Ford’s leaving the door open for a Chinese automaker collaboration, says RBC
US lawmakers have raced to introduce legislation to lock in restrictions on cheaper Chinese vehicles and parts ahead of the Trump-Xi meeting in May.
Analysts at RBC Capital Markets aren’t convinced that Ford is officially ruling out a potential future collaboration with a Chinese automaker in the US.
On Ford’s Wednesday evening earnings call, CEO Jim Farley had this to say:
“We leverage global partnerships and even IP sharing, including with the Chinese OEs, to grow our business around the world. But we are really fully committed to a level playing field here in the US and also safeguarding our home market, because of the importance of the auto industry and our industrial base.
So, how I would think about it is Ford continues to be a global company. We want to have the rights to win around the globe. We need IP and partnerships outside the US to do that. And when it comes to the US industry itself, we are extremely protective, as we should be, like China, South Korea, and Japan are. What that means in specific policies, that will play out in our strategy as a company.”
Last week, Ford denied a Wall Street Journal report that said it had held talks with China’s Geely Automobile Holdings about bringing its car tech to the US. Earlier this month, Farley told Fox News that Chinese EVs would have a “devastating” impact on the US auto industry and shouldn’t be allowed into the country.
Still, RBC sees Farley’s Wednesday comments as more of a “not right now” than a “never.”
“We think the comments do not close the door on a potential collaboration with Chinese OEMs [original equipment manufacturers] in the US, but clearly indicate there could be political resistance to the idea,” RBC analyst Tom Narayan said in a Thursday note. “Like Stellantis, Ford is already collaborating with Geely in Europe, and we could envision a softening approach longer term in the US especially if production is US-based. Ford is losing money on EVs and should demand for these products return to the US, collaborating with Chinese OEMs could shorten the speed to market for some very compelling products.”
If that prediction were to come true, it could cause a major upheaval in the US car market.
Geely and rival BYD have been expanding in both Canada and Mexico — BYD sells 70% of new EVs in the latter country — and China’s EV (and plug-in hybrid) exports more than doubled in the first quarter from last year.
US lawmakers, and the auto industry, appear worried that President Trump could soften the US’s restrictions on Chinese vehicles when he meets with Chinese President Xi Jinping next month. The two are expected to discuss potentially lowering the barriers to Chinese autos in the US, something Trump implied interest in earlier this year.
“If they want to come in and build a plant and hire you and hire your friends and your neighbors, that’s great, I love that,” Trump said in January.
This week, a group of 70 House Democrats sent a letter to Trump saying that the barriers against Chinese cars “must remain a firm and non-negotiable priority.” On Wednesday, a bipartisan pair of senators, Bernie Moreno (R-Ohio) and Elissa Slotkin (D-Mich.), introduced the Connected Vehicle Security Act, which would ban Chinese vehicles, parts, and tech — including those made in partnerships — from the US.
Trump is scheduled to visit Beijing and meet with Xi on May 14 and 15.
