Hello, and welcome to Decoder! My guest today is Rivian CEO RJ Scaringe, and I’m very excited to be talking to him on my show today.

And when I say my show… I mean Nilay Patel’s show. This is my final episode filling in for Nilay while he’s out on parental leave. I’m Joanna Stern, the senior personal tech columnist at The Wall Street Journal, author of the upcoming book I AM NOT A ROBOT (out in 2026), and — fun fact — a cofounder of The Verge.

Listen to Decoder, a show hosted by The Verge’s Nilay Patel about big ideas — and other problems. Subscribe here!

Decoder is off next Monday, but when the show returns, Nilay will be back in the host seat. But until then, I get to drive the Decoder car one last time with Rivian’s CEO riding shotgun. This is RJ’s third time on the show, and it felt like the perfect follow-up to my conversation last week with Ford CEO Jim Farley.

I loved the idea of going straight from Ford — a legacy automaker deep in the EV transition — to Rivian, arguably the most competitive EV-only car company in the U.S. behind Tesla. If you listened to the Farley episode, this one flows nicely. RJ and I cover a lot of the same challenges: tariffs, China, EV pricing. 

But Rivian doesn’t have the legacy tech and other baggage of a traditional automaker. That clean slate makes things like software easier, but it just means the road ahead has another set of bumps. 

And yes, we talked about how my Ford Mustang Mach-E’s lease is up next year — perfect timing, since Rivian’s new R2, expected in early 2026, starts at $45,000.

Of course, I also asked about CarPlay.

Okay: Rivian CEO RJ Scaringe. Here we go.

This interview has been lightly edited for length and clarity. 

All right, RJ Scaringe, you are the CEO and founder of Rivian. Welcome back to Decoder.

Well, it’s great to be on. Thank you for having me.

I’ve taken over for Nilay. I’m also changing the name of this show to “What Car Should Joanna Lease Next?” Actually, let me change the name of the show. Do you have a better name for the show?

“What Car Should Joanna Buy Next?” really rolls off your tongue, so it’s pretty good.

Yeah, it’s going to fit right nicely there. So, I wanted to take you through this because you are my second car CEO on the show, and that’s how I decided to do my takeover. One of the reasons I did that… well, there are two reasons.

One, I always listen to Nilay’s car CEO interviews and love them, but I am also always driving in the car listening to them and screaming that he should be asking different questions. The questions I want answered are usually: Which car should I lease next? So, that is number one.

Yeah, so here we are.

The number two reason is that three years ago, I leased my first EV. It was a Mustang Mach-E. I’ve been quite happy with it, but next year that lease goes up, and I have a number of things I think I want. So I thought we could talk through some of that, and I thought that would inform a lot of our conversation today about the future of EVs and the future of Rivian.

Great. So I get to sell you a car maybe by the end of the show?

I want you to not be the sleaziest car salesman, but the coolest car salesman. And if you’re lucky, I will drive it off the lot.

Okay, all right. Going for a cool car salesman vibe. Got it.

Yes.

Register that.

So let’s start there, on what Rivian has in the market and what’s coming. When you came out with the R1, I believe almost five years ago now, you were very much billed as this electric truck company. 

Now, you’ve got the R1S, you are expanding to the R2 and the R3 after that. It seems like your goal is to be more than just an expensive truck company. How do you think about Rivian today? How should I think about Rivian today?

The goal is definitely to be much broader than an expensive electric vehicle company. So when you launch a new company, it’s always an important question: what do you launch first? We made that decision really even before we made the decision on products. We realized we wanted to build a brand around enabling active lifestyles. The following we earned became really clear, we wanted to launch with a flagship set of products.

So we launched the R1 product with a brother-sister, sibling set of products. It was the R1T, which is a truck, and there’s the R1S, which is an SUV. Those two vehicles were intended to launch the brand and really be our handshake with the world. It enabled us to tell a story about what we stand for, the types of experiences, and the trade-offs we make in terms of attributes. Let’s say, like on-road and off-road performance, performance, and efficiency.

R2 is really just the continuation of that. So whereas R1 has an average transaction price of around $90,000, the R2 starts at $45,000. It captures a lot of those same brand elements, so the vehicles can fit your gear, your pets, your kids, your stuff, and they can go off-road, but it’s much smaller. Then, of course, as I said, it’s also much more affordable. For us, it’s the first product that’ll take us from this flagship, which is what we started with, to something that is broadly accessible in terms of pricing.

So, we’re super excited about it. But I mean, the thing about R2 that I think is so amazing is that a lot of the trade-offs we’ve had to make to get the cost down are a lot. We’ve taken around half the cost out of the vehicle — a little bit more — and it doesn’t manifest in a loss of perceived, let’s say, features or quality. It’s the execution: the interior is just beautiful, and the way the car rides and drives is amazing. It’s obviously smaller, but it really feels like a Rivian, and it’s really enjoyable to drive. 

I think package-wise, for many users, if you don’t need a seven-row, it’s just the right size. It’s a little bit shorter than a Model Y, but it feels a lot bigger. And I love all the little details. The front trunk works great. The rear liftgate is beautiful. It’s got a drop glass in the rear so you can put things in the back without opening the back up. So it’s got all the little intricate details we’ve thought through to make it feel like a magical product experience.

And when does it come out?

We start deliveries in the first half of next year, which means we have to start building what we call saleable units in the early part of next year. We’re right now in what we call a validation phase. So we’re building vehicles, we’re camouflaging them, driving them on public roads. We begin running all of our manufacturing validation builds, so running vehicles through our plant on production equipment and production process later this year. In the early part of next year, we’ll transition from non-saleable units. We built a few hundred of those, which we consume internally, to then units that are saleable to consumers. So yeah, the early part of next year.

So by August 2026?

Yeah, August, for sure.

When my lease is up, will the R2 be on shelves? That’s not what you say in the car business.

We could have an R2 in your driveway when your lease is up, yes.

Okay, okay. Well, you’re already off to a good start, and we’re going to talk about my experience test-driving R1S this summer. That’s one of the reasons I wanted to have you on the show. But I want to quickly talk about how you’re expanding here and some of the backdrop of Rivian. 

I think, actually, it’s kind of perfect because I live in a town in New Jersey that should pretty much just be called Rivianfield, or Rivianland. Everyone has the R1 or the R1S. When you were designing them, were you like, “Let’s make a truck that suburban moms love, and dads?” Were the pictures of suburban moms and dads on your mood board?

Well, actually, it’s funny you say that. So when we were developing the vehicle, even way before we’d shown it to the world — we did the same on R2, and we’re doing the same on R3 and R4 — we always create this idea of “what is the vehicle?” What’s the feel of the vehicle want to be, or what’s the essence of it? But then we interpret it through the lens of lots of different target customers. 

So, in the case of R1, it’s a really broad set of buyers. We wanted a really diverse demographic this would appeal to. One of them, which of course is a big demographic, is people who are using it to support their family with kids or with pets or with gear. Not surprisingly, it fits all those things really well. It really resonated beautifully with customers who have kids or have families.

Interestingly, and this is a fun little fact, we’re the best-selling premium electric SUV in the country. So the way you draw the boundary diagrams on these is always confusing, but the way we draw it around premium SUVs, we have about 35 percent market share for premium electric SUVs. But in California and the state of Washington, we’re the best-selling premium SUV, electric or non-electric. 

So if you’re buying an SUV in the state of California and it’s premium, meaning over $70,000, you’re statistically most likely to be buying a Rivian, and the same is true in Washington. So as dense as it seems in New Jersey, places like Seattle or Mill Valley are areas where it’s the same. It’s very, very popular in these markets.

But in that price range in EVs, you really only have one competitor, right? Is that the [Ford F-150] Lightning?

No, there’s [Tesla] Model X. 

Okay, Model X is actually classified as an SUV there, too. Okay.

Yeah. So we outsell Model X by quite a bit. We outsell, well, everything. There are Cadillacs in that price range. There are also GMCs and the Cybertruck. So there are a lot of things up in that price category.

Going back to thinking about this town I live in and some of the towns you were talking about there, I mean, it’s mostly coastal, I would assume. That’s where you’ve got an audience and a demographic of people who can afford a $90,000 car that needs a bigger body. I’m assuming that part of the strategy that you’re really going for now with R2 is to expand that, to go beyond that niche. Are you confident in that, given what the backdrop of the ecosystem and competition looks like right now?

Yeah, we had a board discussion the other day, and I said it, and I’ll say it here: I’ve never been more confident in the business than where we are today. I think one of the big risks in launching a new company is that there are lots of things you could control that are fairly deterministic. Does the vehicle accelerate like this? What’s the range of the vehicle? Does it fit this kind of stuff? And then there are a number of things that are far less deterministic, and in some ways, I think of those as almost like magic. And the biggest one of those is the brand and how well the brand resonates.

As we just described, you can do all these mood boards and studies to say this is what we hope the brand becomes. But if I were to wind the clock back to 2020, before we launched, I wouldn’t have imagined the brand would even have resonated as well as it has. Since we launched, every year since we’ve launched, Consumer Reports does this annual brand appeal study, and it’s based upon what we say, but they survey lots of different customers independently. And since we launched in 2021, we’ve been at the number one spot on that chart. So, we’re number one level for brand appeal, and then by far the highest rate of repurchase.

