Ford CEO Cautions That China May Drive Every American Automaker to Bankruptcy | Carscoops

      American companies are receiving some protection from threats emerging from the East due to significant tariffs and a ban on Chinese electronics.

      Ford has stated that Chinese automakers represent a greater challenge than Japan once did. CEO Jim Farley has acknowledged that China’s electric vehicle (EV) technology now outpaces most Western manufacturers. The company anticipates that EVs will soon constitute 5 percent of the U.S. market.

      For a long time, many established car manufacturers appeared indifferent to the growing competition from China’s automotive industry. The emergence of new Chinese car makers scarcely seemed to concern them, as if the disruptions that had affected the tech industry would not influence the automotive showroom.

      However, that misconception has been thoroughly shattered. Most prominent automakers now understand the extent of disruption that these Chinese brands are poised to bring to the global car industry, with Ford’s CEO, Jim Farley, being one of the most vocal in recognizing this reality.

      In the past year, Farley has been vocal about his belief that Chinese brands have gained a considerable advantage in the race toward electrification.

      Farley even mentioned that he drives a Xiaomi SU7 daily—not merely for publicity, but out of sincere appreciation. He believes that the competition posed by China surpasses the Japanese challenge from the early 1980s.

      “I believe it’s quite similar, but it’s on a much larger scale,” Farley told Business Insider. “They possess enough capacity in China with existing factories to serve the entire North American market, posing a threat to all of us. Japan never had that capability. Hence, this represents a completely different level of risk for our industry.”

      In 1980, Japan manufactured over 11 million vehicles, prompting then-President Ronald Reagan to implement voluntary export constraints on Japanese imports. Today, while the situation has altered, the sense of unease is reminiscent of that time.

      Currently, Chinese EVs are prohibited from being sold in the United States, providing temporary insulation for local brands. Nevertheless, Ford, which operates globally, cannot depend on geographical boundaries for protection.

      Farley also emphasized that “[the Chinese] possess far more advanced in-vehicle technology. Huawei and Xiaomi are integrated into nearly every car. You enter, and your phone connects automatically, allowing your entire digital life to be synchronized with the vehicle.”

      “We are engaged in global competition with China, extending beyond just EVs. If we fail in this, Ford's future is at stake. The Chinese presence in the EV industry is tremendously significant, completely dominating the global EV market and increasingly influencing areas outside China.”

      For the time being, regulations from the Trump era, including the elimination of the federal EV tax credit of up to $7,500, have affected the demand for electric vehicles in the U.S.

      However, Farley views this slowdown as a temporary situation. He estimates that EVs will account for around 5 percent of the U.S. market in the near term but believes that this figure will increase as more affordable models are produced and public perception aligns with the technology.