Ford relies on Chinese technology as headwinds hit the US EV market.
"Against the backdrop of Chinese companies like BYD and emerging global enterprises becoming major players, the U.S. auto industry is at a crossroads," said Ford CEO Jim Farley, expressing a sense of crisis. The previous Biden administration in the United States promoted policies to cultivate the EV industry in the country to counter China, while the Trump administration took the opposite direction. Major automakers are busy revising their strategies..."
Ford Motor Company of the United States announced on August 11 that it will adopt Chinese battery technology to develop a pure electric vehicle (EV) with a price reduced to $30,000. Due to the Trump administration's adjustment of environmental regulations and reduction of subsidies, the U.S. EV market is facing headwinds. Ford will adjust its development strategy focused on large vehicles and will also explore expanding production in regions outside the United States, such as Europe, in the future.
"Against the backdrop of Chinese companies like BYD and emerging global enterprises becoming major players, the U.S. auto industry is at a crossroads," said Ford Chief Executive Officer (CEO) Jim Farley during a strategy presentation in Kentucky on August 11. He expressed a sense of crisis regarding Ford's late start in the EV market.
Ford's EV business, which mainly focuses on large vehicles, has suffered continuous losses for three years. To make a comeback, the new platform (chassis) for low - cost EVs announced by Ford on the 11th has been comprehensively adjusted in terms of design, production, and procurement. It also said that it plans to invest a total of $5 billion in new car development and battery factory construction.
The highlight lies in the battery, which accounts for most of the cost of an EV. Ford will invest $3 billion in a Ford factory (located in Michigan) supported by the technology of Chinese automotive battery giant Contemporary Amperex Technology Co., Limited (CATL) to produce low - cost lithium iron phosphate (LFP) batteries.
Lithium iron phosphate batteries are about 30% cheaper than ternary batteries that use rare metals such as "cobalt". Chinese companies have an advantage in the development competition. Ford had previously cooperated with South Korean companies to develop and produce ternary batteries, but the quality was unstable, and the cost was slow to decrease.
Ford decided to build a new battery factory in 2023 and announced that it would accept technical support from CATL. However, this decision was criticized by Republican lawmakers and others who are tough on China, and the factory construction was temporarily halted in September of the same year. Ford believes that since the factory is operated by a wholly - owned subsidiary, the batteries are "Made in the USA". Ford also said that this factory is a government - supported battery production project that was decided to continue under the Trump administration.
Regarding large EVs, which are the main cause of losses, Ford will reduce development and production. Ford Chief Financial Officer Sheryl Connelly said at the end of July, "If we reduce the production of some EVs in the United States, it is very likely that production will be shifted to other regions such as Europe." The policies of former U.S. President Trump, who aimed to revitalize the U.S. auto industry, are leading to the transfer of EV production bases overseas.
The previous Biden administration in the United States promoted policies to cultivate the EV industry in the country to counter China. It set a goal that EVs should account for about 50% of new car sales by 2030 and limited the tax - exemption targets for consumers who buy new EVs to vehicles produced in North America. Driven by this policy, major automakers have increased their investment in EVs in the United States.
However, it is not easy to establish a supply chain led by batteries in the United States. Even Tesla, the largest EV manufacturer in the United States, has not yet launched a low - cost model. As of 2024, EVs still accounted for only about 8% of new car sales in the United States. Emerging manufacturers in the United States, such as Fisker, which aimed for the position "after Tesla", have gone bankrupt one after another.
The Trump administration, which is skeptical about global warming, decided in July to abolish the previous administration's tax - exemption policy for EV purchases at the end of September. Given that the U.S. EV market may continue to shrink in the future, foreign manufacturers have taken action in advance. Mercedes - Benz Group of Germany stopped selling EVs in the United States starting from September 1. Honda partially suspended its plan to develop large EVs in North America.
The Trump administration also plans to withdraw the emission standards on which the EV popularization policy is based. It not only plans to adjust the federal government's standards but also decided to withdraw the regulations of California, the strictest state in the United States. Anindya Das of Nomura Securities said, "Unless there is new demand from consumers, it is unlikely that U.S. automakers will actively promote EV sales."
In the United States, the market for hybrid vehicles (HV) is growing instead. In the first quarter of 2025, HVs (including plug - in hybrid vehicles) accounted for about 14% of new car sales, exceeding that of EVs (about 8%). This is considered good news for Japanese companies that are lagging behind in the EV field.
However, most of the components such as motors and batteries used by Japanese companies in HVs are exported from Japan to the United States and are affected by U.S. tariff policies. Honda Director Eiji Fujimura said that in order to avoid tariffs, "we are considering localizing the production of core components of HVs." Japanese companies are forced to restructure their supply chains to comply with Trump's trade and industrial policies.
This article is from the WeChat public account "Nikkei Chinese Net" (ID: rijingzhongwenwang), author: Azusa Kawakami, published by 36Kr with authorization.