The brand is just really connected with consumers — the authenticity of it, the way that we’ve approached making all of these trade-offs and decisions at the product level, how that ultimately shows up and manifests as a business, as a company. My hope is that if we can take even a fraction of the market share success that we’ve had at this premium price point with our flagship product and translate that to the mass market product, the R2, we’d be really happy. 

So, of course, we’d be happier if we could take a bigger fraction of that market share of success. But to get 35 percent market share in the segments we’re operating, outselling all the other EV alternatives, this segment we’re now going into with R2 is very big. This is crushed up with lots of internal combustion engine (ICE) vehicles and lots of hybrids. Of course, you see Model Y in this price category. 

The Chevy Equinox, which I’m seeing all over the place.

Chevy Equinox, yes. There’s a whole host of products we get to compete against.

My previous Decoder guest was Jim Farley, the CEO of Ford. I know you guys know each other.

Yeah, yeah. 

We spent a lot of time talking about the threat of a company that doesn’t even sell cars in America, which is BYD. The mindset is that it is the competitor in the lower-cost, high-tech EV space. Even though they don’t sell in the US, what they’re doing is the competition. He said the Chinese are the 700-pound gorilla in our industry for EVs. There’s no real competition from Tesla, GM, or Ford with what we’ve seen come from China. That’s clearly what he’s thinking about. What about you?

Yeah, I think there are two things to call out about China that are important. The first is obviously their cost structure, and I think that draws a lot of attention. Their cost structure is not… I’m sure Ford has, and we have, but everyone buys everyone’s products and looks at how they’re made. There are certainly lots of innovations that are being made, but there’s nothing that everyone’s not aware of or that they themselves aren’t doing in terms of manufacturing process, vehicle design, or vehicle architecture. 

I think what’s happened on cost is BYD has the compounding benefits of very low cost to capital, both at the OEM level and at their suppliers. In many cases, the plants are free or close to free. It has very low labor cost, very high labor availability, and that just compounds as you go from raw materials all the way up the supply chain to these dramatically lower-cost structures than what we have in the Western world.

So, I think what will happen there is either you’ll see tariffs go in place or requirements that those vehicles be produced locally, where a lot of those cost advantages go away. And so, as much as I think cost is something we should all be aware of, and to say look at how low the cost is to build vehicles in China, which we can see, Western companies can also benefit from as well. You look at the cost structure of Tesla’s vehicles built in Shanghai versus Tesla’s vehicles built in the United States, and it’s much, much lower in Shanghai. So I think there’s the cost element.

But the bigger element is actually how advanced the technology is. Here, what’s happened is, much like Tesla, I’d say much like Rivian, if you start with a clean sheet, you end up in a very different place than the legacy car manufacturers. In our case, we developed our whole software platform in-house. We built all of our electronics in-house. That platform’s very robust, and in fact, it’s what’s underpinned us. We did a $5.8 billion software licensing deal and an associate joint venture with Volkswagen Group, the second-largest car company in the world, to take that technology and deploy it across their vehicles globally, with the exception of the Chinese market. But for Europe, the United States, and the rest of the world.

I think this is the challenge. Now it’s not just Tesla and Rivian that have this very unique approach to software and electronics. It’s a number of, not all, but a number of Chinese companies that also have a much more advanced approach to software and electronics. The legacy OEMs have to very rapidly shift how they approach this technical domain, which has historically not been a core competency of OEMs. Historically, they’re very mechanical companies, and they’ve relied on Tier 1 suppliers to do a lot of that work. Those Tier 1 suppliers often rely on Tier 2, so the software and electronics space in automotive tends to be quite a bit behind consumer electronics as a result of this outsourced third-party approach that the auto industry has evolved to use over the last few decades.

Well, you walked right into some of my questions about tariffs. And also, you really touched on a large part of what my conversation with Ford’s Jim Farley was about, which was about how he pivots the company to do some of the stuff that you’re doing. 

But let’s go back to tariffs because it’s clear that they are affecting your business. It is affecting this entire automotive industry. If you look at what you’re trying to do with R2, which is to bring down the cost and make this an affordable vehicle, or at least your efforts to make it an affordable vehicle, and you’re up against tariffs. Can you do this? Is this just like the worst-case-scenario timing for you?

With R2, we’ve actually had the benefit of making a lot of sourcing decisions, recognizing some of what I’d characterize as global geopolitical shifts. One of the biggest global changes in mindset that’s not just unique to the United States, but we’re seeing across the Western world, is an increasingly domestic-centric approach to manufacturing. Meaning, in the case of the United States and I’d say broadly in the case of Europe, there’s a desire to retain more manufacturing content local to the markets in which the vehicles are sold.

In our case, because we’re producing all of our products in the United States, we knew that going into the sourcing of R2, so we had built a US-centric supply chain around that. Of course, there are some things that we don’t make in the United States, like certain metals and especially heavy rare earth metals. Certain materials just globally really aren’t born out of the United States. Things like nickel are a very good example — 92 percent of the world’s nickel supply comes from Indonesia.

So, in certain aspects of the vehicle, we’ve had to build cross-border trade relationships. Some of the changes we’re seeing in trade policy do add cost, but we’ve had the benefit of being able to be quite plan-full around that. Whereas on R1, which was already in production with a fully sourced and fully operating supply chain, the changes to trade policy being so abrupt, we didn’t have the time to respond to those as thoughtfully as we’ve been able to with R2.

You mentioned —  I mean, I think it’s well-known — that Rivian is manufacturing in the US, and it feels like you’re making these cars here. You’re adding jobs here, but you’re still facing, from this administration, the tariffs and the upcoming cuts to EV tax credits. Do you feel like this administration’s just working against you? Are you just pushing against the tide all the time?

An important part of my job, and I’d say increasingly so, is looking at all the unknowns in the system. We think of this just not for me but for the whole leadership team, looking at all the changes in the system and trying to understand what things are going to be persistent? What are the changes that are going to exist two years from now, a few years from now, five years from now? What are the things that are somewhat in the noise? And when we look at it through that lens, there are a number of really clear things.

So one thing that’s very clear, regardless of whether you’re looking at it from a Republican point of view or a Democratic point of view, is that building independence from China is going to be a theme that’s important in the United States. That was really important for us as we sourced R2. We built very little dependency, or as little dependency as possible, on the Chinese supply chain. That carries with it assumptions around costs and different cost structures, but that was one key takeaway. In that way, we’ve aligned the business to the intent of both political parties in the United States.

The other is that there’s a big push for US capability in both technology and US capability in manufacturing. So, putting aside some of the, I’d say, noise and short-term changes that have impacts, real impacts, on us around electric vehicles and some of the policy for electric vehicles, we find ourselves very aligned in terms of building deep technology expertise in the United States. Technology expertise that is so strong that, in fact, we’re selling that to other companies outside the United States. So this deal with Volkswagen is one of the largest software licensing deals in the history of the auto industry, between a US company and a European company.

I think there’s alignment there, but a big part of what we try to find is a way to depoliticize electric vehicles, which have become political. They shouldn’t be. We’re investing in building technology and jobs in the United States. We employ close to 16,000 people here in the US, so we’re a large company. We have one of the strongest technology teams, I think, in the auto industry. And so we spend a lot of time with the administration on that, and there’s a lot of support and enthusiasm for what we’re creating and building in that regard.

You should just bring an R2 to the White House. You should get President Trump in an R2, and he can say everything’s computer.

[Laughs] We’ll have to ask him, we’ll see.

Yeah. Do you go to Mar-a-Lago in your R2?

It would work beautifully there. The rear window drops down, and you can put a surfboard in the back. It’s a good idea. It’s the ultimate vehicle for being down there.

Well, see, you’re not only going to sell me an R2, you’re going to sell an R2 to the President of the United States. What a great show for you.

Well, I say this all the time, Michael Jordan has a quote I just love, which is that both Republicans and Democrats buy Nikes, and the same is true for Rivian. I think it’s a great result that we try very hard not to make what we’re doing political. We have a lot of Republicans who buy our vehicles and love them. We have a lot of Democrats who buy our vehicles and love them. We have people who are in the middle, and we have Independents. 

So we try to be as broad as possible, in terms of creating a welcome mat for us as a company, and really appeal to the core values of enabling active lifestyles. That’s not a political orientation; it spans across all political points of view.

Although I’ll ask you, did it help you that there was the Elon Musk-Donald Trump alliance and that I now see many people with bumper stickers on Tesla saying, “I bought this before Elon went crazy.” I’m assuming that maybe that helped you.

It’s been interesting to watch. There’s a long list of things that I could say a year ago I would’ve never expected to see happen. So this time last year, I wouldn’t have predicted some of what happened there to have occurred. But I think at the end of the day, look, I think the important thing is that in Tesla’s case, they do have a great set of products. The Model Y and Model 3 are great products. I’ve owned them, so I’ve been a customer a few times, and I think it’s good that customers have that as a choice.

I want to get to some more product questions and things about my R1S driving, but I want to stick just for another second on the state of the economy and the state of your business and the fact that you have the uphill battle now of making cars that are profitable for you. You are still, as far as I can tell from earnings and reports, losing money on each of the vehicles you sell. Is that going to improve in the coming months, and with the R2?

