When Ford CEO Jim Farley wanted to test the competition, he looked not to Tesla, but to China. Now he’s looking for ways the legacy carmaker can emulate its Chinese counterparts.
In 2024, Farley spent six months driving the Xiaomi Speed Ultra 7, the first electric vehicle made by the Chinese tech company mostly known for its smartphones. When the six months were up, Farley said, “I didn’t want to give it up.”
In an interview on Quick response On the podcast Friday, Farley explained why he chose to drive the Xiaomi SU7 instead of a vehicle from an American company like Tesla.
“Nothing against Tesla. They’re doing well, but you know, they don’t really have an updated vehicle,” Farley told host Bob Safian.
Tesla has added some new designs and updates to its vehicles to face the growing Chinese competition. The 2026 version of the company’s Model Y features a futuristic-looking exterior and an upgraded interior that includes a redesigned dashboard. The 2023 version of Tesla’s Model 3 also received an overhaul that added ventilated front seats and ambient light. Some critics have argued that these updates are incremental compared to the improvements made by Chinese car companies.
Tesla did not immediately respond fateRequest for comment.
If Ford wants to be the best in the world, the firm argued, the company needs to focus on its overseas competition, not just Xiaomi but also Chinese EV leader BYD, which Ford’s CEO called “the best in the business” when it comes to costs, supply chain, manufacturing, and intellectual property.
Chinese EVs are not sold in the U.S. due to the increased 100% tariffs imposed by President Joe Biden and maintained by President Donald Trump. Still, Chinese vehicles, especially BYD’s lineup of low-cost EVs, are starting to catch on in other markets. Despite tariffs of up to 38.1% on Chinese vehicles by the EU in 2024, BYD nearly tripled its European sales at the start of the year, with new BYD registrations rising to 18,242 in January, up from 6,884 in the same month a year earlier. The Wall Street Journal Reported.
BYD was founded in 1995 as a battery maker but moved into car manufacturing in 2003 when founder Wang Chuanfu bought struggling state-owned carmaker Xi’an Qinchuan Automobile. BYD later increased its EV production by focusing on sales in China, which soon became the world’s largest EV market in part because the government subsidized consumers who buy EVs and the companies that make them. It also built charging infrastructure in the country and set aggressive fuel economy standards for gas-powered vehicles.
In 2022, BYD became the world’s first carmaker to stop producing gas-powered cars exclusively, focusing on EVs and hybrids. By 2025, the company will surpass Tesla in terms of revenue and overtake Elon Musk’s company as the world’s largest EV maker. Tesla still has a much higher valuation at $1.22 trillion compared to BYD’s $138 billion.
Farley said during the interview that he wants Ford to emulate BYD and do what the Americans can: “Use innovation to compete with the best in the world.”
Chinese EVs are cheap but also advanced. Critics have argued that the $231 billion or so in subsidies the Chinese government has given its domestic EV industry has allowed players like BYD to sell their cars below cost to compete with other industry players.
Even so, Tesla CEO Elon Musk admitted in 2024 that Chinese industry players are “the most competitive car companies in the world.”
Farley said Ford should take a page from BYD and build cars to meet the needs of the “next cycle” of American car buyers who want a wide choice of different body styles but under $30,000, not $50,000.
“If we’re smart, we’ll take BYD’s cost competitiveness, and then we’ll compete with that platform in parts of the market where we know our customers best,” he said.
Ford’s cheapest vehicle, the hybrid Maverick XL pickup, starts at about $28,000, while Tesla’s cheapest vehicle, the Model 3 sedan, starts at $37,000. Both entry-level vehicles are more expensive than BYD’s compact EV hatchback, the Seagull, which goes for $9,500 but only in China. It is sold at a higher price point overseas, including in Latin America and Europe.
Ford is already reinventing itself to compete and took a $19.5 billion charge, one of the biggest hits the company took in December, as it revamped its EV strategy due to weaker-than-expected demand after Trump ended EV credits.
The company is now focusing on hybrids and so-called extended-range electric vehicles (EREVs), which have a small internal combustion engine as a generator to charge the car’s electric battery and offer a longer driving range. Ford’s F-150 Lightning, once billed as the future of its EV business, will be retooled as the EREV.
But it hasn’t completely retreated from EVs. By 2027, Ford still plans to produce a $30,000 electric pickup truck that would be the first in a new class of low-cost EVs. The Ford F-150 Lightning, for comparison, starts at $54,780.
Farley has been one of the loudest voices calling for American automakers to take notes from the Chinese, and the company has previously viewed Chinese automakers as its biggest competitors, not GM or Toyota.
Therefore, Ford is changing the way it does business to emulate its Chinese competition as it works to become a better company, according to Farley.
“That’s a gift that China has given us,” he said, “to fear and respect their progress that we can’t call it organized.”
This story was originally featured on Fortune.com
