pay a monthly subscription for telematics, route optimization, and charging management. Luna: That's a bit like how GE moved from selling lightbulbs to selling 'industrial internet' services. The hardware becomes a platform for software. Lucas: Exactly. And that's the long game. But in the short term, Ford is dealing with a lot of pain. The stock price has been flat to down over the past two years. Investors are impatient. They want to see that eleven billion dollars turn into profits, not just market share. Luna: So what's the timeline? When do they expect Ford Model e to break even? Lucas: Farley has said they expect the next-generation EV platform to be profitable on a per-vehicle basis by 2027. But that's assuming battery costs come down and production volumes scale up. It's a big if. Meanwhile, Ford Blue is still the cash cow, but it's a declining one. The combustion market is shrinking about one to two percent a year globally. Luna: So it's a race against time. Can Ford pivot fast enough before the legacy profits dwindle? Lucas: That's the existential question. And it's not just Ford — it's every legacy automaker. But Ford has one thing going for it that most others don't: the F-150 brand. That truck is a cultural icon. If anyone can pull off a mass-market EV transition, it might be the company that put America on wheels. Luna: You know, I think this conversation is exactly the kind of deep dive that our listeners really appreciate. And it's also the kind of thing that's only possible because we don't have to worry about sponsors or ad breaks. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making these episodes. Lucas: Yeah, it's a small group, but it makes a huge difference. It lets us spend the time to dig into one company's story rather than just skimming the headlines. So if these conversations have moved your work forward in some small way, that's where you can help keep it going. Luna: Alright, back to Ford. One thing I find interesting is how the dealer network is adapting. Ford has about three thousand dealerships in the US. Many of them were initially resistant to selling EVs — lower service revenue, higher upfront costs. But Ford essentially forced them to invest in charging stations and training. The dealers that didn't comply were told they wouldn't get allocation of the most popular models. Lucas: That's a classic distribution play. Ford knew that the dealer network could be a bottleneck, so they used their leverage. And it worked — by early 2026, over eighty percent of Ford dealers had certified for EV sales. That's a massive infrastructure build-out funded by the dealers themselves, not by Ford's balance sheet. Luna: Smart. And it aligns incentives. If a dealer has invested two hundred thousand dollars in charging equipment, they're going to push hard to sell EVs. Lucas: Exactly. So as we wrap up, I want to leave listeners with one concrete comparison. In 1913, Ford introduced the moving assembly line and cut the Model T assembly time from twelve hours to ninety-three minutes. That was a productivity revolution. The current pivot is less about production speed and more about redefining the product itself and the entire ecosystem around it. It's harder, slower, and more uncertain. But if Ford succeeds, it will be another chapter in a company that has reinvented itself more times than most people realize. Luna: And if they fail? Well, it won't be for lack of trying. The question is whether the world will move fast enough to meet them halfway. Lucas: That's the open question for every legacy automaker right now. But Ford's history suggests they're willing to bet big. And that's what makes this pivot worth watching.