Ford Has No Future If They Lose the EV Market to the Chinese

[mackinaw]

Very interesting article in the Detroit News.  Ford Model E COO, Marin Gjaja, recently spoke at a panel discussing disruptive technology.  He also mentions that the target price for the new Ford low cost EV line to be about $25,000-$30,000.

 

https://www.detroitnews.com/story/business/autos/ford/2024/02/14/ford-model-e-marin-gjaja-ev-market-chinese-automakers/72599365007/

[DeluxeStang]

If they can deliver a compelling product while meeting those price targets, I genuinely think there's a ford ev in my near future.

[tbone]

Chinese BEVs need to be have tariffs placed on them. They have been subsidized by the CCP, thus they haven’t been competing fairly.  The are a number of reasons the Chinese would want to disrupt foreign auto industries and it is certainly more than monetary reasons.  
 

Ford needs to get out of bed with Chinese battery companies, and find others to partner with.  They cannot be trusted.  There has to be better options than a foreign adversary.

[AGR]

If Ford and GM can eventually convert their fullsize pickup and SUV customers into EV buyers, they'll be fine. The companies that are most threatened by the Chinese are the Japanese automakers, except Toyota. The main reason Toyota isn't as threatened is that they're sitting on massive cash reserves.

[DeluxeStang]

2 hours ago, AGR said:

If Ford and GM can eventually convert their fullsize pickup and SUV customers into EV buyers, they'll be fine. The companies that are most threatened by the Chinese are the Japanese automakers, except Toyota. The main reason Toyota isn't as threatened is that they're sitting on massive cash reserves.

Why not do both, competing with larger, more premium vehicles, and smaller, more affordable products? I agree with Ford, I think these affordable Chinese EVs are a threat to everyone, and need to be taken seriously. 

[akirby]

9 hours ago, tbone said:

Chinese BEVs need to be have tariffs placed on them.

Isn’t there already a 25% tariff?

[Gurgeh]

1 hour ago, akirby said:

Isn’t there already a 25% tariff?

Yes, but over time there are ways around that. See, for instance, yesterday's Reuters article about BYD's plans to build an assembly plant in Mexico to target the U.S. market. (A part of the Chinese auto industry's challenge is also due to China's requirement that foreign automobile manufacturing in China -- remember that China is now the world's largest domestic auto market -- must have a domestic partner. Imagine if foreign automakers could only operate in the United States if Ford or GM was an equal joint venture in all of their U.S. manufacturing operations.)

 

https://www.reuters.com/business/autos-transportation/chinas-byd-plans-new-electric-vehicle-plant-mexico-says-nikkei-2024-02-13/

"Feb 14 (Reuters) - China's BYD Co Ltd will set up a new electric vehicle (EV) factory in Mexico, Nikkei reported on Wednesday, citing the company's Mexico head, as the EV maker aims to establish an export hub to the United States. BYD, known for its cheaper models and a more varied lineup, recently overtook its biggest rival Tesla Inc (TSLA.O), opens new tab to become the world's top EV maker in terms of sales...

 

"Major U.S. automakers have warned that Chinese cars could spell doom for their own prospects, among them Elon Musk's Tesla. Last month, Tesla's chief executive predicted that Chinese automakers will 'demolish' global rivals without trade barriers.

 

"Musk's view is echoed by a leading advocacy group.

 

" 'The introduction of cheap Chinese autos – which are so inexpensive because they are backed with the power and funding of the Chinese government – to the American market could end up being an extinction-level event for the U.S. auto sector,' according to a forthcoming report by the group Alliance for American Manufacturing.

 

"In Latin America, BYD plans to spend 3 billion reais ($620 million) on a new industrial complex in northeastern Brazil. The three plant complex will be built in northeastern Bahia state, on land formerly occupied by a Ford plant that closed in 2021."

Edited February 15 by Gurgeh

[92merc]

Per the headline, any of the US automakers could die if they don't succeed at EV's.  Chevy, Ford, Stelantis, and even Tesla may not be immune to the Chinese onslaught.

 

But Like Gurgeh stated, China is working on moving a significant amount of manufacturing to Mexico, and not just cars.  Cheaper shipping to US market.  Cheaper labor.  They know their worker base is shrinking in China and they're doing what the can to survive.

 

I agree, if CCP is giving money to Chinese automakers for Mexican factories and the cars themselves, tariff those products too.

 

The reality is the US EV market can't move away from Chinese batteries just yet.  It'll take time for Californian and Wyoming metals production to come online and the US start making truly their own batteries.  But I hope that comes to fruition.

[akirby]

Did not realize they were targeting Mexico.  Thats going to be difficult to manage.

[92merc]

I wonder how the free trade agreement works with foreign companies building in Mexico?  I mean Ford is technically a foreign company in Mexico.

 

I would hope the trade agreement is null when the company is receiving aide from their parent country.  If not, it needs to be updated to apply.

[akirby]

57 minutes ago, 92merc said:

I wonder how the free trade agreement works with foreign companies building in Mexico?  I mean Ford is technically a foreign company in Mexico.

 

I would hope the trade agreement is null when the company is receiving aide from their parent country.  If not, it needs to be updated to apply.

