China’s bid to dominant technology and manufacturing scored another big win on Tuesday when Ford Motor Company’s chairman announced plans to expand its electric vehicle business in the country because “China will lead the world in E.V. development.”
The Ford Motor Company said it will build 15 battery electric or plug-in gasoline-electric hybrid models for China by 2025. The year is significant because the Chinese government has announced a “Made in China 2025” economic plan to upgrade its manufacturing sector around innovative technology
“When I think of where E.V.s are going, it’s clearly the case that China will lead the world in E.V. development,” longtime Ford executive chairman William Ford Jr. said, according to the New York Times.
Ford’s announcement is the latest sign that China’s mercantilist strategy is paying off. Far from free trade, China’s mercantilism involves using the power of the state to force global companies to develop and deploy technology in China. This improves China’s technological know-how and gives China more influence over global corporations, which increasingly rely on China for both customers and workers.
The New York Times explains:
China now appears to be behind that wheel. The government has taken a major role in electric car development and is pushing to dominate the market. Beijing hopes the push will add to its technological know-how, help address its pernicious pollution problems and curb its dependence on oil imports from politically volatile countries.
To achieve this, China is offering global automakers enticing financial carrots and threatening them with weighty regulatory sticks. State-controlled automakers have begun putting massive investments into electric car production. Meanwhile, Beijing has mandated that automakers must start selling large numbers of electric cars and plug-in hybrid cars or risk losing their right to sell gasoline-powered cars in China, now the world’s largest auto market.
“Certainly having the full weight and power of the Chinese government behind it gave them a pretty good head start,” said James Chao, a China automotive analyst at IHS Markit.
China is already the world’s dominant producer not just of electric motors but of practically all their components. Chinese companies even mine most of the valuable minerals, called rare earth metals, that go into the tiny magnets often used to make many of the motors.
Not coincidentally, a Chinese company is attempting to buy the only rare earth metals mine in the U.S., and President Donald Trump has met with American rare earth experts who have urged him to block the deal.
On Thursday, Ford announced that it would build electric vehicles in Mexico, reversing an early promise that this work would be done in Flat Rock, Michigan. The automaker says it still plans to invest in the plant in Flat Rock, but that this facility will build self-driving cars instead.
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