It better improve, and I say that with a smile. So if we look at our trajectory, when we launched, we had a whole host of challenges that really were not predicted. We didn’t predict, when we launched, that it’d be right into the pandemic. It’s probably hard to imagine a more challenging environment to launch an industrial business into. It’s hard to build a plant and launch a plant with remote work and work from home.

We then had a huge supply chain crisis, and given we’re a new manufacturer, we had a real challenge that persisted well into 2023, around just our ability to get enough parts. So we were starved for parts, which manufacturing really benefits from predictability and being steady, and our on-off nature just created a huge amount of unexpected fixed cost overhead.

Then, as we came into 2024, things started to really come together. We launched some updates to the vehicle we call our Gen 2 version of R1, and so in the fourth quarter of 2024, we were positive gross margin. In the first quarter of 2025, we had over $200 million of positive gross margin, which was awesome.

This past quarter was a tough quarter for us, Q2 of 2025. We had a big drop off in volume, largely driven by some of the challenges around getting enough heavy rare earth metals to make our motor. So in our case, because all of our vehicles are, of course, electric, we produce all of our vehicles in the United States. China, as part of the trade negotiations that have been happening, put in place an export control that didn’t allow the export of magnets into the United States. So we just couldn’t make motors because these motors needed the magnets.

We went from 14,000 units produced in Q1 to around 6,000 in Q2. That was a singular sort of phase shift, if you will, that we felt we saw in the numbers. But we built solutions around that. That export control has been lifted. So we’re quite bullish on how the rest of this year is going to go. We’ll produce and sell more vehicles in the second half of the year than we did in the first half.

As you said, the launch of R2 really ignites the business. It allows us to get to a level of volume that helps cover our operating fixed costs. It’s like our plant fixed costs, and then the overall OpEx of the business. So all the R&D and SG&A, the sales administrative functions of the business, support selling and delivering, and servicing all these vehicles. Scale is a really important part of the automotive business and automotive production. It becomes even more important if you’re extremely vertically integrated, which we are. So, once you get to that scale, that vertical integration creates a structural advantage in cost structure. But you need a certain level of scale, which R2 brings for us.

Okay, and maybe it won’t be in this quarter, but maybe you’ll have my R2 lease. 

And that’ll help.

That’ll help, but you’re going to have to convince someone of this decision that isn’t me. So I’m going to play a message from him soon. But I test drove the R1S this summer. I drove it many miles. It was almost 500 miles in your car. So, thank you for that.

I love it, okay.

But I had a pretty tough reviewer in the car for this whole time. And we have a quick question from him. I’m going to play it.

Joanna’s Son: Why did we get a flat tire, Rivian Man?

And what else do you like about the car?

Joanna’s Son: That we have the card for it, and it opened. That’s cool.

So did you hear the beginning of the question?

I couldn’t quite hear the beginning.

It’s, “Why did we get a flat tire, Rivian Man?

I heard the Rivian Man, which I really liked. That’s adorable.

Yeah, that’s your name. I told him I was going to talk to “Rivian Man.” And so that’s what he said. He wanted to know, “Why did we get a flat tire, Rivian Man?”

I actually don’t know. Did you run over a nail or something?

I don’t know either. I don’t know. Anytime he sees a Rivian now, he’s like, “That’s a Rivian, it has a flat tire.” And I had to explain to him that actually all cars can-

Can get flat tires, yeah.

And then the second part of his question was, it wasn’t really a question. He just wanted you to know that he loves the key card. He says that’s really cool. But I wanted to actually tell you, I don’t like the key card.

The key card, actually, is not supposed to be used other than for sort of an emergency. You put it in your wallet, or you put it somewhere and hold onto it. But the idea is that your phone is really the key. So, I don’t know if the team, when you loaned it, set you up with your phone as a key, but that’s the idea.

It’s true. I did have it set up on my phone for a little bit after we had the key card. 

Oh, okay.

Any other things you have to say to my four-year-old son in terms of why he should tell me to get this car?

Ah, so I have a six, a seven, and a nine-year-old. So I have a perspective on what the kids really enjoy with it. I’d say in the case of R2s, my boys have spent a lot of time now in the R2. A lot of the fun little features we have on the R1, like the flashlight in the door, are still there. There’s tons of storage. The front trunk is great in the R2, but we put in a few more features. So the rear glass drops completely. It makes for a really nice open-air experience where you can drive with the back open.

It’s not too noisy. You can fit stuff into it. If you have pets, they really like it. But the car has all the same performance trade-offs; it’s still very capable on-road and off-road. It’s a great adventure mobile; it fits all your gear. So, I think he’d really enjoy the R2, but it’s also easier to get into for kids because it’s a little lower than the R1. My kids prefer the R2 over the R1.

Okay, all right. I’ve got a lot to tell my four-year-old; he’s going to be making this decision. He makes all the important buying decisions in the house.

That’s good.

Also, I text Nilay a lot about cars,  often after I’ve listened to Decoder or just when I’m test-driving cars or thinking about it. So, I want to read you the text I sent him earlier this summer. I said, “Drove Rivian loaner upstate. No problem charging, but maps are fucking terrible.” The good news is you fixed one of these problems, the maps, right?

Yep. We have a great partnership with Google, so the maps are now in partnership with Google, and it was an area where there were a lot of requests for different solutions to our mapping. So the beauty of our architecture is that we can update all sorts of things, including map applications. We have a whole new mapping environment, which is beautiful. It’s really nice, I mean, it’s just great working with the Google team to develop this. It’s really special, it’s a wonderful application.

Did you work with the Google team on the underlying infotainment system? That’s based on Android, right?

It’s a good question. We didn’t work with Google on the platform. We built it to really work seamlessly with the Android ecosystem so that some of the apps that we integrate can be pulled in more seamlessly. But we did that entirely without Google. And then in the case of the maps, we did work very closely with Google.

That makes sense. Well, I did get the R1S back to test post the maps update, and it is significantly improved. So that’s good timing for you to be on the show. 

I love that. So we checked one box there.

Checked one box. 

Okay, one of the main reasons I got a Mach-E actually had to do with CarPlay. Do you still hate CarPlay?

[Laughs] I love it, that’s a funny way to ask it. No, we definitely don’t hate CarPlay. We’ve made the decision, which I’m very confident about, that in the fullness of time, customers will appreciate, which is that we wanted to have a seamless digital experience. To not have the need to jump between CarPlay, which feels obviously like CarPlay, and so it feels the same in every car, and then what we create as a Rivian environment. And rather, think of it more à la carte, create all the same applications. 

So you have YouTube, you can go to Spotify, you can go to Google Maps, you can go to Apple Music, you can go to everything. You can have all those integrations. But for us to hold the glue for putting that all together, this becomes even more important as we start to integrate AI into the vehicle.

Over the next 18 months, we’re going to see a lot of new features that, by necessity, are performing tasks or making decisions to connect different applications. And so, knowledge of “what’s the vehicle state?” Knowledge of “is it in drive, or is it parked? What are the conditions outside the vehicle? What’s your driving history? What are your preferences?” Knowledge of all of that at an ecosystem level allows us to present a richer, better experience for you as a driver or occupant of the vehicle. 

I think it’d be really hard to do that if we had to put all that through an application that expands to take over the screen and provides you essentially with a set of bubbles that feel very much like a CarPlay experience. So piece by piece, everything that someone may have missed from their CarPlay experience, whether it was a mapping, or soon we’re going to have a voice-to-text, is going to be there, and it’ll be beautiful. 

We’re really convicted on this. For some folks, that means they’re not going to buy a Rivian. We accept that. It’s a decision. I say this all the time: part of building a product as complex as this is recognizing and being okay with the fact that we have to make a ton of decisions, like the products, like a vehicle has many millions of decisions together. Some of those decisions, not everyone’s going to agree with, and that’s okay.

Our job is to have convictions around the decisions we’re making and have intention and thoughtfulness in why we made those decisions. But knowing that our goal is to make as many people as happy as possible, but also knowing that you can’t make everyone happy because not everyone’s going to want exactly the same thing.

So what I’m hearing is you’re definitely doing CarPlay Ultra.

[Laughs] Yeah, that’s what the takeaway is, definitely doing it.

That is what you just said.

No, look, we have a great-

No, I hear you.

I mean, to be clear, we have a great relationship with Apple. They’re a close partner. We have a bunch of integrations that are coming soon. Apple Music was the first demonstration of that, but there’s a lot more coming.

More around messaging?

Yeah, so I think messaging, think vehicle access. So I think getting into the vehicle with an Apple Watch and Ultra Wideband, and there’s a whole host of things coming. But you don’t need to use CarPlay to do that. You can do it in other ways.

I agree. I will say three to four years ago, CarPlay was number one on the list of things I wanted in a new car. That has quickly fallen down the list. But I will tell you what’s going to be near the top of the list for this next decision, which is AI, autonomy, and self-driving. Group that all together, which is all very different, obviously, and your teams that listen to this will cringe. 

And we’ve talked about this before, but give me a sense of how you’re thinking about full self-driving or some version of autonomy that goes beyond what you currently have in the car, which I’ve tested, which is a glorified cruise control. I do really appreciate it. 

