Chinese Car Companies Could Still Destroy Ford

“John, this is an existential threat,” Ford Motor Co. (NYSE: F) CEO Jim Farley told one of his board members, John Thornton, after returning from a tour of China. Farley visited the country in September 2024. Thornton knows the Chinese market. He was a banker at Goldman Sachs there. He had also been Goldman’s co-chief operating officer. In the world’s largest electric vehicle (EV) market, the new wave of EVs is not the future. It is the present.

China’s car companies have surged further ahead in sales since the Ford CEO’s visit. Leader BYD moved ahead of Tesla in European sales in April. BYD just announced global new energy vehicle (NEV) sales for May at 382,476. That is up 15% from the same month a year ago. Sales outside China are rising. According to CNEVPost, “The company sold 89,047 NEVs overseas in May, marking the sixth consecutive month of record-breaking sales. This represents a year-on-year increase of 137.46 percent and a month-on-month increase of 12.60 percent.”

Ford can write off any EV success outside of the United States. It only sold 307,000 cars in China last year. Its sales in the country were based on gasoline-powered vehicles. ACEA lists Ford as having 426,307 sales in the European Union last year. That was a drop of 17% from 2023. Ford has no EV presence there. Its market share is so low in the EU and China that it cannot be an EV winner in either.

What About the Tariffs?

Ford’s EV moat in the United States is built on the back of tariffs. In April, John Lawler, Ford’s vice chair, said, “I don’t think we can say no, they’re not going to come to the U.S. The Chinese are coming, and they are a force to reckon with.”

Part of the reason for tariffs on Chinese EVs is that the Chinese government helps fund the expansion of these vehicles. However, their low price points, quality, and features are strong enough that the tariff barrier will not last. What will break it down? President Trump’s notorious deal-making style could lead to a broad trade deal with China. Unfortunately for Ford, EV imports may be on the table. Chinese car companies may play the U.S. economy card. BYD and its smaller Chinese competitors could offer to build factories in the United States and promise tens of thousands of jobs.

Ford’s U.S. EV market share in the first quarter was 7.6%. GM’s brands, added together, did just as well. Hyundai/Kia also holds nearly 10% of the market. Ford has lost tens of billions of dollars to buy its small share. The company is expected to lose another $5 billion on its EV operations this year.

It isn’t whether Chinese carmakers can cripple Ford financially in the U.S. It is when.

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