Ford CEO Jim Farley has blunt message on Chinese EVs | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Ford is proud of its commitment to assembling its vehicles in the U.S. Still, the company is already worried about what competition from Chinese EV makers can do to the U.S. auto industry.

Farley was recently on Fox & Friends, talking about how well Ford is doing despite tariff costs, because 83% of the vehicles it sells in America are assembled domestically, when the conversation turned to Chinese competition.

World’s top EV markets in 2024

China: 6.4 million EVs sold
Europe: 2.2 million EVs sold
U.S.: 1.2 million EVs sold
Rest of world: 1 million EVs sold Source: International Energy Agency

“They have enough capacity in China to cover all of the manufacturing and all of the vehicle sales in the U.S. We should not let them into our country because of the economic impact,” Farley said bluntly when asked about China’s incursion into the West.

But Farley wasn’t done emphasizing just how big a threat China is to the U.S. auto market.

“Manufacturing is the heart and soul of our country, and for us to lose that to those exports would be devastating for our country. There is no way this is a fair fight,” Farley said.

China cannot sell cars in the United States, but it can sell them in Canada and Mexico.

Photo by Anna Barclay on Getty Images

BYD vehicle sales make serious headway in Mexico

While Ford can’t do anything about BYD and other Chinese EV makers taking market share in Canada and Mexico, it does have a front-row seat to just how quickly those vehicles can take over a car market.

Despite the Mexican government raising trade barriers on Chinese vehicles, since there is little competition, the cheap new cars have still been able to take over Mexico’s EV market.

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BYD doubled its sales volume in Mexico last year, according to a recent Bloomberg report, and now the Chinese automaker accounts for about 7 of every 10 electric and plug-in hybrid vehicles sold in the country of 130 million.

Meanwhile, GM, which manufactures three electric vehicles in Mexico, not including its Chinese-made Spark EUV, sold only 1,540 EVs in Mexico last year. Ford, which makes the Mustang Mach-E in Mexico, sells that vehicle with a $10,000 markup over its U.S. price.

Even the mighty Tesla is struggling to keep up, selling fewer than 4,000 EVs there in 2024, according to Bloomberg.

Part of the reason BYD is winning in these markets is that its vehicles are so cheap compared to the competition.

BYD cars go for between $18,000 and $53,000 USD on the high end in Mexico. Part of the reason they are so cheap is that the Chinese government heavily subsidizes the vehicles, so profitability isn’t a concern.

So when Mexico’s President Claudia Sheinbaum signed a bill to raise tariffs on China (and all other countries without a trade agreement with Mexico) to 50%, BYD dealers in the country didn’t fret, saying the company wouldn’t raise prices by more than MXN$15,000 (less than $1,000) per unit, according to Bloomberg.

“Well, first of all, the Chinese have huge direct support for their auto companies. So there are over 100 of them. The places where they’re imported, their local market is 29 million, and their capacity in the countries where they make cars is over 50 million,” Farley told Fox & Friends.

But while Ford frets about a potential Chinese EV takeover, it is also taking many lessons from BYD and applying them to its own struggling electric brands.

Ford has a plan to make a $30,000 EV

Part of the reason the U.S. EV market is struggling is that the cars are so much more expensive than their ICE counterparts.

EVs cost about $11,000 more on average than their traditional gas counterparts, according to a 2023 report. That, coupled with the expiration of the up to $7,500 tax credit that had been propping up the industry for a decade, means that EVs are as unaffordable in America as they’ve ever been.

However, even though Ford said it will lose nearly $20 billion on EV-related charges over the next two years, the company says it has a plan to capture the market. Two years ago, Ford shared plans to reduce its EV production capacity by 35%.

“Ford has to do our part to make our vehicles fully competitive with the Chinese, and I think we have with our affordable EVs coming out made in Kentucky,” Farley told Fox.

Earlier this year, Ford showed its progress on the Universal Electric Vehicle project, which aims to build an EV priced so that most Americans can afford it, and Farley says he got the inspiration for how to make this happen from none other than BYD.

“We think to make that business profitable, we have to get to a BYD cost,” Farley told Bloomberg last month. “And so this skunkworks project called the Universe Electric Vehicle that we’re making in Kentucky, that is designed to match the BYD cost in Mexico.”

Ford says it aims to produce a $30,000 EV in the near future. To get there, it needs to tackle the biggest cost driver for electric vehicles: their batteries.

According to Ford, an EV’s battery can account for up to 40% of the vehicle’s total expense, so the company reimagined EV battery tech to make them smaller and more cost-efficient.

“The really high-end EVs, the $50k, $60k, $70k EVs just weren’t selling,” CEO Jim Farley said in an interview Dec. 15.