There are rules in place that would prevent them from just doing final assemble in Mexico, but if they build them with local parts and local labor then I’m not sure if there is anything to stop that right now.

[tbone]

13 hours ago, tbone said:

Chinese BEVs need to be have tariffs placed on them. They have been subsidized by the CCP, thus they haven’t been competing fairly.  The are a number of reasons the Chinese would want to disrupt foreign auto industries and it is certainly more than monetary reasons.  
 

Ford needs to get out of bed with Chinese battery companies, and find others to partner with.  They cannot be trusted.  There has to be better options than a foreign adversary.

perhaps he was listening?

 

https://www.reuters.com/business/autos-transportation/ford-ceo-open-working-with-rivals-compete-with-china-2024-02-15/

[iamweasel]

Unless the US government radically changes their business policies then we will continue to let foreign companies have an advantage over domestic companies.  This has been an issue for years.  (Part of the reason why Ford/GM still can't compete with Japan/Korea on cost per vehicle.)

 

It's pretty ridiculous that China makes non-Chinese auto companies sign 50/50 JV agreements with local Chinese companies to do business there, but on the flip side BYD can freely sell into Europe and/or the US with limited or no barriers?  C'mon people....what are we doing here.  

[Texasota]

3 hours ago, akirby said:

Did not realize they were targeting Mexico.  Thats going to be difficult to manage.

And it is not just the automotive industries. Chinese companies across all kinds of industries are establishing a huge presence in Mexico. They avoid all import tariffs this way and you can bet bottom dollar they are still being quietly subsidized by the Chinese government. This is especially true of the State Owned Enterprises (SOEs) who do not have to concern themselves with making a profit.

Edited February 15 by Texasota

[tbone]

1 hour ago, iamweasel said:

 

It's pretty ridiculous that China makes non-Chinese auto companies sign 50/50 JV agreements with local Chinese companies to do business there, but on the flip side BYD can freely sell into Europe and/or the US with limited or no barriers?  C'mon people....what are we doing here.  

This has always blown my mind that US and European companies would agree to this arrangement. If you want know how Chinese technological capabilities have increased at the rate that they have, this is a major contributor. Why you would expose your intellectual property to this level is beyond me.   Why the US and EU would not take steps to eliminate this requirement is beyond me. 

[DeluxeStang]

Interesting, so Farley intentionally brought attention to the $11,000 BYD EV. I don't see Ford getting anywhere near that price. 

 

I'll be completely honest, now that we have this 25-30k price, I'm stunned they're going to make an electric BS and maverick that are in line with, or even undercut the price on ICE versions, that would be a game changer. 

[Deanh]

1 hour ago, DeluxeStang said:

Interesting, so Farley intentionally brought attention to the $11,000 BYD EV. I don't see Ford getting anywhere near that price. 

 

I'll be completely honest, now that we have this 25-30k price, I'm stunned they're going to make an electric BS and maverick that are in line with, or even undercut the price on ICE versions, that would be a game changer. 

think youd ytrust a car that MSRP'ed for 11k made anywhere, if it was involved  in an accident?....a sub 20k car here in the USA is pretty much a thing of the past Id say...and thats irrespective of what drivetrain it utilizes...

[DeluxeStang]

13 minutes ago, Deanh said:

think youd ytrust a car that MSRP'ed for 11k made anywhere, if it was involved  in an accident?....a sub 20k car here in the USA is pretty much a thing of the past Id say...and thats irrespective of what drivetrain it utilizes...

Hence why I said I didn't see Ford getting anywhere near that price, and why it was odd for him to bring it up for that reason. I'd say 20 grand is about the floor for a decent car anyways. Try to go any lower, and I would question the quality of the product. 

[AGR]

20 hours ago, DeluxeStang said:

Why not do both, competing with larger, more premium vehicles, and smaller, more affordable products? I agree with Ford, I think these affordable Chinese EVs are a threat to everyone, and need to be taken seriously. 

 

I never said otherwise, they obviously need a broad product portfolio. The fullsize truck segment gives them a nearly unassailable profit center that the Japanese automakers lack, save for Toyota.

[iamweasel]

7 hours ago, tbone said:

This has always blown my mind that US and European companies would agree to this arrangement. If you want know how Chinese technological capabilities have increased at the rate that they have, this is a major contributor. Why you would expose your intellectual property to this level is beyond me.   Why the US and EU would not take steps to eliminate this requirement is beyond me. 

 

Yeah, even with Japan and Korea the trade is one-sided.  People always say "well Ford and GM didn't make the cars that people in those countries wanted."   Well even if they did they would not be able to sell them in large quantities given the home turf protections in place.  My old boss at Ford did a 3-year stint at Ford of Japan when that was still going and the stories he told were pretty amazing.   (I actually knew about 10 people who did rotations over there and all had similar experiences.)

 

Everyone would agree Toyota makes cars people want, right?  Well guess what......in South Korea last year there were 1,720,919 cars and light trucks sold.  You know how many Toyota sold?  A whopping 8,495 units.  Good for a massive 0.49% market share.  (Honda was even worse....3,140 total sales.)  Gee.....I wonder why 2 of the most reputable companies can't penetrate the market in South Korea?   FWIW, Hyundai/Kia sold 1,325,737 units in South Korea....a 77% market share.  

