Ford's CEO says it must rethink its brand in China as EV sales boom

Ford Motor Co (F.N) must reshape its brand for the world's largest car market since the market for electric vehicles (EVs) in China is booming and highly competitive, according to its Chief Executive Jim Farley.

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"If we want to maintain the Ford brand in China, we will have to rethink what the brand means to us," Farley told reporters Thursday evening in Detroit, before a charity event.

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"There's no way it can be like middle of the market. It's totally over-filled."

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In addition, he was not asked and he did not give details as to what a brand reset would entail.

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There was a decline in Ford's sales in China in the first quarter, along with low sales and market shares for other established, global automakers, as sales of battery-electric and plug-in hybrid vehicles boomed, led by China's BYD (002594. SZ).

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After Farley had just returned from a trip to China, he found it noteworthy that the only premium brands that have succeeded in China have been all-electric from the beginning, focusing on technology and the "digital experience" of drivers and services. There are a number of companies in Hong Kong that are doing well, including Xpeng (9868. HK), Nio (9866. HK), and Li Auto (2015. HK).

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In fact, state-owned automakers also have created new brands for EVs in China, according to him.

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"What really makes a company different from the others is the technology and services they offer," he said.

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"The vehicles are all so beautiful. It is hard to choose which one to buy. You should go to China."

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Farley said Chinese automakers also had to contend with fierce competition in the market for two-row, SUV-style electric vehicles, a segment that Tesla (TSLA.O) competes with the Model Y in as well.

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"These Chinese brands have such overcapacity in the two-door crossover that the amount of money they are losing and burning is incomprehensible," he said of the companies that make these crossovers.

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"That's why they're putting all their effort into Europe. Europe is a premium export market. That's why all of them are going there."

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The executive, who appeared via video at the Shanghai auto show this week, was quoted as saying, BYD, which is the largest EV manufacturer in China and dominates the market for EVs and plug-in hybrids, has a singular lead in its supply chain and is able to control all of the critical elements.

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"BYD is one of the biggest companies in the world. They are in a totally different field from Tesla, and they are going places," he said.

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"The company is vertically integrated, from the ground up, all the way to the batteries. They are doing this in a way nobody else is doing on this planet."

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A new entry-level EV dubbed the Seagull was unveiled this week at the Shanghai auto show, which shocked analysts and industry executives with its combination of design, battery range, and price.

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There will be an entry-level hatchback priced at 78,000 yuan ($11,300), which is a significant discount compared to the prices offered by some of the global EV brands.