But how do you get to the point where I am actually just sitting in my R2, if I get one, and I’m able to go from my house in New Jersey to the studio in New York without maybe touching the wheel a couple of times? Maybe I touch it two times. How do you get there?

Yeah. Boy, we could spend the rest of the time on this. This is a big topic. 

Well, it’s good because we have another hour.

All right. First, it’s important to recognize there’s been a big shift. So the way autonomous systems were developed up until around 2021, or even 2022, is that you had a perception platform or stack of perception, which may be cameras and radars — maybe in some cases, cameras, radars, and lidars that would see the world or perceive the world. 

It would identify all the objects, it would classify those objects, and it would assign vectors to those objects, like how they’re moving in the world. Then all of those objects would be handed to a planner, and the planner would be a rules-based environment that’s essentially a programmed version of interpreting how the world works and then making a whole series of decisions based upon this defined set of rules. That environment has its obvious limitations; it’s very sensitive to changes in the sensor set, and it’s very sensitive to the location or the application. So, it sort of reached an asymptote of capability.

While that was being developed, a whole new approach to thinking about how to develop self-driving systems emerged, which was really to use AI, which, interestingly, AI as we know it today was not really part of the first gen of self-driving systems. It was a very rules-based environment. So, what’s now happening and what’s happening in our Gen 2 vehicles, which is why there’s a significant difference between our Gen 1 and our Gen 2 vehicles… Our Gen 2 vehicles, which we launched in the middle of 2024, brought all of our perception stack in-house. All the sensors we designed ourselves; there are no third-party sensors there. We then built a much more powerful compute platform, so an inference platform in the vehicle. 

We’re taking all this data and we trigger it based upon a whole variety of things, which we can talk about in a moment, but, like interesting events. We use that to feed the training of a large parameter model. Think of it like a foundation model for driving. So, a large, what’s ultimately a multi-billion parameter model, and that model is a neural net of how to drive a vehicle. And the beauty of this is, as you improve sensors, change sensors, or change vehicle applications, this neural net of understanding of how to drive a vehicle doesn’t go away.

So, a simple analogy is if I wear glasses, if I learned to drive without glasses, and you suddenly handed me my glasses, I would not forget everything I learned. I would just drive better, with more accuracy, because I have better precision or better perception. The same is true in this approach now, which is building a large model. You’ve maybe heard or people have heard it called an end-to-end approach, where you take this approach of having data come in, you use that to train the model, and then that model determines how the vehicle’s operating. Why this is so exciting is that the rate of improvement of these systems is going to be much higher.  That’s the platform we now have in our vehicles.

We’re going to begin to see the feature set expand. So today, as you said, we call it a highway assist. It’s a highway feature where you can be on the highway, you can take your hands off the wheel, your eyes stay mostly on the road, but otherwise, the vehicle drives itself. The next extension of that is hands off the wheel, eyes on the road everywhere, so on any type of road. The next extension of that is hands off the wheel, eyes on the road, with turn-by-turn so the vehicle can navigate from one address to another, and that’s coming next year as well.

The next step is for hands off the wheel, eyes off the road, in certain circumstances. The highway is a really good example where you’re on the highway, your hands are off the road or off the wheel, you want your eyes off the road, and you can be on your phone reading a book. And that set of features for us is going to be coming in 2027. And that I think is a really big unlock because you start to get your time back. So it’s not just reducing the cognitive load on you to have to operate the vehicle and be fully aware, but it also gives you the ability to do other things.

What I just described is all happening over the next 18 to 24 months. I think the rate of progress here is going to be so high that if we look at the last 10 years for autonomy and compare it to the next 10 years, it’s going to be on a completely different trajectory, such that by early 2030s it’s going to be inconceivable to buy a new car and not have it perform at a very high level from a self-driving point of view.

Tell me real quick, though, what are the sensors? I mean, there’s this big debate I feel happening right now, or maybe it’s not really a debate. There’s maybe one side of the debate, and no one’s really debating it, that there is the lidar versus cameras. And Tesla’s going all in on cameras, saying we don’t need lidar. What about Rivian? Does Rivian add lidar?

Yeah, so our view is that there is a real benefit [to lidar]. Actually, I should start over. The view of the entirety of the science community is that having multiple sensors is helpful because you build a more accurate view of the world. The way that we build these neural nets is that you want a broad understanding of the world, and you want the highest accuracy. And if you have more than one camera, you’re going to have multiple cameras that have different signals, which have different signal-to-noise ratios that need to be managed. But ultimately, the way that that information is fused very early, if you have multiple cameras coupled with radar, coupled with potentially lidar, as you said, it gives you a more fulsome and accurate picture. It also allows you to train your model better.

So, it’s analogous to if I had to learn the world with one eye, I would learn a less accurate version of the world than if I had learned the world with two eyes. And if you look at the evolutionary tracks of many species of animals, most animals have multiple modalities of sensing. And the ones that have to operate in maybe the most extreme environments, let’s say extreme darkness, generally combine some optical perception with some wavelength-based perception. Often, like sound waves or sonar, bats are an example of this.

Our view is that it’s definitely beneficial, and our approach to sensors has been that we need to rapidly build our foundation model as fast as possible. Tesla has a lot of vehicles and has made great progress. We have an amazing product. So we have more megapixels in cameras. We have 55 megapixels in cameras in R1, which’ll jump to 65 megapixels in R2. We have a really robust set of corner radars and a really beautiful 3D imaging radar in the front. And that’s rapidly building a robust foundation model, one that we’re going to start to see these features I just described play with.

So not ruling out lidar, is what I’m hearing?

No, I wouldn’t rule out lidar. And there’s another thing I’d just say, which is important to note. I think a lot of the debate around lidar was born out of [autonomous vehicles] 1.0, where you actually had a rules-based environment, where this idea of an early fusion or building of a neural net that wasn’t there. In a rules-based environment, it was more complex to do some of these fusion activities because the fusion typically happened a little later. 

Now, what’s happened is that we no longer run the models like that. So the models benefit from the maximum amount of information on the front of the model. The cost of lidar used to be tens of thousands of dollars. It’s now low, a couple of hundred bucks. So it’s a really great sensor that can do things that cameras can’t.

So my last question comes back to buying or leasing one of your cars next year, which is that, and this is the worry I have, that Rivian was recently ranked last by Consumer Reports in a survey on vehicle reliability. What are you planning to do about that? 

That’s something we’re absolutely focused on. The way, of course, this looks at some of our early builds, our vehicle liability is now getting much, much better. But even with that, even with the fact that there were more service requests on our early builds than, let’s say, other vehicles, we had the number one level of customer satisfaction. I always say to our team, when we look at that data, imagine if our reliability gets to be best in class, coupled with all the product attributes. So, that’s our goal. 

R1 has continually improved since we launched, and then R2 is a further step change from that with all the learnings that we’ve made around our production process, production quality, and reliability. It was tough for us when we first launched because, in our first year, we came out number one on customer satisfaction, but it was our first time building vehicles at scale. So not surprisingly, we had more challenges with just ramping up quality systems to begin with.

Well, the good news for you is that I experienced that customer service when I had that flat tire.

Yes.

So, I know about that, and so does my four-year-old. So, it’s looking good.

RJ, thank you so much. I mean, I have a lot of other questions, but I’m being told I need to wrap up. They’re giving me the circle. 

You’re getting the hook?

I’m getting this, yes.

Well, thank you for your time.

Thank you for your time. I really appreciate it.

All right, wonderful. Thanks.

_{Questions or comments about this episode? Hit us up at decoder@theverge.com. We really do read every email!}

Hello, and welcome to Decoder! This is Nilay Patel’s show about big ideas and other problems. I am not Nilay Patel, though I have long wanted to be him. 

I am Joanna Stern, the senior personal technology columnist at The Wall Street Journal, author of the upcoming book I AM NOT A ROBOT (releasing spring 2026), and, once upon a time, a cofounder of The Verge. I’m the last Monday guest host filling in for Nilay while he’s out on parental leave with his adorable new son, and I’m very excited to be talking today to Ford CEO Jim Farley. 

I’m a longtime Decoder listener and my favorite episodes are car episodes. I might not own a gas-powered Mustang convertible like Nilay — I’m not cool enough — but I did, in fact, lease my first EV, a Ford Mustang Mach-E, back in 2023. I think car CEOs are currently facing some of the most fascinating and complex challenges in both tech and business.  

Listen to Decoder, a show hosted by The Verge’s Nilay Patel about big ideas — and other problems. Subscribe here!

So when I was asked to guest host the show I said, “That’s it, car CEOs.” And Jim was at the top of the list. Jim was on this show once before — his first appearance was in May 2021. And, well, a whole lot has changed in the past four years. Actually, a whole lot has changed in the last four months. The second Trump administration’s barrage of tariffs, trade wars, and a whole lot more, just to name a few.  

For Ford, it’s an especially critical moment. Last month, the company announced what it calls the Ford Universal EV Platform, an all-new manufacturing process that the company is calling a “Model T moment” for EVs. That’s because it should, in theory, allow Ford to produce cheaper EVs in a more efficient manner than it does with its current lineup, including my Mach-E. You will hear Jim say “last week” a few times — that’s because we taped this episode in August just after their announcement. 

