Ford has spent years trying to solve a problem facing nearly every legacy automaker: how to compete with China’s cheaper batteries, faster product cycles and expanding global brands without becoming dependent on them. That balancing act has now become a direct confrontation with Washington. On September 8, U.S. Transportation Secretary Sean Duffy urged Ford CEO Jim Farley to cut ties with major Chinese companies, singling out CATL, Geely and BYD and warning that the relationships raise national-security concerns. Ford pushed back, calling the criticism misguided and emphasizing that it owns and controls its Michigan battery operation. The clash lands as U.S. lawmakers move to harden barriers against Chinese vehicles while Canada opens a managed pathway for Chinese EV imports and Chinese brands gain ground in Mexico. Ford’s dispute is therefore bigger than one company: it exposes a widening fracture in how North America plans to compete with China.
CATL Battery Deal Sits at the Center
The sharpest dispute surrounds Ford’s BlueOval Battery Park Michigan in Marshall, where the automaker is using technology licensed from China’s CATL to manufacture lithium-iron-phosphate batteries. Ford says the plant is owned and controlled by Ford, with American employees operating the facility. By June 2026, the company said more than 500 workers had been hired, with a goal of 1,700 jobs, and battery shipments were expected to begin during 2026.
Washington sees the arrangement differently. Duffy pointed to CATL’s inclusion on the Pentagon’s Section 1260H list of Chinese military companies and argued that importing technical expertise can create strategic dependence even when production happens on U.S. soil. That distinction is crucial: Ford presents licensing as a shortcut to domestic capability, while administration officials increasingly treat access to Chinese know-how itself as a security issue. The argument is no longer simply about where a battery is assembled, but who supplies the technology.
Geely Partnership Turns Europe Into a Flashpoint
Ford’s European partnership with Geely has become the clearest example of how a commercially attractive deal can collide with Washington’s strategic priorities. In July, Ford and Geely announced a joint venture at Ford’s Valencia, Spain, plant. Ford is set to own 66% of the venture and Geely 34%, with the facility expected to build three Ford-branded multi-energy vehicles and two Geely electric models beginning in 2028.
For Ford, the logic is straightforward. The Valencia plant has potential capacity of 500,000 vehicles, and sharing production can improve utilization, spread development costs and preserve jobs in a competitive European market. U.S. critics see another outcome: a Chinese automaker gaining a stronger manufacturing foothold in Europe through an iconic American partner. The dispute illustrates Ford’s geographic problem. A partnership that may strengthen its position against low-cost rivals in Europe can simultaneously be portrayed in Washington as helping those rivals expand into Western markets.
BYD Talks Add Another Layer of Political Risk
Ford’s reported discussions with BYD have widened the controversy beyond CATL. In January, Reuters reported that Ford was in talks to buy batteries from BYD for some hybrid models, with one option involving use at factories outside the United States. Ford did not confirm a deal, saying only that it speaks with many companies. The talks were notable because BYD is both a battery producer and one of the world’s largest electric-vehicle manufacturers.
The business case is easy to understand. Ford has shifted more attention toward hybrids as it recalibrates its electric-vehicle strategy, and lower-cost battery technology can help make those vehicles more competitive. Politically, however, BYD is exactly the kind of company U.S. officials are trying to keep outside the American market. Ford may want Chinese technology to compete globally, while Washington fears that relying on Chinese suppliers could strengthen competitors the United States is simultaneously trying to contain.
Lincoln Nautilus Shows How Slowly Supply Chains Move
The Lincoln Nautilus has become a symbol of how difficult decoupling can be. Ford plans to move production of some Lincoln models from China to the United States beginning in 2030. The Nautilus, Ford’s main China-built vehicle sold in the U.S., faces a 52.5% U.S. tariff, according to Ford. CEO Jim Farley has said the move followed the administration’s policy direction and described reshoring as necessary to strengthen the domestic manufacturing base.
For the Trump administration, 2030 is too far away. Duffy criticized the timeline because it leaves more years of dependence on Chinese manufacturing. Ford has not identified where the reshored Lincoln production will occur. The episode shows why political demands can move faster than factories. Vehicle programs require tooling, suppliers, labor, certification and capacity planning years in advance. Washington wants separation, but Detroit operates on product cycles that can make even an announced retreat from China look slow.
Farley’s China Strategy Collides With Washington’s
The disagreement is striking because Farley has spent 2026 warning that Chinese automakers are competitors. In July, Reuters reported that he told Ford employees Chinese brands could enter the U.S. market within five to ten years. Ford is developing lower-cost electric vehicles intended to match the cost efficiency and engineering discipline of Chinese rivals such as BYD. Farley’s message has been that ignoring China would leave Ford dangerously less prepared.
