The automotive world has taken a sharp turn, and Ford is under no illusions about what’s coming. Once, Chinese car companies were mocked, often known for borrowin let’s call it "heavily influenced" designs from established brands. But those days are over. Now, China’s automotive sector is leading the charge, backed by a powerhouse of affordable labor and materials that Western manufacturers can only dream of. What was once an underdog has transformed into a titan.

After visiting China and getting a first-hand look at their latest models, Ford’s CEO Jim Farley had a stark realization. According to The Wall Street Journal, Farley confided in board member John Thornton, declaring that Chinese electric vehicle (EV) makers now pose an "existential threat." He wasn’t alone in his assessment. Ford’s CFO, John Lawler, was also there, and he didn’t mince his words either, stating, “These guys are ahead of us.”

Farley’s unease stems from a sense of déjà vu. He’s seen this kind of disruption before, pointing to the rise of Japanese automakers like Toyota and Honda, who began eating into American market share back in the 1980s. And much like how Hyundai and Kia have evolved into formidable competitors, Chinese manufacturer especially in the EV space are quickly gaining ground.

Ford’s response has been swift but carefully considered. In February, Farley announced the formation of a "skunkworks team" tasked with developing a new platform for affordable EVs, designed to challenge not just the Chinese but also Tesla. One of the first products off the assembly line will be the fully electric Puma crossover. This one is aimed squarely at Europe, a market where Ford has recently pushed back its target to go fully electric by 2030.

When it comes to electric models, Ford’s lineup has been conspicuously thin. A much-anticipated three-row electric SUV was originally slated for a 2025 release but was later delayed to 202 before being axed altogether. And in a further shakeup, the next-gen electric F-150 has been postponed yet again, with its launch now delayed to 2027, having originally been planned for 2025.

The Blue Oval’s decision-making has been somewhat puzzling of late. Just last year, Ford bid farewell to the iconic Fiesta once a staple in European cities. The demise of the Fiesta follows the Mondeo’s discontinuation in 2022, and the Focus is also set to be phased out by 2025. These nameplates have long since vanished in the U.S., with the Mondeo sold as the Fusion and the larger Taurus being retired in 2019.

Governments around the world have recognized the challenge posed by Chinese carmakers and are beginning to act. The U.S. government, for example, has introduced a steep 100% tariff on EVs manufactured in China, set to take effect on September 27. The European Union, meanwhile, is expected to follow suit with its own set of tariffs. According to Automotive News Europe, the EU plans to hit SAIC with a 36.3% duty, Geel Volvo’s parent compan with 19.3%, and BYD’s European exports with a 17% tariff. However, Bloomberg suggests these rates might be revised downwards.

It’s clear that Ford, and many other legacy automakers, are facing a new reality. The rise of Chinese EV makers has been rapid, and the traditional giants of the auto world must innovate quickl or risk being left behind.