Ford Motor Co (NYSE: F) CEO Jim Farley said on Wednesday the legacy automaker has a far higher relative price for distribution than electric vehicle maker Tesla Inc (NASDAQ: TSLA).
What Happened: Farley said Ford’s distribution model per unit is $2,000 more expensive than that of Elon Musk-led Tesla and Ford has the potential to reverse those costs.
“The first is the distribution model. We think our distribution model today is about $2,000 per unit, more expensive than Tesla,” Farley told investors at the Alliance Bernstein 38th Annual Strategic Decisions Conference.
“About the third of that is inventory, we have all this inventory sitting around the dealers, in transit, got to get rid of all that.”
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Ford has been driving down inventory and Farley has said the company will focus more on pushing its online presence instead, just like Tesla.
Online Boost: Farley said Ford will have to go “ 100% online” with EVs, a in which there is no inventory and the product comes a with “100% remote pickup and delivery.”
The executive said, unlike Tesla, Ford has an edge with its physical retail presence as it allows customers to try out an omnichannel experience.
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Farley also said Ford spends about $500 to $600 per vehicle on advertising, a cost it would like to get rid of. On the battery front, switching to lithium iron phosphate chemistry could lower costs significantly as they are “much cheaper and more abundant, and that battery chemistry is 20% less.”
Price Action: Ford shares closed 0.95% lower at $13.55 on Wednesday and are down 38% YTD.