 

Same issue in reverse.....Hyundai/Kia bailed out of Japan years ago due to awful sales and there were stories like this in 2022 but not sure what has happened since then.  

 

https://www.reuters.com/business/autos-transportation/south-koreas-hyundai-motor-take-fresh-crack-japan-sales-2022-02-08/

 

Bottom line is the US and Europe need to get a lot smarter with how international trade in the auto industry is done or there will be no US/Euro companies left in 50 years.  

 

[tbone]

56 minutes ago, iamweasel said:

 

Yeah, even with Japan and Korea the trade is one-sided.  People always say "well Ford and GM didn't make the cars that people in those countries wanted."   Well even if they did they would not be able to sell them in large quantities given the home turf protections in place.  My old boss at Ford did a 3-year stint at Ford of Japan when that was still going and the stories he told were pretty amazing.   (I actually knew about 10 people who did rotations over there and all had similar experiences.)

 

Everyone would agree Toyota makes cars people want, right?  Well guess what......in South Korea last year there were 1,720,919 cars and light trucks sold.  You know how many Toyota sold?  A whopping 8,495 units.  Good for a massive 0.49% market share.  (Honda was even worse....3,140 total sales.)  Gee.....I wonder why 2 of the most reputable companies can't penetrate the market in South Korea?   FWIW, Hyundai/Kia sold 1,325,737 units in South Korea....a 77% market share.  

 

Same issue in reverse.....Hyundai/Kia bailed out of Japan years ago due to awful sales and there were stories like this in 2022 but not sure what has happened since then.  

 

https://www.reuters.com/business/autos-transportation/south-koreas-hyundai-motor-take-fresh-crack-japan-sales-2022-02-08/

 

Bottom line is the US and Europe need to get a lot smarter with how international trade in the auto industry is done or there will be no US/Euro companies left in 50 years.  

 

I 100% agree with your last statement. The US auto industry is more than just about selling cars and trucks. It’s also a national security asset.

[lfeg]

The future in the US for automotive is affordability. And the domestic manufacturers are behind the 8 ball. They have been going upmarket for years, leaving the entry level to the Koreans. In electrification they are going after the premium market, neglecting the lower end of hybrid cars. Even pickups have gotten stupid expensive. The big danger to the domestics is if an offshore manufacturer hits the sweet spot of an affordable vehicle that has a reasonable level of equipment and decent looks. Chinese building in Mexico is a serious threat, but would be a welcome option for a large part of the market.

[silvrsvt]

33 minutes ago, lfeg said:

The future in the US for automotive is affordability. And the domestic manufacturers are behind the 8 ball. They have been going upmarket for years, leaving the entry level to the Koreans. In electrification they are going after the premium market, neglecting the lower end of hybrid cars. Even pickups have gotten stupid expensive. The big danger to the domestics is if an offshore manufacturer hits the sweet spot of an affordable vehicle that has a reasonable level of equipment and decent looks. Chinese building in Mexico is a serious threat, but would be a welcome option for a large part of the market.

 

Until people's buying habits change radically, I don't see this happening.

 

The only reason smaller/cheap cars sold in the US over the past 50 years was because the need for CAFE offsets. 

Imports are just as guilty of doing this also, even though they offer "affordable" cars.

 

In the grand scheme of things, globalization is going to come to an end in the next 10-20 years and importing cars from China or even Japan to a lesser degree will become impractical because the US is going to become more insular and not be the worlds navy anymore...just think what will happen to global shipping in the Red Sea if a couple ships where sunk-no one would issue insurance and the flow of traffic would trickle down to nothing. 

You might not see it but the US is currently in a phase of building out plants right now that hasn't been seen since WW2 because of this. We have enough natural resources to support ourselves going forward too, so places like the middle east are going to become less important to us.

[akirby]

47 minutes ago, lfeg said:

The future in the US for automotive is affordability. And the domestic manufacturers are behind the 8 ball. They have been going upmarket for years, leaving the entry level to the Koreans. In electrification they are going after the premium market, neglecting the lower end of hybrid cars. Even pickups have gotten stupid expensive. The big danger to the domestics is if an offshore manufacturer hits the sweet spot of an affordable vehicle that has a reasonable level of equipment and decent looks. Chinese building in Mexico is a serious threat, but would be a welcome option for a large part of the market.

There are no signs that the market for mid to high priced vehicles is going away or even shrinking much.  Worst case you’ll see prices go back down a bit.  The lower end may see a surge with new lower priced vehicles but I think most of that will come from used car sales not higher priced new vehicles.

[akirby]

10 minutes ago, akirby said:

There are no signs that the market for mid to high priced vehicles is going away or even shrinking much.  Worst case you’ll see prices go back down a bit.  The lower end may see a surge with new lower priced vehicles but I think most of that will come from used car sales not higher priced new vehicles.

Also those cheaper vehicles bring much smaller profit margins.  But early adopters with cheaper BEVs will do well until the competition ramps up.