For most Americans, the Chinese electric vehicle boom, much like Covid in December 2019, and WWII before Pearl Harbour, is just something that’s happening somewhere else. But Ford bosses know better than to put their heads in the sand. They describe the threat posed by cheap Chinese EVs as ‘colossal’ and think it’s inevitable that they’ll eventually be offered for sale in the U.S.
Ford, and the western auto industry, is already struggling to deal with a cooling EV market resulting from a second wave of potential buyers remaining unconvinced about the value and practicality of vehicles that cost more than combustion alternatives and are backed up by a less than stellar charging network in some parts of the U.S.
Related: Ford Working On Affordable EVs, Setup A “Skunkworks Team” For New Platform
But Ford is concerned that Chinese automakers may win over customers with incredibly aggressive pricing, as the Koreans and Japanese did before them.
“They are ahead of us in this technology,” Marin Gjaja of Ford’s EV division, Model e, told Bloomberg this week. “We look at that and say, ‘That’s coming here eventually, so we’d better get fit now and better get going on EVs or we don’t have a future as a company.’”
Though the U.S. government has implemented tariffs to try to curb an influx of Chinese-made cars, Gjaja is in no doubt that they’ll ultimately find a way in, potentially through Mexico.
“If I was sitting in China right now running a Chinese OEM, I’d be looking for land in Mexico,” Gjaja said, citing the low cost of construction, labor and the tariff-free access to North America via the USMCA trade agreement.
“They’re going to come here, just as the Japanese ended up here, the Koreans ended up here and the Germans ended up here. It’s a big market,” Bloomberg reports Gjaja explaining. And it sounds like Ford, realizing the magnitude of this challenge, is open to joining forces with other Western carmakers to fend it off.
Ford CEO, Jim Farley, warned attendees at a conference that automakers who “cannot compete fair and square with the Chinese around the world” risk losing 20-30 percent of their revenue. That’s why Ford has created a special engineering team to design a, small, ultra-affordable electric car to compete with the $11,000 BYD Seagull, Reuters reports.
And it’s why Farley is open to collaborations to help bring manufacturing cost of major components, such as the batteries, down as far as possible.
“We can start having a competitive battery situation,” Farley said at the conference, per Reuters. “We can go to common cylindrical cells that could add a lot of leverage to our purchasing capability. Maybe we should do (this) with another OEM.” Who do you think Ford should buddy-up with?