It’s also not just tariff troubles for Ford. There’s the general weakening of demand for EVs in the US, the loss of the federal tax credit, and rising competition from low-cost Chinese competitors like BYD and Xiaomi.

One thing I love about talking to Jim is that he’s honest about it all. You’ll hear him say in plain terms that China is, in some respects, miles ahead of the West when it comes to some parts of its EV industry. And this major multibillion-dollar gamble on a Ford Universal EV Platform isn’t a done deal. You’re going to hear him say the word “risk” quite a lot in this conversation, and how this major manufacturing and strategy pivot could very well fail. 

Jim had quite a lot to say about rebuilding the manufacturing base of blue-collar workers here in the US to compete with China — and even AI. Plus, he didn’t shy away from what he’d like to see from the Trump administration on tariffs. He says specifically, “We’re just asking for a fair fight.” 

And don’t worry, I didn’t forget to do my best Nilay impression with a bunch of Decoder questions. Is Ford considering Apple’s CarPlay Ultra? (His answer is so great on that one.) How does Jim Farley make decisions? And, most importantly, do I stick with the Ford Mach-E when my lease is up next summer? I also couldn’t let Jim go without hitting him with a special call-in question from an old friend who’s technically not supposed to be working right now. I think you’re going to really like that one. 

Okay, hopefully you’re in your car listening to this: Ford CEO Jim Farley, here we go.

This interview has been lightly edited for length and clarity. 

Jim Farley, you are the CEO of Ford Motor Company. Welcome back to Decoder.

Great to be here with you, Joanna.

Thank you for coming on my show. Obviously, this is not my show, this is Nilay’s show, but I want to give you some background. I listen to Decoder all the time, and I love Nilay’s car CEO interviews. But often I find myself saying, “Nilay, why didn’t you ask that question?” So, when he asked me to do this, I said, “That’s it, I’m going to bring on car CEOs. And I’m going to ask the questions I want.”

I see.

[Laughs] So you were last on the show in May 2021. Things have changed considerably in the world, in technology, in the country, and at Ford. I want to talk about all of those things. But something also changed for me. In 2023, I got a Mustang Mach-E. I leased one.

Thank you.

And that lease is up next summer.

Ah, I’ll be reading about your decision process.

Well, that’s going to inform a lot of this conversation because I wanted to give you the chance to be the world’s best car salesman to the most annoying customer. I think that’s just going to set a lot of the backdrop of this conversation.

[Laughs] I love it.

Last month, you said at a press conference that the Mach-E is not so great, that it’s not the future of Ford. Why should I stick with a Ford EV next time?

Well, we just won the revised Model Y versus Mach-E drive evaluation by a pretty respected magazine. I’m still pretty proud of the Mach-E. We knew what we knew then (five years ago) and we now know what we know now. Those are, as you said, two different things.

I would say that in the second inning of product development, Ford really understood the opportunity to serve the EV market more fully than we did several years ago and we executed a product with the right approach based on those lessons. That’s with the consumer, because we’ve learned what consumers are willing to live with and not — like charging on the fly — as well as where in the market Ford should participate and put its limited resources. I think you’re going to find that the Ford EV product range will be much sharper, more specific, and more valuable to customers than it was when you last shopped.

Let’s dig into the news you just announced, which is that you have something called Ford Universal EV Platform. What is that, and when is it coming? More specifically for me, will it be out next August, and will I be able to get that kind of new Ford versus an upgrade to my Mach-E?

You’ll learn a lot more about the first product. It’s a platform that will be out in 2027. We learned so much from the Mach-E. We’ve been number two to Tesla. We’re a long way behind them, but we’re number two in the US market in EV sales. EV sales aren’t the most important metric, but it does give you an indication that Ford has learned a lot and has served a lot of wonderful customers like you. We have all of the data coming off the vehicle, so we have learned a lot about customers.

We believe the platform that we shared in Kentucky is a breakthrough approach for developing and delivering an affordable, electric platform to customers, where we’ll develop and launch several vehicles over the subsequent few years and show that we can have a profitable vehicle that’s sustainable in terms of the company’s resources and made in the US. But in order to compete with the likes of BYD, who we think are among the best in the world, we had to completely reinvent the platform for the customers.

There’s a lot to that. I’m sure we’ll get into it, but in short, the evolution revolution of our thinking was to develop a vehicle for manufacturability, to radically reduce the cost and the complexity of the vehicle with all new thinking that is not embedded in a traditional car company. To do that, we needed all new talent, and we needed them to be separate from Ford, separate from our IT solutions that we used to develop and release parts, and separate from a philosophy standpoint about how to radically simplify the vehicle. This is all to really get back to the basics of Ford and Henry Ford’s idea of a “universal car.”

Our first body style will be a pickup, but it’s really not a pickup. I would say it’s a new silhouette. What I mean by that is that it has more room than a RAV4, the best-selling passenger car in the US. That doesn’t include its frunk and pickup truck bed. It is very fast, it’s rear-wheel drive, it’s super fun to drive, and it has a digital experience that no one’s seen — at least that we’ve seen — even in China. The digital experience is quite different for customers. I think the whole package is something that has not been offered in the US or anywhere else to date. I think this first product is quite revolutionary.

And this first product is what you’re going to have out in 2027?

Yes, exactly.

You’ve mentioned BYD, which is a Chinese competitor that is making low-cost, very high-tech EVs. Here in the US, you’re up against Tesla and GM. You mentioned that you have the second-best-selling EV, but GM seems to have had some real luck with the Equinox EVs, and they’re quickly taking off because of price.

Absolutely.

Is the move to put this new platform out against this backdrop enough? Is it enough to compete both here and in China?

For us, it could be. Globally, no,, it’s not enough. In North America, it’s absolutely the right strategy, but it’s not our complete strategy. GM has 14 nameplates, we have three. We came out with our vehicles four or five years ago, and it’s coming out with them now. So, our product cycle is completely different. What I mean by that is we’re about to launch our second generation of products, and it has its first 14 out now. I hope it outsells us. If I were GM with 14 nameplates, it should easily scale. I personally didn’t think we would be number two for three years with our simple lineup, but it seems to have worked so far in the first inning.

The competitive reality is that the Chinese are the 700-pound gorilla in the EV industry. There’s no real competition from Tesla, GM, or Ford with what we’ve seen from China. It is completely dominating the EV landscape globally and more and more outside of China. They have 20 million units locally, and about 11 million are EV or [extended-range EVs], So half that market. We’re barely at a million vehicles here in the US. That’s one tenth of China’s volume. Europe’s only twice as big as us, so that’s maybe only one fifth. China’s successful for good reason. It has great innovation at a very low cost. 

For example, it bet on [lithium iron phosphate] technology, not these expensive lithium batteries. There’s hundreds of companies, and they’re all sponsored by their local governments, so they have huge subsidies. It’s new brands. It’s BYD and Geely, and companies like Nio and Xiaomi, many of which have never been in the car business before, and that’s a big advantage for them. In China, the brands that are winning are indigenous brands. They’re not global automotive companies, they’re really Chinese companies. To beat them, we need a completely different approach. It’s not the number of vehicles you have or the price you offer the customer. Everyone’s going to have affordable EVs. If you sell an affordable EV in the US for $30,000 but it costs you $50,000 to make, you could say you have an affordable EV, but that’s not a sustainable business.

Three or four years ago, we saw this affordable customer duty cycle changing with our sales. It became very obvious to me that we had to go outside of Ford, create this maverick group, give them resources and stay out of their way, but make sure that they deliver on a completely new approach because the Chinese are so formidable, they have so much support from the government, and their customers have such a high expectation for the digital experience that an incremental approach from Mach-E would never work.

I love you telling it to me real straight here. It’s exactly what I was thinking. In some ways I’m driving a dinosaur, right? That’s the whole reason I leased a number of years back.

Smart move.

I want to go back to price. I was charging at an Electrify America station in Connecticut recently, and four out of the six stalls had these Chevy Equinox EVs. I asked this woman how she likes hers. She said she liked it, but the thing she was really talking about was the price. She said, “We like this car and the price so much that we actually got two.” And she pointed to her husband who’s in the other stall. I’m not thrilled that this type of family’s taking up all these stalls, but it’s fine. I forgive them. 

I’m wondering if just getting that price down so that EVs can finally take off in lower, more affordable areas is one of your motivating factors right now.

To your point, I think it was inevitable that government support would wane. It was inevitable that the duty cycle wound up being EV customers who use their car for commuting and shorter trips, and occasionally taking a longer trip. This happened in the 1910s over 100 years ago. Steam was 30 percent, electric was 30 percent, and the rest was internal combustion engines. A few years later, it was totally different. 

Back then you could not call which technology would win. It’s the same now. The EVs came at the high end, and I would say $40,000 is expensive now for most people. We don’t talk about it in the car business because more than two-thirds of the cars sold in the US are used. We never really talk about those two-thirds, but their average price is around $30,000. The average new car is obviously much higher than that. Most of the five-year-old vehicles that people are driving around in the US are going to be around $30,000. This is the most important part of the EV market. It’s not expensive Lucids and Teslas. That’s all interesting, but what is really going to move this market is a non-government-subsidized, affordable EV that people can afford, and that’s at a lower cost to use than a used Model Y because there’s a lot of those around. 

