Ford’s Electric Gambit: How Driving Chinese Cars Could Revive an Icon

Ford CEO Jim Farley’s recent stunt—driving a Xiaomi SU7 electric car for six months—has become a symbol of Detroit’s uneasy reckoning with its new rivals: Chinese automakers. Farley’s hands-on approach to studying competitors’ strengths, he says, reveals “your weaknesses.” Nowhere is this more urgent than in the electric vehicle (EV) race, where U.S. giants like Ford face a rising tide of Chinese innovation and scale.

The Unconventional Strategy: Learning from the Rivals

Farley’s experiment began in 2023 when he ordered Ford’s management team to import five Chinese EVs, including the Xiaomi SU7 and Zeekr 001. These vehicles, flown from Shanghai to Michigan, became test subjects for Ford’s engineers. Farley’s personal test drives—detailed in speeches and podcasts—were not just curiosity. They exposed a stark truth: Chinese automakers like BYD, which controls nearly 30% of the global EV market, are outpacing Ford in cost efficiency and battery technology.

BYD’s vertically integrated model—manufacturing batteries, semiconductors, and EV platforms in-house—has given it a 30–40% cost advantage over U.S. rivals. Farley calls this “a new fitness test” for Ford. In response, he launched a “skunkworks” team in California, staffed with engineers from Tesla and Rivian, to build a low-cost EV platform priced under $30,000. The goal? To rival BYD’s $10,000 Seagull model while avoiding the profit-eroding traps of luxury EVs like the $40,000 F-150 Lightning.

The Elephant in the Garage: Trade Tensions and Tariffs

But Farley’s challenge is not just technical—it’s geopolitical. U.S.-China trade tensions loom large. Under Trump-era tariffs, Chinese EVs face 25% import duties, making them cost-prohibitive for American buyers. Yet BYD and Xiaomi are already sidestepping these barriers: BYD plans to build a U.S. factory by 2025, while Xiaomi has partnered with Chinese battery giant CATL to secure supply chains.

Meanwhile, Ford’s reliance on third-party suppliers for batteries and chips leaves it vulnerable. BYD’s control of rare earth minerals—critical for EV batteries—and its 90% global dominance in processing these materials further tilt the odds.

Ford’s stock has stagnated, while BYD’s surged—a stark reflection of their competitive trajectories.

The Numbers: Can Ford Turn the Tide?

The financials are grim. Ford’s EV division (Model e) lost $5 billion in 2024, and analysts project another $5.5 billion loss in 2025. By contrast, BYD’s net profit margin in 2023 was 12%, double that of Tesla. Ford’s EVs struggle with high battery costs: lithium prices remain volatile, and its reliance on pricier nickel-based batteries (vs. BYD’s cheaper lithium-iron-phosphate cells) adds to the deficit.

Farley’s cost-cutting moves—such as slashing stock bonuses for half of Ford’s middle managers—are a stopgap. But to turn profits, Ford needs scale. Its goal of selling 600,000 EVs annually by 2026 hinges on launching affordable models like the upcoming midsize electric pickup truck.

Leadership and the Road Ahead

Jim Farley’s gamble is as much about culture as it is about cars. He’s pushing Ford to abandon its “big company complacency,” borrowing tactics from startups. But internal critics argue this shift is too slow. A recent securities fraud investigation, alleging Ford misled investors about warranty costs, underscores lingering governance issues.

Yet Farley’s vision has merit. Analysts at Bloomberg Intelligence note that Ford’s decision to pivot toward midsize EVs—a market where BYD’s models dominate—could tap into a $50 billion addressable market by 2027. The success of its skunkworks team’s “Project T3” electric truck, expected in 2026, will be pivotal.

Conclusion: A Long Road, But a Possible Turn

Ford’s fate hinges on three factors:
1. Cost Discipline: Can it cut EV production costs to $30,000 or below?
2. Battery Innovation: Will its partnership with SK On and QuantumScape deliver breakthroughs?
3. Trade Policy: Can the U.S. curb Chinese subsidies without stifling competition?

While Ford’s EV sales have grown, BYD’s surge outpaces it—highlighting the gap to close.

For investors, Ford’s shares (F) remain a high-risk bet. At $9.39 (as of February 2025), they trade near 52-week lows, with a P/E ratio of 12.4, well below the industry average of 18.2. The dividend yield of 7.99% offers some comfort, but payout sustainability depends on turning the EV division profitable by 2026—a tall order.

Yet Jim Farley’s unorthodox strategy—driving Chinese cars to find Ford’s flaws—may yet pay off. If Ford can replicate BYD’s cost structure and scale, it could reclaim its throne in the EV era. The question isn’t whether Ford can compete—it’s whether it can do so before Chinese rivals redefine the automotive world entirely. The next few quarters will tell.