Key Takeaways:
– Ford’s CEO, Jim Farley, perceives Chinese EV manufacturers as an “existential threat.”
– Ford is creating a new platform for affordable EVs to counter Chinese and Tesla’s advancements.
– The company has delayed its next-gen electric F-150 pickup truck for the second time.
– Governments worldwide are responding to the growing Chinese EV market with heightened tariffs.
– Ford has progressively discontinued popular car models like Fiesta, Mondeo, and Focus.
Growing Threat from Chinese EV Manufacturers
Chinese automobile manufacturers are making their presence felt in the global market. Once considered inferior, these companies have made significant strides in design and engineering, with the electric vehicle (EV) segment being their strong suit. Chinese EV makers now enjoy access to abundant affordable labor and materials, giving them an edge over international counterparts.
The evolution of Chinese manufacturers is reminiscent of the rise of Japanese automobile brands like Toyota and Honda in the 1980s. Ford’s CEO Jim Farley regards this rapid ascent as an “existential threat”, echoing thoughts shared by Chief Financial Officer John Lawler, who stated that Chinese manufacturers are ahead in the race.
Ford’s Fight Against the Rising Threat
In response to this competitive landscape, Ford is taking concrete steps to maintain its relevance. Early this year, Farley substantiated that a dedicated team is working on a new platform for affordable EVs. This strategic move is aimed at not only challenging the Chinese counterparts but also rivaling the industry leader, Tesla.
However, Ford’s journey on the EV pathway hasn’t been quite smooth. It had to cancel the launch of an electric three-row SUV initially planned for 2027 and has twice pushed back the release date of the next-gen electric F-150 pickup truck. The company’s EV spending is also experiencing a 10% reduction.
Dismissal of Popular Models
Ford has made several strategic decisions in recent times that have raised eyebrows in the industry. The company discontinued the production of Fiesta, a popular choice among European car buyers, and implemented similar decisions for models like Mondeo and Focus. These models were retired from the American markets earlier, where Mondeo was known as Fusion.
Government Response to Chinese EV Infiltration
In reaction to the growing competitiveness of Chinese EVs, governments globally are imposing increased tariffs on these imports. The US, under President Biden’s administration, has solidified a 100% duty on Chinese EVs starting from September 27, 2021. The European Union is also anticipated to vote for amplifying tariffs on Chinese vehicles next week. This move will likely affect Chinese car makers like SAIC, Geely, and BYD, which are expecting to face duties ranging from 17% to 36.3%.
In conclusion, the rapid rise of Chinese EV manufacturers represents a significant challenge for established brands like Ford. Recognizing this trend, global automakers and world governments are employing a combination of aggressive strategies and imposing policies to counteract this threat. The sustainability of these actions, however, remains to be seen.