Ford CEO Jim Farley Loves EVs. That Matters a Lot.

Ford Motor CEO Jim Farley has confessed: He loves electric vehicles. That’s good for EV enthusiasts and an important reminder for investors that the cars aren’t going away.

Friday, Farley posted an article on LinkedIn detailing his thoughts on car technology. “I spent the past 40 years developing new vehicles, from Camrys and Scions at Toyota to F-150 Raptors, Broncos, and Transits here at Ford Motor Company,” wrote the CEO. “To this day, I spend many weekends racing Mustangs or wrenching on my 1973 Bronco. So as a lifelong petrol-head, I was [as] surprised as anyone when I fell in love with electric vehicles.”

Government policy or politics has nothing to do with the romance, he said. Performance and utility are what did it.

EVs are fast and responsive—faster and more responsive than equivalent gasoline-powered cars—and batteries enable some interesting benefits. Cooling or warming the car before driving is easier and doesn’t require engine idling. And the all-electric Ford F-150 Lightning can also function as a backup generator for a house.

For investors, Farley’s post is a reminder that EVs are here to stay. There have been some doubts about that.

EV euphoria peaked in late 2021 or early 2022, when Tesla was worth $1 trillion and Ford stock traded north of $25 a share, more than double the current level. Things are different now. After increasing by 46% in 2023, U.S. all-electric car sales grew just 3% year over year in the first quarter. The slowdown left investors, and car executives, wondering what was going on.

Do America’s wide-open spaces make widespread adoption of EVs impossible? Probably not. The easier explanation is that a lack of affordable EVs, inadequate per-charge range, and poor charging infrastructure made it difficult to convince anyone but early-adopting technology enthusiasts to buy an all-electric car.

EVs have to get cheaper, batteries have to get better, and charging infrastructure needs to expand. All those things are happening. “I believe the next great shift for vehicles will be toward software-defined and electric vehicles,” Farley said.

The industry isn’t giving up on electric vehicles. Farley says as much. And if people need more evidence, earlier this week Volkswagen announced an investment and joint venture with Rivian Automotive that will essentially let VW use Rivian’s EV battery and software technology.

The traditional auto companies will keep spending to develop EVs, alongside gasoline technology, for the coming decade or more.

That poses a challenge for Wall Street. Investors have to be ready to evaluate the returns of an industry that needs to develop gasoline and EV technologies simultaneously.

BofA Securities analyst John Murphy counts 113 new EV offerings for American car buyers that will be launched between 2025 and 2028. But he also says it will take until 2028 for EVs to reach upfront cost parity with gasoline engines. That means higher costs will continue to be a barrier for auto makers trying to sell those 113 new models.

Murphy sees a few scenarios for U.S. EV adoption. He says EVs could account for 30% or 40% of new-car sales by the end of the decade, depending on how technology develops. One thing he is certain of is that more EVs are coming for U.S. buyers to test drive.

Farley believes buyers will like them when they try them. “Nearly 70% of global electric vehicle owners say they’ll only buy electric vehicles in the future,” wrote Ford’s chief. “If there is one thing I have learned in 40 years it’s this: you never want to be on the wrong side of customers and what matters in their lives.”

Ford stock was 0.4% in premarket trading at $12.28 a share while S&P 500 and Dow Jones Industrial Average futures were down 0.2% and 0.3%, respectively.

Write to Al Root at [email protected]