Chinese firms to make cars in US? Ford CEO, Trump admin officials discuss US-China automaker JV: Report

Ford Chief Executive Officer Jim Farley has reportedly spoken to Trump administration officials on an expected framework with which Chinese automakers can manufacture cars in the US while also offering some protection to domestic car companies.

The top executive sat with Trump Cabinet members last month, according to a Bloomberg report citing people familiar with the discussions. The talks involved Chinese carmakers partnering with US companies through joint ventures where the US companies will hold the controlling stake, according to the people cited in the report.

The ventures would have a framework with which both the Chinese and US partners could share profit as well as technology through the JVs, as per the report.

The discussions are still preliminary and informal as no solid decision has been made on the matter. Such a framework would be similar to what China asked of western automakers about 30 years ago when they had to partner with Chinese carmakers in order to set up factories in that country.

The discussions come at a time when Chinese automakers are steadily moving towards to the US market, with Canada recently announcing plans to let in some Chinese carmakers into that country and BYD vehicles gain popularity across Mexico.

US Trade Representative Jamieson Greer, Transportation Secretary Sean Duffy and Environmental Protection Agency Administrator Lee Zeldin were the ones who met with Farley to discuss the matter during the Detroit Auto Show last month, Bloomberg reported.

Why is Ford discussing Chinese automakers now?

According to the Bloomberg report, Ford’s discussions did not come as a push towards realising the JVs but as a way to protect American interests in a situation where Chinese automakers do successfully make inroads to the US market.

However, it got a cold reception from the cabinet officials, who felt that the matter will not be received in a positive way in Washington.

It must also be noted that 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.

Chinese automakers face domestic opposition

Opposition has been observed in the US domestic auto market after Trump in January indicated that the would be open to allowing Chinese automakers into the country if they built plants and hired Americans.

GM Motors, for example, has told the Trump administration that it opposes a Chinese entry into the automaker market, according to the Bloomberg report citing one of the people.

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.

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.

“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.”