Ford CEO Jim Farley has issued a stark warning about the competitive threat posed by the Chinese auto industry, suggesting that it could potentially drive American automakers, including Ford, out of business. In a recent interview on CBS Sunday Morning, Farley compared the current situation to the 1980s, when Japanese automakers challenged the U.S. industry, but noted that the current threat is even more significant.
“Oh, I think it’s exactly the same thing, but it’s on steroids,” Farley stated. “They have enough capacity in China with the existing factories to serve the entire North America market, put us all out of business. Japan never had that. So, this is a completely different level of risk for our industry.”
Tariffs and Market Dynamics
Currently, American automakers are somewhat shielded by significant tariffs imposed on Chinese electric vehicles (EVs) by former U.S. President Joe Biden. These tariffs were implemented in the last year of Biden’s administration, before Donald Trump took office and initiated his own series of tariffs. As a result, major Chinese brands like BYD have not yet entered the U.S. market. However, some Chinese-owned brands such as Lotus, Polestar, and Volvo, along with a few Chinese-built models like the Buick Envision and Lincoln Nautilus, are present in North America.
Meanwhile, Chinese automakers are making significant inroads just south of the U.S. border. In Mexico, brands such as BYD, GWM, MG, and Chery are competing aggressively, and JAC is manufacturing vehicles locally. Due to the absence of heavy tariffs, China became the leading supplier of imported light vehicles in Mexico in 2022, a position it maintained in 2024. According to América Economía, Chinese brands accounted for 7.7 percent of the Mexican market in 2024, with even higher shares in other Central American markets like Panama, where they hold 26 percent.
Global Expansion and Market Share
The expansion of Chinese automakers is not limited to North America. They are actively seeking to increase their global footprint, particularly as their domestic market becomes increasingly competitive, characterized by frequent price wars. This strategy has allowed them to gain significant market share in regions across Latin America, Asia, and Africa.
When questioned about the potential for American consumers to embrace Chinese cars, Farley noted the presence of a Chinese vehicle in his own garage—a Xiaomi SU7, which he praised for its high quality and excellent digital experience. “They are the competition, and to beat them you have to join them,” Farley explained.
Strategic Alliances and Industry Threats
Ford has already established joint ventures with Chinese brands Jiangling and Changan. The latter produces several models, including the Lincoln Nautilus, one of the few Chinese-built vehicles sold in the U.S. Changan also owns the Deepal brand, which competes in the Australian market. Farley has been vocal about the threat posed by Chinese automakers, identifying them as Ford’s main competitors, rather than traditional rivals like GM or Toyota. In 2023, he labeled Chinese EVs an “existential threat.”
Despite their growing influence, Chinese brands have not yet replicated the strategy Japanese automakers used to penetrate the U.S. market in the past. Japanese companies gained a foothold by offering well-built, fuel-efficient vehicles, which became popular during the 1970s oil crises. The U.S. government negotiated voluntary export restraints with Japan in the early 1980s, prompting companies like Honda to establish local manufacturing to circumvent quotas. This was soon followed by Nissan, Toyota, and others.
Looking Ahead
The current landscape presents a complex challenge for American automakers. While tariffs provide temporary protection, the potential for Chinese brands to enter the U.S. market remains a significant concern. The expansion of Chinese automakers into global markets indicates a strategic shift that could reshape the automotive industry.
As the situation evolves, U.S. automakers may need to consider new strategies, including potential collaborations or innovations, to remain competitive. The coming years will likely reveal whether the American auto industry can adapt to this new era of global competition.
