Ford's retreat: the challenges of competing in China's EV market

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🗞️ Driving the news: Ford plans to reduce future investments in China, citing intense competition from local electric vehicle (EV) manufacturers
• Ford's market share in China has halved since 2016, with vehicle sales falling below 500,000 last year for the first time in a decade
• Jim Farley, Ford's CEO, expressed doubt over the prospects of Western automakers in China's EV market, highlighting the success of local brands like BYD, Great Wall, SAIC, and Changan
• Chinese brands today seemingly offer cheaper or superior EVs

🌎 Why does it matter for the planet: The mobility sector corresponds to 17% of the global emission, and  global competition in the development of EVs is considered positive for the success of the energy transition
• The Chinese trend, where non-native carmakers dropped from 25.7% in 2021 to 19.0% in 2022, may signal a less competitive EV market - with unknown repercussions

🔭 The context: China is rapidly establishing itself as the largest market for EVs, with Chinese brands aiming for global dominance
• According to the International Energy Agency, EV sales accounted for 29% of total car sales in China in 2022, compared to 21% in Europe and just 8% in the US
• BYD, China’s leading electric vehicle manufacturer, has surpassed Tesla in terms of global EV market share, jumping from 5% in Q1-21 (with Tesla at 17%) to a robust 20% by Q4-22 (Tesla fell to 12%)

⏭️ What's next: Ford's plans to downsize its operations in China reflect a broader strategy the company has implemented in regions like Europe, focusing on higher-margin vehicles
• Instead of investing heavily in EV production in China, Ford will focus on commercial vehicles and use the market as a "listening post" for battery technology trends

💬 One quote: "If you just reinvest in a new cycle of EVs in China, there is no guarantee, or no data, that would suggest the western companies win." (Jim Farley, CEO of Ford)

The full-length article was published in the Financial Times on May 16, 2023.