His response has included selective cooperation. Earlier in the year, Bloomberg reported that Farley discussed a framework with Trump administration officials under which Chinese automakers could build in the United States through joint ventures controlled by American companies. The idea was preliminary and no policy was adopted. That approach reflects an industrial strategy: learn from a stronger competitor while retaining control. Duffy’s intervention suggests Washington is moving toward a principle — technological separation, not managed integration, should define the relationship.
Congress Is Building a Harder Wall Around Chinese Cars
The pressure on Ford is part of a bipartisan push. The Connected Vehicle Security Act of 2026, introduced by Democratic Senator Elissa Slotkin of Michigan and Republican Senator Bernie Moreno of Ohio, advanced unanimously from the Senate Commerce Committee in July. The measure is designed to strengthen restrictions on Chinese-linked vehicles, software and hardware, building on the Commerce Department’s connected-vehicle rule.
That rule already creates a phased barrier. Restrictions on Chinese or Russian software and sales by connected-vehicle manufacturers linked to those countries begin with model year 2027, while connectivity hardware restrictions begin with model year 2030. Automakers, including Ford, have urged Congress to turn the policy into a ban and prevent companies such as BYD from receiving waivers. Ford’s position is complicated: it supports tougher barriers against Chinese vehicles entering America while seeking selected Chinese technology and partnerships elsewhere. Washington is increasingly skeptical that those strategies can remain separated.
Canada Is Moving in the Opposite Direction
North America is no longer pursuing a common approach to Chinese vehicles. Canada began administering a quota on March 1, 2026 that allows 49,000 China-origin electric vehicles annually to enter at the 6.1% most-favoured-nation tariff. Ottawa’s arrangement replaced the previous 100% surtax for vehicles admitted under the quota and was presented as a way to expand affordable EV access while encouraging Chinese investment in Canada’s auto and battery supply chain.
The contrast with Washington is sharp. U.S. policymakers are trying to keep Chinese-connected vehicles, software and key hardware out, while Canada is creating managed channel for Chinese EVs. The Canadian government has said the quota represents less than 3% of its new-vehicle market, but American lawmakers have already cited Canada’s opening as a security concern. For automakers operating across the border, differing rules could complicate sourcing, model planning and compliance in what was once treated as an integrated continental market.
Mexico Shows Why Washington Is Nervous
Mexico adds another layer to the split. Chinese-brand vehicle sales there rose nearly 30% in the first half of 2026 to 137,525 units, according to Mexican dealer-association data reported by Reuters. Their market share climbed to 17% from 14% a year earlier, even after Mexico imposed 50% tariffs on vehicles from China and other countries without free-trade agreements.
Those numbers help explain why U.S. officials view North American borders as part of the China-auto debate. Chinese automakers do not need access to U.S. dealerships to become regional players; they can build scale, supplier relationships and brand awareness in Mexico and Canada first. Washington’s concern is that the United States could become an isolated high-wall market while Chinese companies deepen their presence on both sides of it. Ford’s cross-border supply chains make that tension more than theoretical. Different national rules can quickly turn sourcing decisions into trade, security and political disputes.
China’s Battery Dominance Makes Decoupling Expensive
The challenge for Washington is the scale of China’s manufacturing lead. The International Energy Agency says China accounted for 70% of electric-car production in 2025 and more than 80% of battery-cell production. Its share was higher in key battery materials: about 85% of cathode active material and more than 90% of anode active material for electric-car batteries. Chinese battery producers increased their share of global deployment to almost 75%.
Those figures explain why Ford keeps returning to Chinese partners as political risk rises. Building a factory in Michigan can relocate jobs and production, but reproducing process expertise, supplier networks, equipment, material capacity and skilled manufacturing know-how is far more difficult. LFP batteries are exposed because the IEA says supply chains outside China remain dependent on Chinese manufacturing. Cutting ties may reduce strategic vulnerability over time, but it can raise costs, slow launches and make Western automakers less competitive globally today.
Ford’s Domestic Strength Does Not End the Argument
Ford’s defense rests on an American manufacturing footprint. The company says it assembled more than 2 million vehicles in the United States in 2025 and employed 56,300 hourly U.S. manufacturing workers, the most of any automaker. It says 83% of the vehicles it sold were assembled domestically. In August, Ford announced that Lincoln would phase out China-built imports for the U.S. beginning in 2030, expected to support thousands of direct and indirect jobs.
Yet the administration’s complaint goes beyond assembly statistics. The question is whether an American automaker can remain technologically and commercially connected to Chinese firms while still being treated as a trusted industrial partner by Washington. Ford argues that licensing and selective partnerships can strengthen Ford and bring manufacturing home. Duffy’s letter signals that the administration may demand a cleaner break. That conflict could shape not only Ford’s strategy, but the future architecture of North America’s auto industry.
