Chinese electric vehicles push Ford to rethink its strategy as it faces major challenges and tariff issues

Ford CEO Jim Farley has strongly cautioned that Chinese electric vehicle (EV) makers represent a fundamental danger to the survival of U.S. car companies, describing their manufacturing prowess and pricing tactics as a "whole new kind of risk" compared to the Japanese competition of the 1980s, as noted in a

. This warning comes as revealed a major overhaul of its EV plans, which includes scrapping a planned three-row electric SUV and postponing the launch of its all-electric pickup truck until 2027, shifting its focus to hybrids and commercial EVs, according to . These moves highlight Ford’s difficulties in keeping up with Chinese competitors such as BYD, which is quickly scaling up both its output and global presence.

For example, BYD’s Zhengzhou megafactory has more than doubled in area since late 2023 and now far surpasses Tesla’s Austin plant, based on satellite images and official records. The facility produced 545,000 vehicles last year and intends to hire 20,000 more workers in early 2025, demonstrating its rapid expansion, as reported by

. Farley recognized the magnitude of the threat, stating that Chinese EVs could "drive us all out of business" simply by dominating the North American market, according to the Carsales report. He even mentioned test-driving a Xiaomi SU7, a Chinese EV, to better understand the competition, and complimented its "excellent quality" and advanced digital features, as highlighted in the Carsales report.

Ford’s financial woes add urgency to its change in direction. The automaker posted a $1.4 billion loss in its EV division for the third quarter of 2024, contributing to a projected $4.5 billion loss for the year, based on a

. Import tariffs on certain parts, reaching up to 70%, have increased costs by $2 billion—about 20% of Ford’s worldwide profits—forcing the company to shoulder expenses that ultimately impact its workforce, as noted in the Carsales report. Meanwhile, Tesla is also under pressure, with its stock dropping 3.68% even after shareholders approved a $1 trillion pay package for Elon Musk, as stated in a .

In response to the Chinese challenge, Ford is turning its attention to more compact, budget-friendly EVs and bringing back classic models like the Capri. Farley also cautioned against "Trojan horse" strategies, where Chinese brands might use established names such as Mazda or Nissan to enter international markets, according to the MechHelp analysis. Ford’s updated approach seeks to combine cost savings with innovation, but Farley admitted that the chances of maintaining U.S. manufacturing are "shrinking with each passing day," as the MechHelp analysis observed.