Ford CEO Warns of Intensified Competition from China’s EV Industry
Ford CEO Jim Farley has drawn a stark parallel between the current competition from China’s electric vehicle (EV) industry and the challenges faced by the American auto sector during the 1980s with Japan. In an interview on CBS Sunday Morning aired on October 26, 2023, Farley expressed that the threat from China is not only similar but significantly more intense, stating, “Oh, I think it’s exactly the same thing, but it’s on steroids.”
Farley highlighted that China’s automotive manufacturing capabilities are immense, claiming, “They have enough capacity in China with existing factories to serve the entire North American market, put us all out of business.” He emphasized that this level of risk is unprecedented, noting that Japan never had such extensive capacity when it dominated the market in the 1980s.
In 1980, Japan was the largest automobile producer globally, with manufacturers like Toyota, Nissan, and Honda outpacing major American companies such as Ford and General Motors. This led to significant trade tensions, culminating in the Reagan administration’s introduction of voluntary export restraints on Japanese vehicles in 1981, a move aimed at protecting the U.S. auto industry.
Farley has long acknowledged China’s ascendancy in the EV market. At the Aspen Ideas Festival in June, he described China’s progress as the “most humbling thing” he has ever observed. He noted, “They have far superior in-vehicle technology,” citing the seamless integration of technology from companies like Huawei and Xiaomi into their vehicles.
In a recent episode of The Verge’s “Decoder” podcast, Farley stated, “The competitive reality is that the Chinese are the 700-pound gorilla in the EV industry.” He elaborated that China’s dominance is not just confined to its borders but is extending globally, posing a significant challenge to traditional automakers.
As demand for EVs in the United States is projected to slow, partly due to the rollback of federal EV incentives by the Trump administration, Farley expressed concern. He predicted that U.S. EV sales could halve, stating on September 30, 2023, “In the near term, I believe EV adoption will now only be about 5% of the U.S. market.” However, he remains optimistic about the growth potential for affordable EVs.
Farley has also noted his personal experience with Chinese EV technology. He shared that he drove a Xiaomi Speed Ultra 7, a Chinese electric vehicle he imported from Shanghai to Chicago. He believes that American consumers will gravitate towards such vehicles for their quality and advanced digital experiences. “To beat them, you have to know them,” he remarked, underscoring the necessity for American manufacturers to adapt to the competitive landscape.
The challenges posed by the Chinese automotive sector highlight a pivotal moment for the U.S. auto industry. With Farley’s insights, it is evident that the stakes are high as American manufacturers navigate this evolving market landscape.
