Ford CEO Issues Dire Warning: China Can “Put Us All Out Of Business” With Existing Capacity

Ford CEO Jim Farley has escalated his warnings about Chinese automotive dominance to existential levels, declaring that China’s manufacturing capacity could single-handedly destroy the entire North American auto industry. In a stark CBS Sunday Morning interview that aired October 26, Farley compared the Chinese threat to 1980s Japan “on steroids”—his most alarming public assessment yet of the competitive landscape facing American automakers.

“They have enough capacity in China with existing factories to serve the entire North American market, put us all out of business,” Farley told CBS correspondent Kris Van Cleave. “Japan never had that, so this is a completely different level of risk for our industry.”

The warning comes as Ford bleeds cash on electric vehicles—losing $1.4 billion in the third quarter alone—while simultaneously absorbing $2 billion in costs from Trump administration tariffs, which Farley says represent roughly 20 percent of Ford’s global profit.

The CEO Who Drives The Competition

Farley’s credibility on Chinese EVs stems from firsthand experience that would be unthinkable for most American auto executives: he’s been daily-driving a Xiaomi SU7 for six months after Ford shipped one from Shanghai to Chicago.

“I drive a Xiaomi,” Farley admitted to CBS. “High quality, great digital experience.” When asked if Chinese cars are something Americans would want to buy, his answer was unequivocal: “Yes.”

“To beat them, you have to know them,” Farley explained, defending his decision to use a competitor’s vehicle.

This isn’t just CEO marketing speak. The Xiaomi SU7 that Farley praised offers seamless smartphone integration, AI companions, and build quality that matches or exceeds Western competitors—all at prices that undercut American EVs by thousands of dollars. Ford’s own Mustang Mach-E sells in China starting around $30,000, demonstrating the price-competitive landscape Chinese automakers have created in their home market.

1980s Redux, But Worse

Farley’s comparison to Japan’s automotive rise in the 1980s carries weight—he lived through it. His grandfather was Ford’s 389th employee, one of the first to help build the Model T, and Farley himself worked at Toyota during the period when Japanese automakers were crushing Detroit.

“I think it’s exactly the same thing, but it’s on steroids,” Farley said, reflecting on similarities between then and now.

But there’s a critical difference. Japan’s automakers built factories in America, employed American workers, and integrated into the U.S. supply chain. China’s strategy appears fundamentally different: maintain massive domestic manufacturing capacity while leveraging economies of scale that American companies simply cannot match.

“Japan never had that,” Farley emphasized, referring to China’s ability to serve entire continental markets from existing domestic factories.

The Tariff Shield—And Its Cost

The Biden administration’s 100% tariff on Chinese EVs—announced in May 2024 and currently in effect—has created a temporary moat around the American market. The tariff effectively bans Chinese electric vehicles from U.S. roads, giving domestic automakers breathing room to develop competitive products.

But that protection comes at a steep price for Ford. The company imports numerous components that are now subject to Trump-era tariffs, some as high as 70 percent.

“There are parts, fasteners, wiring looms from other countries,” Farley told CBS. “And we pay our tariffs, sometimes up to 70 percent on those parts.”

That tariff bill? “That’s giving us a $2 billion bill. About 20 percent of our global profit is going away in tariffs,” Farley revealed.

The cruel irony is impossible to miss: tariffs designed to protect American automakers are simultaneously crushing their profitability, while the Chinese competitors they’re meant to block continue building superior products at lower costs behind the tariff wall.

Ford’s Mounting Challenges

Farley’s dire warnings arrive at a particularly vulnerable moment for Ford. As EVXL reported last week, the automaker took a $2 billion hit from a supplier fire that disrupted aluminum supplies for its most profitable gas-powered F-150 and Super Duty trucks. The company’s Model E electric vehicle division lost $1.4 billion in Q3 2025 alone—with no clear path to profitability until at least 2026.

When the supplier crisis hit, Ford prioritized conventional truck production over the all-electric F-150 Lightning, revealing where the company’s real profit drivers remain. While competitors like Tesla turn healthy margins on EVs, Ford continues hemorrhaging money on every electric vehicle it sells.