For people in America who have a tough time with all their demands, want to go on vacation, want to put their kids through college, and want to have a house or whatever, $30,000 is the most they want to spend. I think that customer you met is very typical. Sorry to use a baseball analogy, but this next inning is completely different from the first one, where the fitness of the companies doesn’t rely on the government, and we have to innovate.

I said it last week, and I’ll emphasize it now: there are no assurances that we can do this. No one has ever built a car in three pieces. No one’s offered their own electric architecture at this price. We’ve never done it. We’ve never had two large unit castings and high quality. No one’s done it. Tesla’s talked about it, but it hasn’t done it. In fact, our manufacturing process has radically moved on beyond what Tesla’s ever shown in its unboxing. So, there’s a lot of risk here. This is not a guarantee that Ford’s going to get this done.

You’ve segued really nicely into my next set of questions, which are the Decoder questions. You’ve set out to build something, and now you’ve got to figure out the structure to build it. You said you had to create a maverick group that was separate from Ford, separate in terms of IT. Now, you’ve got to take this skunkworks engineering team, which I believe is in California, and you’ve got to bring that into the big castle that is Ford.

Yes.

How do you think about integrating these new skunkworks ideas into this bigger system? Have you mapped out how that’s going to happen?

Yes. We’ve been working on that for a couple years now. One of the things that really helped us in that regard was that Alan [Clarke], the leader of this Universal EV Platform team, was free to have Ford people on his team but had the right to say no to anyone. So, he went through a very rigorous process. He’s had the team that scouts for the manufacturing process for all this new stuff for three to four years.Of course, we’ve been listening to them. We have a lot of good experience at Ford, too, that knows how to handle risk in supply chain and risk in manufacturing and new processes like the one we use with aluminum F-150. It’s a different problem, but the same process of risk elimination. It’s a plan that has come together. 

It’s important to have a plan, but you get out of the plan pretty quickly because of surprises. The supplier isn’t as good as you thought, they’re running late, or software for a module is running late. Then, you have to really de-risk. The way we’re thinking about it is, “Let’s make a simple one first. Let’s not try to add all the complexity. Why don’t we just make one color, one version, one spec at the beginning, and massively simplify the task for everyone? What is the basic level of software capability?” 

We don’t need all the singing and dancing, hands-free automation at launch. Maybe we focus BlueCruise on a simple operating domain like high-speed safety, with hands-off highway operations for the autonomy solution. Then gradually, as we verify the delivery of that base capability — whether it’s the vehicle structure, the manufacturing process of the suppliers, or even automation — we start to introduce more complexity and capability over time when we feel comfortable. That makes it stressful for the go-to-market team because, frankly, they don’t know what they’re going to be selling in a year and a half. But that’s the only way we’ve found to do this.

I want to stay on some more Decoder questions, and call you out. In your first Decoder interview in 2021, you dodged the question, “How do you make decisions?” In fact, I was listening to the episode in my Mach-E last week and just screaming, “Jim, you didn’t answer.” You answered about the company’s strategy, but you didn’t answer how you specifically make decisions. I feel like you’ve had to make some big decisions here with this new platform. So, how do you do it?

Let’s just be specific. In this case, I looked at the wiring loom in the Mach-E. It’s a beautiful wiring loom, but it’s 70 pounds heavier than the Model Y’s wiring loom, and it’s $200 a battery to carry that wiring loom around. I just had to ask myself the question, “Can my team do it?” Taking the wiring loom as a metaphor, can my team beat BYD?

I went to [Executive Chairman] Bill Ford, the board, and my team. I said, “I love you guys, but I don’t think we can do this.” The decision I arrived at, which was highly informed by meeting Doug Fields, was that we had to do it completely separately. Doug is a Model 3 chief engineer and worked on the car project at Apple. He was one of the first-generation software designers in AOS. He also designed the Segway early in his career. He’s been at the forefront of a lot of technology revolutions time and time again. I asked him, “Why can’t Ford do it?” He’s like, “Jim, your part release system, your IT, your CAD design systems are 25 years uncompetitive. There’s no way you can beat BYD with that. You need real expertise.”

BYD has vertical integration with the batteries. Its batteries are 30 percent cheaper than what we can buy from CATL. For us to beat that battery, to even be in the neighborhood in terms of cost, we have to radically redesign the efficiency of the motors, gearboxes, and inverters on the EV side so it uses 30 percent less battery. We can’t beat BYD’s vertical integration on the cost of battery. The only way we can beat it was with innovation on the draw of the battery.

When I got the list of inventory from Doug about what we have to do to beat BYD, even three to four years ago, it became very obvious to me that I had to look my team in the eyes and say, “Eventually we’re going to come back to you for the industrialization of this product. But for now, leave these people alone, trust that they don’t have any prejudice in coming up with something better. If you want to get mad at me, you can come into my office and shout at me, but don’t waste their time.”

I talked to Bill, and I also do Gemba. I go in person for every big decision I ever make. I went to that teardown and looked at every piece. I looked at the number of fasteners in a Model Y. It was literally a third of the fasteners that go into a Mach-E. From a customer standpoint, you won’t tell the difference, but from manufacturability and cost standpoints, fasteners are an output metric for how elegant your engineering solution is. When I looked at those fasteners and the wiring loom, I knew I had no choice because I gemba walked and talked to people who knew. I can’t put the company’s future at risk by making people happy. I have to do the right thing. That’s how I approached that particular decision.

Can I interrupt you quickly to tell me what gemba is?

Gemba is something that I fell in love with at Toyota. Gemba is “genchi genbutsu,” which is a Japanese phrase for “go and see with your own eyes, learn with your own eyes.” It’s actually the five senses. The idea is that before you make a big decision or want to understand a problem, you have to go and see the real problem and where the waste is. It’s a tool in problem solving. 

In my case, the waste was that wiring harness, those fasteners, all the welds, the front and rear structures that’ll eventually get displaced by unicasting. You see the waste. You look at it, you ask the engineers: “Why do we have this waste? Why do we use a 25-year-old parts release system?” As a leader, you get down on the floor and you ask them the basic questions, so you can visualize your decision. That’s what gemba is.

Love that. Didn’t know that before. I need to practice gemba, clearly.

Let me back up here. You have to restructure your company, but it also seems like you’ve been talking about restructuring the economy. You’ve been talking about a refocus on the “Essential Economy,” or the blue-collar jobs that are the backbone of this country. 

You wrote a LinkedIn essay in June about the focus of AI on white-collar productivity, but that we need to do the same for blue-collar work. How are you thinking about automation at Ford? 

There’s a complete crisis in the country that’s not being talked about. People like Mike Rowe will talk about it, but we have a crisis that’s not in the public debate. We have a 500,000 construction worker shortfall. We have a 500,000 factory worker shortfall. We don’t have enough people in emergency services to support our society when things go wrong. Firemen, ambulance workers, medical workers, plumbers, and electricians — the frontline people that make our society run that many of us take for granted.We call this the Essential Economy. 

We see this at Ford because we’re on the edge of this software-defined vehicle, but we’re also a heavy manufacturing industrial company. Whether it’s a technician shortage in our dealerships to work on these vehicles or the factory worker shortage, I really learned as a leader during the United Auto Workers (UAW) strike what a crisis we have as a country. I see it with our customers. Plumbers and electricians are constantly trying to get young people into those vocations, and there’s no training. The trade schools and apprentice programs that our grandparents had that made this country so great are not there anymore. We’re very vulnerable as a country. 

The productivity of those essential workers, as you said, is way behind that of white-collar workers. Automation, AI deployment, and everything else that has happened for white-collar tools, it’s not the same for blue-collar work. There’s very little training. Companies like Ford, thankfully, have enough resources that we can put our backs behind this problem with trade schools and scholarships, but our society isn’t doing it. In fact, we’re going to have a conference here in Detroit in the fall where we’re going to gather other companies that have the same problem and really see it — solution providers, academics, and creative people in government — and we’re going to try and start working on this problem.

Is it a Farm Aid or medical crisis like COVID? No, it’s more. In a way, it’s just as threatening to our society. The way we’re thinking about it is that we’re going to walk the walk and invest heavily. We have been. We spent about $1 billion on the dignity of the workplace and safety in our plants. We’ve modernized our buildings. We’re investing in trade schools and scholarships to recruit technicians for vehicle repair as well as our factories. 

But this is a society problem. The one that bothers me the most is cultural. We, as a culture, think that everyone has to go to an Ivy League school to be valuable in our society, yet we all know that our parents and grandparents made our country wonderful because of these kinds of jobs. There’s incredible dignity in emergency services, and people can have wonderful careers. But our society doesn’t celebrate those people like they do the latest AI engineer. 

That’s exactly what I wanted to ask you. This seems like such a reversal of decades of messaging in America that said “Get out of manufacturing  and go to the office.” Is your advice to this next generation to actually go get a job in manufacturing?

