There's only one way to beat China

This week, in a New York Times feature, Ford CEO Jim Farley is again quoted discussing the global threat China poses to his sales. “I have 10,000 dealers around the world. Only 2,800 are in the U.S.,” Mr. Farley said. “So you do the math.”

The article is about Ford’s skunkworks truck project, and is an interesting read. The discussion of gigacasting components to lower product costs raises concerns about repairability, but it also reveals the company's stance on EVs and electrification.

(This article isn’t exclusively about Ford, even though I use Farley in my opening example and talk about its skunk works projects. Most of what I talk about applies to most automakers.)

But a small skunkworks project isn’t going to beat the Chinese. Also, following the EPA’s 2026 guidance on tailpipe emissions and efficiency won’t outperform the Chinese. Automakers, all of them and not just Ford, are going to have to do something they’re not accustomed to doing if they want to beat the Chinese.

Chinese automakers have extensive support to build their products and pursue future innovations. The government subsidizes their activities at a level our government would never match, even under the most liberal administrations. It just wouldn’t happen.

Our current government is the opposite of liberal and actively destroys our efforts to advance green energy, reduce pollution, and mitigate the effects of global climate change. There’s no way the same government will spend any money helping an automaker that doesn’t want to return to leaded gasoline and carburetors.

Additionally, the stock market is weird right now. Maybe it’s always been strange, but when you’re beholden to shareholders, you have to make the money printer go brrrr, and you have to keep the stonks going up. Since CEOs often receive bonuses tied to share price, the incentive to build high-margin vehicles as cheaply as possible is stronger than the incentive to make cars more affordable, innovate, or compete globally.

With a pullback on regulations and the drive away from electrification to something that is more “customer’s choice,” there just isn’t the incentive here to be all that innovative.

What needs to happen is that the CEOs of the global automakers need to sit down and do some soul-searching. They need to speak with their boards and conduct risk assessments. They need to get all of those fancy-pants MBAs together and decide if China is a future threat to their business.

You see, electrification is inevitable. Electric vehicles are as unavoidable as death. Every automotive executive I’ve talked with over the past four years understands that. So if that’s the case, and if the Chinese are going to give everything they have to winning that battle (and the overall struggle for renewable energy dominance), you have to decide if that’s a threat to your business. You have to determine whether that threat is greater than any short-term risk in investing in something that you acknowledge is inevitable.

If the Chinese threat is as serious as a heart attack, then it most certainly is a greater risk than missing a quarter’s revenue target or investing in technology to make cars greener and more affordable. If the Chinese threat is so severe, automakers will have to do something they don’t want to do.

They’re going to have to suit up and get in the game.

To avoid Malaise 2.0, automakers will need to invest in new technology. They’ll have to ignore rollbacks and reduced regulation. Typically, regulation and incentives drive private-sector progress, but the government isn’t going to help here.

Affordable EVs are achievable (look at the Equinox, Leaf, and Bolt), but larger-scale efforts will be needed. They can’t be some side project for funsies. The fact that many automakers spent hundreds of millions of dollars on facilities and technology that they now aren’t going to use at all is madness to me. But it also indicates that the funds are available to innovate if they want to.

$100,000 EVs aren’t the answer, either. You need to build affordable cars that people can buy. You need to design marketing campaigns hailing the advantages of EVs. You need to run campaigns to counter the anti-EV narratives. You’re going to have to get dealerships on board, and you’re going to have to find a way to reward them for knowing about EVs, educating customers, and selling them.

You’re going to have to do more than drive a Chinese EV and talk about how they’re beating us. If you’re worried about them beating us — and I think you should be — you’re going to have to get aggressive about doing something about it.

I know the government should play a stronger role in this. The space race wasn’t won solely by the private sector, but I know that many automotive executives believe that private industry can and should be able to do things that they think the government shouldn’t.

You’re going to have to go it alone. Maybe your competition doesn’t go with you. Maybe they do. But you’re going to have to take more action.

On the other hand, if you’re not willing to make some of these changes, you probably don’t actually consider China that much of a threat. And maybe they aren’t. But if they aren’t, perhaps you should stop saying they are.

I like the space race metaphor here. We can either win the race to green, renewable energy, and electric vehicles. Or we can lose, and remain the petrol-addicted, planet-burning, smog-producing empire we have always been.