(Feb 14): Ford Motor Co’s top executive spoke to senior Trump administration officials about a potential road map for Chinese automakers to build cars in America by partnering with US car companies, according to people familiar with the discussions.
The rough framework discussed by Ford chief executive officer Jim Farley and Trump cabinet members last month would allow Chinese carmakers to manufacture vehicles in the US through joint ventures with domestic automakers in which the American company holds a controlling stake, said the people, who asked not to be identified because the discussions were private. The ventures would be structured so that both the Chinese and US partners would share profits and technology in the joint venture, the people said.
No decision has been made on the matter and the discussion was characterised by the people as informal and preliminary.
Farley discussed the idea with US Trade Representative (USTR) Jamieson Greer, Transportation Secretary Sean Duffy and Environmental Protection Agency (EPA) administrator Lee Zeldin when they visited the Detroit Auto Show last month, the people said. The discussion took place days after US President Donald Trump indicated that he’d be open to allowing Chinese automakers into the US if they built plants and hired Americans, saying “let China come in” during a Jan 13 speech at the Detroit Economic Club.
Ford said Farley gave the cabinet secretaries a tour of the Ford stand at the auto show and that they “discussed a variety of industry topics”, but declined to reveal specifics.
Ford’s talks generally about China with the Trump administration have consistently emphasised “the need to protect our home market from a flood of subsidised vehicles built in China”, Mark Truby, Ford’s chief communications officer, said in a statement.
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“We have also been clear about the privacy and national security issues associated with Chinese vehicles in the US and we will continue to reiterate this in our discussions with policymakers,” Truby said.
While Farley was not pushing the joint-venture option, the concept got a cold reception from the Trump officials, who felt it would face opposition in Washington, the people said. Still, an investment deal like that is seen by some in the administration as a possible outcome of Trump’s planned meeting in Beijing with Chinese President Xi Jinping in April.
Such a joint-venture setup is a mirror image of what China required of western automakers three decades ago when they had to partner with Chinese carmakers in order to set up factories in that country.
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Representatives of the EPA, USTR and Department of Transportation had no immediate comment.
Watershed moment
Chinese competitors gaining a foothold in America would be a watershed moment with massive implications for domestic automakers, their supply chains and consumers.
China’s carmakers have rapidly gained market share in Europe, Mexico and South America with lower-cost models that feature advanced electric-vehicle batteries and infotainment systems. They also receive significant government subsidies and can offer technology at low prices in part because they tolerate slim margins and losses, giving them a competitive edge that western rivals struggle to match.
Trump’s January comments surprised Detroit’s automakers, who’d felt formidable trade barriers erected by the US would keep Chinese automakers out of the country long enough to allow them to catch up on China’s lead in electric vehicles, batteries and other automotive technology.
General Motors Co (GM) has told the Trump administration that the company opposes a Chinese entry to the market, one of the people said. GM has argued that existing companies would lose market share and a flow of parts from China could have a devastating effect on North American suppliers.
GM’s opposition echoes a wider view among Trump’s cabinet that the US should keep China’s automakers out of the US market. While the president has said that he may welcome Chinese companies into the US if they build cars here, many on his team oppose such a move due to economic and national security concerns.
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Farley too has warned that China’s low-cost, high-tech cars represent an “existential threat”.
“Their cost, their quality of their vehicles is far superior to what I see in the west,” Farley said last summer at the Aspen Ideas Festival, where he revealed he had visited China a half dozen times in the last year. “We are in a global competition with China and it’s not just electric vehicles. And if we lose this, we do not have a future at Ford.”
At the same time, Ford has been open to working with Chinese companies. Farley has sought to partner with Chinese carmakers and battery makers to learn from them, while at the same time developing its own low-cost electric vehicle coming in 2027 that aims to be competitive with China’s BYD Co, the world’s top seller of electric vehicles.
Just in the last few weeks, Ford held talks with BYD about expanding a battery-supply partnership and explored a manufacturing partnership in Europe with China’s Geely. In December, Ford expanded a licensing agreement with Chinese battery giant Contemporary Amperex Technology Co, or CATL, from building cells for electric vehicles to also manufacturing stationary power sources for utilities and data centres.
A recent report by the Financial Times that Ford was weighing a joint venture with Xiaomi to build vehicles in America was flatly denied by both companies.
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