Ford CEO, Trump Officials Discussed China-US Carmaking JVs

Ford Motor Co.’s top executive spoke to senior Trump administration officials about a potential framework in which Chinese automakers could build cars in America while offering some protection for domestic companies, according to people familiar with the discussions.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — Ford Motor Co.’s top executive spoke to senior Trump administration officials about a potential framework in which Chinese automakers could build cars in America while offering some protection for domestic companies, according to people familiar with the discussions.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The idea discussed by Ford Chief Executive Officer Jim Farley and Trump cabinet members last month involved Chinese carmakers partnering with US companies through joint ventures in which the American company holds a controlling stake, said the people, who asked not to be identified because the discussions were private. The ventures would be structured so that both the Chinese and US partners would share profits and technology in the JV, the people said.No decision has been made on the matter and the discussion was characterized by the people as informal and preliminary. Such a setup would be a mirror image of what China required of western automakers three decades ago when they had to partner with Chinese carmakers in order to set up factories in that country.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.The discussions, which haven’t been previously reported, come as China’s automakers move ever closer to America’s doorstep. Canada’s government recently announced a plan to allow some Chinese EVs into the country, while BYD Co. vehicles are becoming commonplace on streets in Mexico.Farley discussed the matter with US Trade Representative Jamieson Greer, Transportation Secretary Sean Duffy and Environmental Protection Agency Administrator Lee Zeldin when they visited the Detroit Auto Show last month, the people said. The discussion took place days after President Donald Trump indicated that he’d be open to allowing Chinese automakers into the US if they built plants and hired Americans, saying “let China come in” during a Jan. 13 speech at the Detroit Economic Club.Ford said Farley gave the cabinet secretaries a tour of the Ford stand at the auto show and that they “discussed a variety of industry topics,” but declined to reveal specifics.Ford’s talks generally about China with the Trump administration have consistently emphasized “the need to protect our home market from a flood of subsidized vehicles built in China,” Mark Truby, Ford’s chief communications officer, said in a statement.“We have also been clear about the privacy and national security issues associated with Chinese vehicles in the US and we will continue to reiterate this in our discussions with policymakers,” Truby said. While Farley was not pushing the JV option, it was discussed as a way to protect American interests in a scenario in which Chinese companies make inroads in the US, the people said. Still, it got a cold reception from the Trump officials, who felt it would face opposition in Washington, the people said. However, an investment deal like that is seen by some in the administration as a possible outcome of Trump’s planned meeting in Beijing with Chinese President Xi Jinping in April.Representatives for the EPA, USTR and DOT had no immediate comment.Ford’s shares rose less than 1% Friday in New York. The stock is up 7.6% this year, ahead of the S&P 500 Index, which is little changed.Watershed Moment Chinese competitors gaining a foothold in America would be a watershed moment with massive implications for domestic automakers, their supply chains and consumers.China’s carmakers have rapidly gained market share in Europe, Mexico and South America with lower-cost models that feature advanced electric-vehicle batteries and infotainment systems. They also receive significant government subsidies and can offer technology at low prices in part because they tolerate slim margins and losses, giving them a competitive edge that western rivals struggle to match.Trump’s January comments surprised Detroit’s automakers, who’d felt formidable trade barriers erected by the US would keep Chinese automakers out of the country long enough to allow them to catch up on China’s lead in electric vehicles, batteries and other automotive technology.General Motors Co. has told the Trump administration that the company opposes a Chinese entry to the market, one of the people said. GM has argued that existing companies would lose market share and a flow of parts from China could have a devastating effect on North American suppliers.GM’s opposition echoes a wider view among Trump’s cabinet that the US should keep China’s automakers out of the US market. While the president has said that he may welcome Chinese companies into the US if they build cars here, many on his team oppose such a move due to economic and national security concerns.Farley too has warned that China’s low-cost, high-tech cars represent an “existential threat.”“Their cost, their quality of their vehicles is far superior to what I see in the west,” Farley said last summer at the Aspen Ideas Festival, where he revealed he had visited China a half dozen times in the last year. “We are in a global competition with China and it’s not just EVs. And if we lose this, we do not have a future at Ford.”At the same time, Ford has been open to working with Chinese companies. Farley has sought to partner with Chinese carmakers and battery makers to learn from them, while at the same time developing its own low-cost electric vehicle coming in 2027 that aims to be competitive with China’s BYD, the world’s top seller of EVs.Just in the last few weeks, Ford held talks with BYD about expanding a battery-supply partnership and explored a manufacturing partnership in Europe with China’s Geely. In December, Ford expanded a licensing agreement with Chinese battery giant Contemporary Amperex Technology Co., or CATL, from building cells for electric vehicles to also manufacturing stationary power sources for utilities and data centers. A recent report by the Financial Times that Ford was weighing a JV with Xiaomi to build vehicles in America was flatly denied by both companies.—With assistance from Zahra Hirji, Allyson Versprille and Courtney Subramanian.(Updates with additional context, share trading.)Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.