The change comes at a pivotal time for the automaker as it attempts to execute an $11 billion restructuring plan, launches key products such as the Ford Bronco SUV, and pivots toward electric and autonomous vehicles.
Wall Street analysts expect Farley, who's known as an intense "car guy," to speed up the automaker's transformation efforts and potentially bring a new sense of interest in the company from investors.
Here is what you should know about Farley, 58, who joined Ford in 2007 as global head of marketing and communications from Toyota Motor:
Analysts weren't surprised by Farley's appointment as he was Hackett's heir apparent, but the timing was sooner than many anticipated.
"The timing occurring now to us suggests Ford is ready to take on a more aggressive, faster moving path forward," RBC Capital Markets analyst Joseph Spak said in an investor note Tuesday.
Other analysts such as Credit Suisse's Dan Levy shared similar expectations for Farley, who earlier this year purchased $1 million of stock in a show of confidence for the automaker's recovery plans.
"We believe Farley brings greater sense of urgency + action," Levy told investors in a note, citing a focus on execution, leveraging smart vehicles and expanding the automaker's commercial vehicle operations.
Ford shares on Tuesday surged more than 3% on the succession plans before leveling out to close at $6.86, up 2.5%.The stock was down slightly in after-hours trading.
BofA Securities analyst John Murphy maintained the firm's buy rating. In an investor note Tuesday, he said Ford is "starting to hit an inflection in product cadence and restructuring efforts."
Steve Weiss, chief investment officer and managing partner of Short Hills Capital Partners, said Tuesday that he purchased additional shares of Ford partially because of the executive change as well as the Ford Bronco.
"I just don't think there's a lot of downside here," he said on CNBC's "Halftime Report." "I see it as very low risk and not a value trap."
Farley, whose grandfather worked as an early Ford employee, cut his teeth with Toyota in marketing.
During his nearly 20 years at the Japanese automaker, Farley led sales and marketing for Toyota's luxury Lexus brand and launched the now-defunct Scion brand that was geared toward younger buyers. He also led the Toyota brand's market planning and advertising efforts.
Farley was convinced to leave Toyota by Ford Executive Chairman Bill Ford Jr. and and Ford CEO Alan Mulally, a former Boeing executive who led Ford through the Great Recession without bankruptcy, in 2007.
"I was in the outer lobby and I watched Jim (Farley) get out of his car," Mulally told The New York Times in 2008. "I remember his hello, his eye contact, his questions, how articulate and genuine he was. I knew right then this was the person I wanted."
Ford described Farley on Tuesday as a "very key" executive in saving the company during the last economic downturn that bankrupted General Motors and what was Chrysler at the time.
Farley was appointed to lead global marketing sales and service for Ford in 2010, becoming the automaker's global leader for the operations. He also held global operating responsibilities for Lincoln from December 2012 to August 2014 before overseeing several international operations such as Europe.
Under Hackett, Farley's roles were expanded to include the company's global markets, followed by corporate strategy and new business ventures such as autonomous and all-electric vehicles.
Farley is a "car guy." He enjoys working on classic cars and racing on tracks. It's something identified by analysts as a potential positive following an outsider such as Hackett restructuring the company.
"Hackett's tenure and style can be viewed as part of the process to get Ford on the path they are on (refocusing product, fixing underperforming businesses)," according to RBC Capital's Spak. He later added, Farley's "persona and style may be what is needed" to continue Ford's plans.
The leadership change wasn't enough though for CFRA analyst Garrett Nelson to change the firm's sell opinion on Ford. He said, "Farley will have his work cut out to 'right the ship,' as Ford remains in the middle of a multi-year restructuring and we don't see it's vehicle sales returning to pre-Covid levels anytime soon."
Ford, great-grandson of company founder Henry Ford, described Farley as "a car guy through and through."
"It's his passion and it's his love," Ford told reporters Tuesday. "He can be found on weekends, often at race tracks, racing his finished cars and it's his joy."
Aside from being a "car guy," Farley is known as being intense and passionate, sometimes to the point of having a temper when things don't go correctly.
"He's a guy in a position that has to make tough calls, not where you're making friends," Robbie Buhl, a former IndyCar driver and friend of Farley's since childhood, told the Detroit Free Press last year. "If Ford is going to be around and thriving in five years, the culture has got to change. If it doesn't change, the company won't be around."
Ford, who served as CEO of the automaker from October 2001 to September 2006, described Farley Tuesday as "intensively competitive" and someone who has grown into a leader at the company.
"I've watched him develop into a transformational leader with the values, and he's always had the values, to lead Ford Motor Co. into the future," he said.
Looking at Farley, it's not hard to see some resemblance to his late cousin, Chris Farley, a comedian who rose to stardom through NBC's "Saturday Night Live" and a series of movies in the 1990s.
The auto executive last year opened up to the Free Press about the passing of his cousin, including some regrets for leaving the movie star in California to join Ford.
"When he passed away, it was very sad for all of us on a personal level. People would bring it up, and say he was great, but it was a lot of conflicting emotions. I lived in Los Angeles when Chris was doing events and movies. I'd see a lot of Chris. He was going through fame, dealing with being a Wisconsin boy exposed to so much. I'm not just a fan, I'm family. So I'm caring for him, and making sure he was OK. Time heals things. I remember meeting Marino Franchitti, a famous race car driver, and he said, 'Tommy Boy's my favorite movie.'"
During the coronavirus pandemic, Farley also tweeted memes that included the late actor.