When Ford CEO Jim Farley wanted to test out the competition, he looked not at Tesla but at China. Now he’s looking for ways the legacy carmaker can mimic 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 known mostly for its smart phones. By the time the six months were up, Farley said “I don’t want to give it up.”
In an interview on the Rapid Response podcast on Friday, Farley explained why he chose to drive a Xiaomi SU7 rather than a vehicle from an American company like a Tesla.
“Nothing against Tesla. They’ve been doing great, but you know, they really don’t have an updated vehicle,” Farley told host Bob Safian.
Tesla has pushed some redesigns and updates for its vehicles to meet growing Chinese competition. The company’s 2026 version of the Model Y included a futuristic looking exterior and an upgraded interior that includes a redesigned dashboard. The 2023 version of Tesla’s Model 3 also got an overhaul that added ventilated front seats and ambient lighting. Some critics have argued these updates are incremental compared to improvements made by Chinese car companies.
Tesla did not immediately respond to Fortune’s request for comment.
If Ford wants to be the best in the world, argued Farley, the company needs to focus on its competition abroad, not only Xiaomi but also the Chinese EV leader BYD, which the Ford CEO called “the best in the business” when it comes to cost, supply chain, manufacturing, and intellectual property.
Chinese EVs are not sold in the U.S. because of an escalated 100% tariff imposed by President Joe Biden and kept in place by President Donald Trump. Still Chinese vehicles, especially BYD’s lineup of low-cost EVs, have started to catch on in other markets. Despite a tariff of up to 38.1% imposed on Chinese vehicles by the EU in 2024, BYD increased its European sales by nearly three times at the start of the year, with new BYD registrations skyrocketing to 18,242 in January, up from 6,884 in the same month a year prior, 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 scaled up its EV production by focusing on selling in China, which quickly became the world’s biggest EV market in part because the government offered subsidies to both consumers buying EVs as well as the companies making them. It also built up charging infrastructure in the country and set aggressive fuel economy standards for gas-powered vehicles.
In 2022, BYD became the first car manufacturer in the world to stop producing cars powered exclusively by gas, focusing instead on EVs and hybrids. By 2025, the company had surpassed Tesla in terms of revenue and had dethroned Elon Musk’s company as the world’s biggest 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 Americans are great at: “Use innovation to compete against the best in the world.”
Chinese EVs are notably cheap but also advanced. Critics have argued that the $231 billion or so in subsidies the Chinese government has granted its domestic EV industry has allowed players like BYD to sell their cars below cost to outcompete other industry players.
Still, even 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 at $30,000, not $50,000.
“If we’re smart, we’ll take the cost competitiveness of BYD and then we’ll compete with that platform in parts of the market where we know our customers really well,” 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 just under $37,000. Both entry-level vehicles are much more expensive than BYD’s compact EV hatchback the BYD Seagull, which goes for $9,500 but only in China. It is sold at a higher price point abroad, including in Latin American and Europe.
Ford is already reinventing itself to compete and took a $19.5 billion charge, one of the biggest hits ever taken by a company, in December as it revamped its EV strategy due in part to weaker-than-expected demand after Trump ended the EV credit.
The company is now focusing on hybrids and so-called extended-range electric vehicles (EREV), which have a small internal combustion engine primarily as a generator to charge the car’s electric battery and offer longer driving range. Ford’s F-150 Lightning, once billed as the future of its EV business, will be retooled as an EREV.
But it’s not backing away from EVs entirely. By 2027, Ford is still planning to produce a $30,000 electric pickup truck that will 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 among the loudest voices calling for U.S. automakers to take notes from the Chinese, and has previously said the company sees Chinese automakers, not GM or Toyota, as its biggest competitors.
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 is the gift that China gave us,” he said, “to be fearful and respectful enough of their progress that we could not organically just phone it in.”
This story was originally featured on Fortune.com
This post was originally published here
