- Ford decided to divest from China’s electric car business, recognizing the challenges of competing in a very large electric vehicle market.
- Ford’s CEO expressed uncertainty about the ability of Western manufacturers to compete on a level playing field with local rivals in China.
- Ford will focus on commercial vehicles and a better understanding of battery technology.
Ford decided to divest China from its electric car business, a complex step considering that market is by far the largest for EVs.
According to the CEO of Ford himself, “There are no guarantees” that Western automakers will be able to fight on a level playing field with local rivals.
According to Jim Farley told the Financial Timesford It will “put less capital at risk” in China and will focus only on “commercial vehicles like delivery vans.”
In parallel, it will use the Chinese market to better understand battery technologies.
“Reinvesting more money in electric vehicles in China gives us no guarantee and there is no data to make us think that Western companies can win there,” Farley explained.
“The winners in China in the EV market are not the traditional manufacturers”said the CEO of Ford, detailing that the leaders are BYD, Tesla, Great Wall, SAIC and Changan.
The strategy of reducing its investments in China is completed by the one it is carrying out in Europe, where it cut smaller models, such as the Fiesta, and refocused on vehicles that give it more profit margin.
China’s electric car market is not for Ford
China’s electric car market has experienced remarkable growth in recent years. According to the China Association of Automobile Manufacturers, in 2022, electric vehicle sales reached a record 4.5 million units, accounting for more than 50 percent of global electric vehicle sales.
This increase is mainly attributed to the Chinese government’s subsidies, incentives, and supportive policies aimed at accelerating the adoption of electric vehicles.
The Chinese market is dominated by local players such as BYD Auto, NIO and Xpeng Motors.
BYD, backed by investment from Warren Buffett’s Berkshire Hathaway, has established itself as a leader in the electric vehicle market, offering a wide range of electric cars, buses and trucks.
NIO and Xpeng Motors, for their part, have also gained market share, known for their innovative designs, autonomous driving and low prices.
China’s central government has been instrumental in driving the growth of the electric car market. Support includes subsidies, tax breaks, and funding for research and development. It is also building a vast network of charging infrastructure.
A key point in China: its territory is home to the largest battery manufacturers in the world, such as Contemporary Amperex Technology (CATL) and BYD, ensuring a constant and reliable supply.
Returning to Ford and Farley’s statements, the CEO of the US company said Tuesday that “Over the past two years, we have been taking a hard look at our business in China and have decided that our strategy will be a much lower investment.”
When asked if, as rumored, they will lay off 1,300 employees in China, he refused to answer.
Ford has eight plants in China through agreements with local companies such as Changan, Lin Ho and JMC.
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