I think it would help all of us as a society. Look, my son [Jameson] is 17. He’s a senior in high school. He’s got every opportunity that you could ever imagine. He doesn’t have to worry like most people. I made sure that he had a summer job where he learned how to weld, to fabricate, to really work with his hands, and relate to people. And he can make a choice. I have no prejudice for Jameson. If he turns out to be the greatest welder or a mechanic working on our Super Duty diesel engines, I will be so thrilled as a parent. I think we all need to look at ourselves and decide what kind of society we want to build in America. Let’s say that we’re getting into war somewhere. Google’s not going to make the boots, but Ford will. To defend our own country, we need these people.

Now, we’re having critical issues. The average ambulance is 15 years old. We do not have enough emergency care people. Look at what firemen are having to go through in California with smoke and their own health. These are very dangerous jobs, and we have a shortage. It’s going to affect all of us in a lot of annoying ways. We need to really get serious about readjusting our expectations for our kids, younger people, and our country to give them opportunities to grow. And these are great jobs. A factory job at Ford could make way over $100,000 a year, and you can bridge into a lot of other things. My grandfather was a factory worker at Ford, and he became a Ford dealer in his 60s. Think about the possibility. He was an orphan, he had nothing. He never went to college. It didn’t matter to him.

I’m really excited and energized about this. It’s a much bigger problem than fixing Ford and making it a world-class company. It’s important for our country. We need to focus on this just as much as the new exciting AI and the new social media dance on Instagram. Let’s get busy working on these important problems.

I do have a call-in question from a guest caller.

Nilay Patel: Hey, Jim, it’s Nilay. I’m very excited to be calling in with this question. As you know, I’m a Mustang guy. I have a 2021 Mustang GT convertible. It’s one of my favorite cars ever. People love this car because it’s so easy to mod and tune. You can just reprogram the engine control unit (ECU) to make the car go faster. But with the new version of the gas Mustang, the one with all the screens running on your new platform, the ECUs are locked. People can’t just reprogram them. A lot of enthusiasts attribute the recent drop in gas-powered Mustang sales to the locked ECUs. 

My questions are: Do you agree with that, that the locked ECUs are behind the recent drop in gas-powered Mustang sales? Do you have a plan to let people unlock the ECUs and tune the car more easily? Thanks for answering the question. Joanna, I’m sure you’re doing a great job.

I have no idea what that question means. So–

[Laughs] I do. 

I’m going to set a timer. You get a minute to answer that.

I have this debate with my son, actually, because he has an older Mustang. He didn’t buy the new one for reasons like that. I would absolutely say the drop in sales is not due to that. Actually, we’re doing really well with Mustang. I think we’re the only one left really, which we’re quite proud of. We’re investing a lot in Mustang. I think the thing people don’t get about Mustang is that it’s a global car. It’s the best-selling sports coupe in the world. We outsell Mustang outside of the US than inside the US. When I look at sales for Mustang, I look at globally. The Mustang continues to grow in some of our biggest countries like Australia and Sweden because people want a little slice of that America. Everyone wants to do a burnout.

As far as the vehicle’s tunability, I think the call-in question is outstanding. This is a real dilemma for us, and there’s no easy answer. We want people to modify their cars, but we also have to take quality and privacy really seriously. I think he was talking more about the performance of the vehicle, and over time, our approach would be to give people the option to digitally adjust their vehicle from Ford, so that we can maintain quality but still let the user have their own idea of performance. That’s different for everyone, and I think that vision will come to life in the coming years.

The aftermarket is a real opportunity, but it’s also a big challenge for us because a lot of people like to write software in the control module that controls the powertrain to get better performance. But what they don’t know, and what the user may not be aware of, is that all the reliability and the quality issues that might come up are very expensive. My daughter’s boyfriend is one of these people. He bought a brand new F-150, he’s got a supercharger on it. He recently got a bunch of error codes because he updated the ECU against Ford’s standards, and now he needs thousands of dollars of expensive repairs because the vehicle has started chewing its camshaft. It was great that he could get 650 horsepower out of his EcoBoost F-150. He didn’t think about what he was doing to the reliability of the vehicle, but we have to at Ford.

All I would say is that it’s a tough problem to solve. We always want to give customers a chance to tune their vehicles, but we actually know a lot about the reliability of the vehicle. Are we as a brand going to let our quality reputation suffer to give a person the ability to modify the vehicle? I think that’s a hard compromise for us to make.

I actually understood most of it. I want to move on to the big T in the room: the tariffs. Last quarter, you operated at a loss despite record revenue because you took $800 million in tariff charges in Q2, when tariffs were actually lower than they are now. What are your conversations like right now with the administration?

They’re very important. Ford is the most American company in terms of the quantity of vehicles we make in the US. Over 80 percent of our vehicles sold here are made here. But we also are the largest importer of parts. The discussion we’re having with the administration today covers three policy areas: tailpipe emissions, tax policy, and especially tariffs. On tariffs, the biggest issue is the $2 billion bill for our imported parts. Because we make the most in the US, we import the most parts. We have a lot of stackable tariffs. There’s fentanyl tariffs, [Section 301 tariffs] from China. We have steel and aluminum tariffs that are now over 50 percent. There are a lot of tariffs that a company like Ford gets because there are auto-specific tariffs and non-auto-specific tariffs. They all stack up. So, we have this layering of all these imported parts.

To make an F-150 affordable, there are a lot of parts we can’t make locally, like wiring looms and fasteners. There are thousands and thousands of parts that we have to import because we can’t even buy them in the US. If we did, the vehicle would be $100 to $200 a month too expensive for customers. Our discussions with Washington, D.C. are really clear: “Look, we both agree. Let’s strengthen US companies like Ford that have bet on America. We have more UAW jobs than anyone, but don’t penalize us for trying to make the vehicle affordable.”

We’ve had very productive discussions with the Department of Commerce, the president himself, and the whole administration on how to come up with a way to minimize this $2 billion bill so that we are advantaged as a company. Originally, they were thinking that there would be high tariffs for finished automotive vehicles. Fifty percent of all vehicles bought in the US are imported through a port or a rail across a border. Now, it looks like the standard tariff will be about 15 percent and 12.5 percent from Japan. That’s not a fair fight. We’re just asking for a fair fight. If you’re going to allow people to import with 15 percent tariffs, which includes their parts in the vehicle, but you put a 50, 60, 70 percent tariff on the aluminum steel that goes into our US-made vehicle, let’s work on a process for tariff relief that would allow us to do that and still make the vehicles affordable.

That’s what we’re talking about with the administration. They’re extremely open, and they’re extremely supportive of us. They’re also making a lot of policy changes on tailpipe emissions and tax. Look at the EV credits as an example. We can get to that if you want. But the tariffs are the most critical for our profitability. About 20 percent of our profit has evaporated now because of these parts tariffs. We’re highly engaged with the administration. I remain very optimistic that we will find a solution, but it is very expensive.

I wanted to ask about the EV credits because between the tariffs and the EV credits going away, it feels like this administration is on your side. Yet, you are also adding more jobs than ever to manufacturing here in the US. You’re doing the things the president wants.

Yes. I do generally believe that those three policy areas are very important. Joanna, we didn’t feel like we should get a $7,500 check on an EV to make the transition successful. We do need support for the production tax credit on batteries, so that we could be competitive with China because it has such a huge advantage, and we do need to onshore that IP to start really scaling battery manufacture. You can’t ship a battery overseas. It’s very heavy and it’s not a good shipper, which we say as a shipper. 

We have gotten a lot of support from them for making batteries here in the US. The PTC credit is very important. We have changed our EV investment to not depend on the consumer tax credit from the government, and we’re fine with that. Other countries like China and in Europe do support their EV consumers. We didn’t really expect that at Ford. We’re kind of a “lift ourselves up by the bootstraps” kind of company anyway, so that was something we already did.

But the relief on fuel economy standards is a very important topic that the administration clearly has a point of view on. We want one national standard, and we want to be able to sell what customers really want. Hybrids are really popular now, and so are EVs. I think we’ll find a tailpipe emission standard that is more reasonable and sustainable and not have a bunch of states with unique standards that make logistics for cars a nightmare, since you have to send different states different emission-standard cars. And that’s really expensive for customers, too.

The real area that is super critical for Ford and for companies like Ford that are committed to the US, is tariffs, working through and making adjustments as they and bilateral trade deals get announced. We need to find a landing spot that works for companies like Ford, where it’s a level playing field from a tariff standpoint and the administration accomplishes what it wants to accomplish. We’re not there yet, and that’s why we’re working really hard. I spent a lot of time in DC, and there’s a good reason for it. This is really important for our factory workers, for the future of our country, and for the shareholders of Ford. 

I want to come back to me because really this whole podcast is about me, obviously.

[Laughs] Good.

One of the main reasons I decided to get the Mach-E, other than it having good range and me loving the way it drives, was that it had Apple CarPlay. Some of your competitors have abandoned CarPlay. A lot of the newer, upstart car companies, like Rivian and Tesla, have their own software. I want to talk about this new Digital Experience you guys are working on, but I want to just cut to the chase with CarPlay. What about CarPlay Ultra? Are you considering that?

