In recent months, much ado has been made about the potential national security and competitive threats that Chinese vehicles could potentially pose in the U.S. market, which prompted the Biden Administration to raise tariffs on those models – and raw materials – substantially. However, foreign automakers like Ford are facing headwinds in the Chinese market as well, with a big uphill battle in regard to competing in that market moving forward as well.
“Unless [foreign car brands] change their mindset of developing and manufacturing cars to one that is more willing to take risks, and consider how to design and manufacture a car from so-called first principles, their position will become increasingly precarious,” said Stephen Dyer, co-leader and head of the consulting firm AlixPartners’ Asia automotive practice, according to CNBC.
In what is now the world’s largest automotive market, domestic Chinese automakers currently dominate sales, and also lead the globe in terms of producing hybrid and all-electric vehicles, with those electrified models accounting for 40 percent of overall sales. According to AlixPartners, Chinese automakers also hold a distinct advantage in terms of expenses, as they’re able to produce EVs at a 35 percent lower cost compared to foreign rivals.
This creates even more problems for automakers like Ford in a market where one can purchase a brand new EV for as little as $10,000. It’s also precisely what motivated The Blue Oval to create its own low-cost EV platform to compete with those models, which must also do battle with Tesla in that same market. FoMoCo is also in the process of revamping its Chinese lineup, shifting to existing models produced domestically rather than creating unique ones just for that market.
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Comments
That was China’s plan all along: Use the foreign automakers to learn how to build a vehicle, copy and infringe on trade secrets, and then once the Chinese mastered the whole value chain of automaking, spit them out.
Agree. At this point, Ford and others are just throwing good money away by even trying. Just like developing a never-ending chain of new EVs in the US and Europe. China can’t compete in both on ICEs and HEVs and that’s where the money SHOULD be going. China will find a tarrif-free way into both, just watch.
US automakers are acting just like they did in the 1980s with the Japanese invasion. Ignore it. Not smart.