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While Industry Battles Market Mandates, Ford Sees Threat From Chinese Makes

Ford's leader has looked around the market and has found the 800-pound gorilla in the room, it has the name BYD.Q
A current Ford Model Waiting For Market Changes

This must be a tough week for Ford CEO Jim Farley. While the rest of the industry is looking and battling mandates that won’t kick in for another decade, the Ford leader is looking over his corporate shoulder and seeing the threat from BYD, a Chinese company already making plans to sell in the U.S.

An Existential Threat

Farley sees what an existential threat to Ford in the form of the BYD Seagull could be. The small electric sells in China for about 68,000 yuan. This may seem like a lot of money, but it isn’t. The Seagull’s pricing point is roughly $10,000.

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While the industry is looking at a different set of issues and not focusing on what could be coming, Farley is laser-focused on “expensive Chinese EVs entering the market,” says the Ford Authority, an independent source of information on the automaker.

Farly views the impending Chinese market invasion as a “major threat” to Ford’s business. The government sees the new cheap Chinese vehicles as a threat to national security, while Ford sees them as competitors.

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Investor Asks Important  Question

During a recent Q3 sales and earnings call with investors.CEO Farley was “asked whether or not building hybrids and PHEVs could help with propose mandates, but Farley “made it clear that he’s more focused on China, “which he views as a bigger threat, specifically calling out the BYD Seagull as an example. He told those involved in the sales call:

“That’s the reality. The reality is that regulators worldwide, including the U.S., have put their foot firmly on the scale, and there is no hybrid mix or PHEV mix in the world that will get you compliant,” Farley said. “And even if the federal government eases off with administration change, many of the large states with lots of revenue will probably not do that. So, the reality is that there’s a bigger thing here than the government. It’s called China. It’s called the BYD Seagull. The market will likely sell 110 million EVs this year in China.”

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The government uses subsidies and regulatory changes to spur competition between Chinese makers in China. “The BYD Seagull was just treated to its latest price cuts,” says FA. As noted, the price cut means the small all-electric model now has a starting price of 69,800 yuan, or about $9,700.

Regardless of this type of aggressive pricing, small electric vehicles remain profitable for BYD.

As FA notes:

This potential threat is precisely why Ford recently shifted gears – focusing on smaller, cheaper EVs.” Ford had been secretly developing:

  • A low-cost EV, says FA
  • A second project led by former Tesla exec Alan Clarke

In the meantime, For is delaying “the launch of select EVs as it shifts its focus.”

Ford Motor Photo

Marc Stern has been an automotive writer since 1971. His automotive articles have appeared in venues including Popular Mechanics, Mechanix Illustrated, AutoWeek, SuperStock, Trailer Life, Old Cars Weekly, Special Interest Autos, and others. You can follow Marc on Twitter or Facebook.

 

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