We are. We don’t like the execution of Ultra in round one, but we’re very committed to Apple. I’ve talked to Tim [Cook] many times about this. Ford does not have the right, in our opinion, to disrupt someone’s digital life when they get in their car. We want you, Joanna, and all the customers to bring in their digital life, and make it as easy as possible. We don’t think we should restrict that to make money off the customers. We don’t want it to be a hassle. We don’t think we can design an experience that’s going to displace your phone. At the same time, there are things that Ford is working on to add on top of the Google and CarPlay digital experience, whether it’s automated systems or the way a trip gets planned, that will make it even better.

We’re highly informed by what’s going on in China right now, specifically the customer experience part. An AI assistant in the car, let’s say, is very important for Ford. We think that every customer should have an AI assistant in the car. Not just a voice to move to your phone-based AI system but something specific that you can talk to, almost like a companion. To allow everyone to bring their digital life into the car and have it seamlessly integrated is a more complicated journey for us to execute. Then, put more on top of that, whether it’s productivity software (we’re now up to 1 million Ford Pro subscriptions now), BlueCruise, how you plan a trip, or auto specific things like how your [Advanced Driver Assistance Systems] (ADAS) system works and how it integrates into your entertainment system. We believe we have to design something that works with your digital life as well.

It’s a more complicated choice, especially when you look at backcasting it into all of our past vehicles, but I believe it’s a more customer-centric approach. And you will see that, Joanna, in your next shopping trip. You’ll make that choice, we’ll all read about it. That’s our philosophy. Now, other companies have different philosophies, but we believe that our philosophy is the most customer-centric.

But it seems like with the Ford Digital Experience, which you have rolled out to some cars and is based on Android Automotive, that you’re going to have to choose. Are you going to do this Android Automotive experience with the things you’re talking about building on top, or are you going to pick a CarPlay Ultra experience and go all on Apple?

I see what you mean. It’s a really good question. I don’t know where Apple’s going to go. I think Apple has to make a big decision. It’s not a Ford decision, actually. Then, we will decide based on their decision.

You mean that Apple has to make a decision, or are you going to allow this to also run in combination with other infotainment software?

Yes. Not only that, are you going to allow OEMs to control the vehicles? How far do you want the Apple brand to go? Do you want the Apple brand to start the car? Do you want the Apple brand to limit the speed? Do you want the Apple brand to limit access? 

We’re doing that now for our Pro customers. If you’re a Pro customer, you can limit access to the vehicle on the weekend. Many of our plumbers and electricians have a company vehicle and they’re not allowed to use it on the weekend. We allow speed control now, so you can’t go above the speed limit. Is Apple going to want to do that? If Apple wants to do that, I think we’re going to have a tough time because then the Digital Experience gets really messy, and we’ll have to decide between Google and Apple, to your point.

Now, Google has two different layers. It has Google Automotive Services, which is a curated digital services experience in the car, but it also has Android Auto, which is an operating system that we can build our own experience on top of. So, Google as a platform company gives us both. Apple has a totally different approach. Again, I’ve talked to the Apple team and our team is in contact with them. I think Apple has to decide if it wants control of the entire experience inside a vehicle. If it does and it wants to follow Ultra with the Ultra 2 or whatever is next, then Ford will have to make a big decision.

I know where we would go. We believe ADAS integration with your entertainment system is so critical. In three or four years when you’re flying down the highway with your eyes off the road going 80 miles an hour on Interstate 5 and you’re watching a movie, having a ChatGPT moment, or having a wearable on, we don’t think that a system from a tech company that’s not integrated into the car is going to save your life. So we’ll have to make a choice.

It sounds to me that you’ve been forced with the reality that you’ve got to build your own.

Yes, but the good thing is that now versus when you and I last talked, Android Auto is advancing nicely. We’ve learned a lot about how to build an experience on that. I hear a lot of OEMs say, “Well, it’s about controlling the customer. I don’t want Apple to be able to…” That’s not a big deal for us. We just want it to be easy for customers. But if those companies want to control the vehicle, I think that’s a bridge too far. In that case, we have to invest a lot more in a Ford experience.

I hope that doesn’t happen, by the way. I look at what has happened with Huawei and Xiaomi in China. It’s amazing. Those companies are all in on auto. When you’re a Huawei or Xiaomi customer, you either buy a Huawei system in someone else’s brand or you buy a Xiaomi car, and it’s completely seamless. I wish our tech companies had approached the auto industry that way, but they haven’t. Now we’ve got to do what we’ve got to do.

You said something really interesting about how you want to have an AI companion in the car. I am actually spending a lot of time in the car now talking to ChatGPT. I’m not listening to Decoder. I have my iPhone, it’s coming through CarPlay, it’s Bluetooth paired, and I’ve got my ChatGPT app. I’m not looking at it, it’s safe. I just have it in voice mode and I’m driving to a meeting to meet you. I’ll say, “Tell me what I should know about Jim Farley and where he’s been in the news.” It’s a very interactive conversation, almost like I’m on the phone.

How do you think about this? Does Ford have to be a part of that relationship?

It’s a good question. I think, yes, especially for anything transportation-related. I want to go somewhere, I want to know about my car and the condition of the car. We either have to be part of the conversation or we have to supply that. Not to be arrogant because of the safety control and the vehicle control, but we actually think we can provide a chat experience that has added value beyond your non-vehicle experience. To your point, we don’t want to burden the customer with two different experiences. That would be really arrogant and really bad for the company.

I think people are starting to realize why you’ve been on this, Joanna. The difference between car companies where you have a software-defined vehicle is not going to be what your sheet metal looks like. It won’t be how powerful your EV motor is. That’s all math. All the cars look nice. It’s going to be this digital experience that says why someone buys this or that. We have to sort this out really thoughtfully.

Now, in China, Nio has an AI companion in the car. It’s like a physical thing. It’s like a little person, and it works really well. Customers love it. If you look at China being ahead of the West in terms of integrating AI as a companion in your vehicle, early indications are that a well done companion-like functionality from the OEMcan add a lot of value to people’s lives. That’s the direction we’re going. It’s similar to not investing in Level 4 autonomy and robotaxis and putting our effort towards Level 3 automated, eyes-off driving in the AI space. It’s a similar kind of bet. Pick a few places where Ford can add value, but don’t make the customer go backwards. That’s our philosophy.

To be clear , you’re more focused on that highway driving experience right now with BlueCruise?

For sure. Our number one priority is to not be the first one to do eyes-off, Level 3highway driving, but to be the best, most reliable, and the safest, the one you want to use for you and your loved ones. We took all the Argo AI people and we gave them a choice. Do you want to do highway high speed, eyes-off automation? Push a button, watch a movie, or whatever people want to do? We could do this podcast in your car. 

All of our AI deployment for autonomous driving is going there because we think that’s a cooler problem to solve for most average Americans than a robotaxi. Even though the robotaxi is a really cool problem — I love being in a Waymo — we think that highway miles are a bigger societal opportunity.

Alright, my last question. You get to play car salesman. It’s next August, I got to get rid of this Mach-E. What do I do?

Oh, you need to buy another Mach-E. We’ve improved it a lot since your last one. It’s a lot more affordable. We have some wonderful new experiences. I’m going to give you a run for your money in terms of value. It’s a really incredible product that we’ve refined over four years. The Mach-E’s we’re making now are pretty radically different from the earlier ones. We have OTA updated your car, and I know what improvements were in that. The new vehicle, the compute power onboard, the efficiency, the quality, and the improvements to the fit and finish are all material enough that I think you should test-drive one and see what we have.

There’s a reason why we just beat the revised Model Y, which is the best-selling alternative —  not that you would just use that as your benchmark. I think you’re going to have a lot of fun shopping. I’m going to learn a lot as you go shopping, like the rest of America. What I would love for you to do is wait six months because I want to show you this new Universal car. You’re going to go, “Jim, I’m so glad you told me to wait.”

That’s what you can do for me. You can give me an extension on the lease. This is what you should have been doing for me. This is where I would’ve sold me. I would’ve said, “Extension on the lease, six months, we’re going to give you a good deal Joanna. You’re going to be happy.”

And bridge you to something that no one will be able to offer. You’ll go, “Oh, my god, this is so much better than anything I could buy, including the Mach-E. I’m really glad I waited.” That’s the right approach.

See, I should be working in your dealership. That’s how I would’ve sold it. Well, Jim Farley, thank you so much for spending so much time. I’ve got a ton more questions, but we’ll do this again sometime and have you back on the show.

I don’t think you’re driving a dinosaur either. I think you’re driving a fantastic automobile. I love my Mach-E. Frankly, we’re really proud to have you as the owner, and thank you for being on the podcast. I always enjoy our interaction. I can’t wait to learn more about the ChatGPT experience inside your car. I hope you don’t mind if a few of our software engineers call you.

Yeah, they should call me. Again, this is not sponsored. I have been a very happy Mach-E driver. I’ve been in it a lot this summer. We didn’t get to it, but the charging infrastructure has improved so much. I charge for 30 minutes at Electrify America, and Electrify America has gotten better. Get that CEO on here. I charge, I’m on my way. I drove 350 miles up to New Hampshire last week.

Oh good. 

I’ve been happy. We’ve got some software things to deal with. We didn’t really get into that, but it sounds like you’re working on it for me.

We are. That you for the time, Joanna. All the best to you.

You too.

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