"We believe smaller, more affordable vehicles are the way to go for EV in volume," said Farley.
The auto executive, who has previously said Americans need to shake their addiction to "
monster vehicles," explained that electric vehicles operated under a completely different set of rules from Ford's traditional business selling gas guzzlers.
"In ICE [Internal Combustion Engine], a business we've been in for 120 years, the bigger the vehicle, the higher the margin," Farley said.
"But it's exactly the opposite for EVs. The larger the vehicle, the bigger the
battery, the more pressure on margin because customers will not pay a premium for those larger batteries," he added.
Farley spoke after the Detroit automaker posted disappointing Q2 earnings, with shares falling by
as much as 12% after market close.
The company continues to lose money on its electric vehicle business amid an
industry-wide slowdown in demand for EVs. This area of the business
lost $1.14 billion from April through June.