The End of Ford as We Know It

The Atlantic

5 hours ago

Last year, Ford CEO Jim Farley commuted in a car that wasn't made by his own company. In an effort to scope out the competition, Farley spent six months driving around in a Xiaomi SU7. The Chinese-made electric sedan is one of the world's most impressive cars: It can accelerate faster than many Porsches, has a giant touch screen that lets you turn off the lights at your house, and comes with a built-in AI assistant —all for roughly $30,000 in China. 'It's fantastic,' Farley said about the Xiaomi SU7 on a podcast last fall. 'I don't want to give it up.'
Farley has openly feared what might happen to Ford if more Americans can get behind the wheel of the Xiaomi SU7. Ford was able to import a Xiaomi from Shanghai for testing purposes, but for now, regular Americans cannot buy the SU7 or another one of the many affordable and highly advanced EVs made in China. Stiff tariffs and restrictions on Chinese technology have kept them out of the U.S. If things changed, Ford—along with all other automakers in the U.S.—would be in serious danger. Chinese EVs can be so cheap and high tech that they risk outcompeting all cars, not just electric ones. In the rest of the world, traditional automakers are already struggling as Chinese cars hit the market. In Europe, Chinese brands now have roughly as much share of the market as Mercedes-Benz. 'We are in a global competition with China,' Farley said earlier this year. 'And if we lose this, we do not have a future at Ford.'
It might sound a bit overblown. American auto executives delivered similar warnings about Japan in the '80s —and Ford's still standing today. But this week, Ford signaled in unusually clear terms for the auto industry, that it sees China as an existential threat. At a Ford factory in Louisville, Kentucky, Farley announced a series of drastic countermeasures to begin making cheaper electric cars that can compete with Xiaomi and other Chinese companies. The changes are so fundamental that Ford is retooling the assembly line itself—the very thing Henry Ford used to get the world motoring a century ago.
Ford's answer to China starts with—what else?—a pickup truck. In 2027, the Louisville plant will produce a new electric truck starting at $30,000. By today's standards, this would be one of the cheapest new EVs you can buy in America. It will cost far less than Ford's current electric truck, the F-150 Lightning Pro, which starts around $55,000. Plenty of Americans might get excited about a decent, affordable electric truck. But what's more important than the price is how it'll be made.
Ford's other EVs, like the F-150 Lightning and electric Mustang Mach-E, were heavily adapted from existing gas-powered models. Those vehicles are built by cobbling together a hodgepodge of individual components that evolved independently of one another over time, like a house that's been slowly renovated several times across decades. Retrofitting a design for a big, expensive EV battery comes with all kinds of compromises, including high costs. Ford realized early on that it was spending billions of dollars on wiring, among other things, that its competitors such as Tesla didn't need to deal with, because their electric cars are purpose-built from the ground up. No wonder, then, that Ford's electric division has racked up $2 billion in losses in just the first half of this year alone.
Ford's approach with its new truck is more like bulldozing the entire house and starting from scratch. A small team full of former Tesla and Apple engineers, working out of California, designed the process. The new truck will be made with 20 percent fewer parts than a traditional gas vehicle, Ford has said, and half as many cooling hoses. The company has 'no illusion that we have one whiz-bang idea' to keep costs down, Alan Clarke, Ford's head of advanced EV development, who spent a dozen years as a top Tesla engineer, told me. 'We've had to do hundreds of things to be able to meet this price point.'
For Ford, a single $30,000 electric truck is hardly a sufficient answer to China's inexpensive EVs. The bigger development might be the factory itself. Besides adding robots, the company's assembly line hadn't changed much since the days of Henry Ford. At the revamped Louisville plant, Ford is using what it's calling an 'assembly tree' system: three 'branches' where the vehicle's battery and major body parts converge to make the car with fewer parts. By doing so, Ford says, it'll crank out trucks up to 15 percent more quickly than the plant's current vehicles. It's one factory and one vehicle for now, Clarke said, but if successful, this approach could spread throughout Ford. 'It is certainly the future of EV-making, one way or another,' he said.
In some ways, Ford is simply catching up to what China has already been doing. 'Broadly, what Ford announced this week is already being done—just not by them,' Tu Le, the founder of Sino Auto Insights, a research firm, told me. With EVs, the battery became the most expensive part of a vehicle—so carmakers, starting with Tesla, began to rethink how body parts and other components were made and come together to cut costs. China ran with many of those ideas.
Ford's plans will be challenging to pull off. China has immense government subsidies, a huge pool of engineering talent, the world's best battery technology, and ultra-low labor costs. (A Reuters analysis of BYD, the Chinese EV giant, indicates that its workers are paid roughly $850 per month.) Meanwhile, Donald Trump's One Big Beautiful Bill Act just gutted many EV subsidies and incentives that would have helped America catch up to China.
Legacy automakers have made big promises before about a forthcoming EV revolution, only to retreat, retrench, and rethink when things got hard, or when they got a pass from environmental regulators. Last year, Ford canceled a large electric SUV, and its current EV lineup is getting old while competitors like General Motors have been rolling out new models all of the time. Ford's new truck is at least two years away, and China isn't waiting around. Chinese EVs are surging in developing countries like Nepal, Sri Lanka, Djibouti, an d Ethiopia —where more limited gasoline infrastructure and lower EV-maintenance costs make them especially appealing. That competition is bad news for a company like Ford, which builds and sells cars all over the world. Ford's new car is designed to be exported as well, though the automaker won't say where yet.
A lot is riding on a $30,000 truck. As Chinese EVs take over the world, keeping them out of the U.S. becomes a tougher and tougher sell. It's not hard to imagine a company like BYD eventually getting the go-ahead to build a factory in the U.S. 'I see a Chinese EV being built in the U.S. within Trump's current term,' Le predicted. Those cars won't be as dirt cheap as they are in China when built with American labor, but they would still be considerably more advanced.
Henry Ford's company once reinvented how cars were built. The most alarming possibility for Ford is that it could do so all over again—and somehow, even that might not be enough.