The company’s struggles extend beyond manufacturing. Ford’s $3 billion battery plant in Michigan—using technology licensed from Chinese battery giant CATL—faced political attacks and regulatory uncertainty before ultimately securing tax credits. The plant’s survival shows how deeply intertwined American EV manufacturing has become with Chinese technology and expertise.

China’s Dominance By The Numbers

Farley’s warnings about Chinese manufacturing capacity aren’t hyperbole. China produces 70 percent of the world’s electric vehicles, a dominance built over a decade of strategic government investment in battery technology, EV development, and supply chain control.

Chinese EV prices have reached near-parity with gasoline cars in their domestic market. A 2025 International Energy Agency report found that 39 percent of Chinese EV models were priced under $25,000—comparable to the 45 percent of gasoline models in that range. Budget-conscious buyers worldwide are taking notice.

The technological gap is equally concerning. During his June 2025 appearance at the Aspen Ideas Festival, Farley called China’s EV progress “the most humbling thing I have ever seen,” specifically citing superior in-vehicle technology. “Huawei and Xiaomi are in every car,” he explained.

“You get in, you don’t have to pair your phone. Automatically, your whole digital life is mirrored in the car.”

The Global Competitive Landscape

While the 100% U.S. tariff keeps Chinese EVs out of America, they’re flooding other markets. Chinese automakers now produce 8 percent of European Union EVs, with brands like BYD directly challenging legacy manufacturers like Volkswagen, Mercedes, and BMW on their home turf.

In Mexico, Chinese vehicles accounted for nearly one-fifth of new car sales in 2024, surpassing shipments from the U.S., Brazil, India, and Japan combined. Budget-conscious Mexican buyers embrace affordable Chinese options like the $17,000 Chevy Aveo (made by GM’s Chinese joint venture) that offers 48 miles per gallon.

European automakers face their own crisis. German car giants have watched their China market share collapse as local EV makers like BYD offer comparable vehicles at significantly lower prices. Volkswagen’s China chief warned that Chinese competitors are leaping ahead, prompting desperate partnership deals with Chinese firms for autonomous driving, batteries, and digital services.

EVXL’s Take

This is Ford’s CEO publicly admitting what the entire industry knows privately: American automakers are losing a race they may have already lost.

Let’s connect the dots EVXL has been tracking for over a year. Back in September 2024, Farley’s China trip left him “shaken” and sparked Ford’s dramatic EV strategy shift. By October 2024, he was publicly praising the Xiaomi SU7 he’d shipped to Chicago, saying he didn’t want to give it up. In June 2025, he called Chinese EV technology “the most humbling thing I’ve ever seen.”

Now, just four months later, he’s escalated to existential threat language: “put us all out of business.”

That progression tells a story. Farley isn’t crying wolf—he’s watching the wolf circle closer while his own company loses $1.4 billion per quarter on EVs and burns $2 billion on tariffs that were supposed to protect American manufacturing. The recent supplier fire that cost Ford another $2 billion revealed the company’s priorities: when aluminum ran short, gas-powered F-150s got priority over electric Lightnings because that’s where the money is.

The uncomfortable truth Farley is dancing around? Tariffs are a band-aid on a bullet wound. Yes, the 100% levy keeps Chinese EVs out of American showrooms today. But it also keeps American consumers from accessing affordable, high-quality electric vehicles while domestic automakers struggle to match Chinese innovation and pricing. Ford’s battery plant drama shows how dependent U.S. EV manufacturing remains on Chinese technology—even the “American-made” batteries use CATL’s licensed technology.

Meanwhile, Chinese automakers aren’t standing still. They’re establishing manufacturing in Mexique, dominating Europe, and capturing market share across Latin America, Africa, and Southeast Asia. Every year American automakers hide behind tariff walls is another year Chinese competitors refine their products, expand their manufacturing capacity, and lock up global supply chains.

Farley’s driving that Xiaomi because he knows the score. When tariff protection inevitably erodes—through trade negotiations, Mexican manufacturing workarounds, or simple political change—American automakers will face competitors who spent the last decade building better, cheaper EVs while Detroit was still trying to figure out how to make electric vehicles profitable.

The real question isn’t whether Chinese automakers can put Ford out of business. It’s whether American companies can innovate fast enough to remain relevant in a global market that China increasingly dominates.

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