Ford Motor Co. CEO Jim Farley is expanding his focus beyond Ford’s traditional competitors as the company envisions a future dominated by electric and digitally-connected vehicles, particularly in China.

Speaking at a Morgan Stanley conference, Farley stated, “We see the Chinese as the main competitor, not GM or Toyota.” He acknowledged the rising competition in the automotive landscape and the significant gains made by Chinese automakers. Farley emphasized China’s dominance in electric vehicle production, accounting for 70% of global output. He regarded the Chinese as a formidable force and highlighted two strategies to surpass them: establishing a distinct brand, which Ford believes it possesses by leveraging its iconic status, or surpassing them in terms of cost.

Farley, however, questioned how one could achieve cost competitiveness against a rival with a scale five times larger, citing Chinese automakers like SAIC Motor, Great Wall Motor, Geely, and BYD Auto as key competitors. BYD Auto, in particular, caught his attention due to its vertical integration, investments in lithium iron phosphate battery chemistry, and impressive scale.

Farley expressed admiration for BYD Auto, describing it as a vertically-integrated, aggressive, and unapologetic company. China’s position as the world’s largest auto exporter and its dominance in EV battery technology compelled Farley to urge the United States to make a decision, irrespective of geopolitical tensions. He emphasized the need to avoid politicizing the localization of battery technology in the US, as it could negatively impact customers.

Detroit’s automakers have been reassessing their strategies in China, given the intense competition from domestic manufacturers who lead in electrification and offer high-quality, affordable electric vehicles. China holds the dual distinction of being the world’s largest auto market and the top EV market.