Ford Motor Company has become the latest battleground in Washington’s campaign to reduce America’s dependence on Chinese automotive technology. U.S. Transportation Secretary Sean Duffy has urged CEO Jim Farley to cut Ford’s ties with battery giant CATL and Chinese automakers Geely and BYD, arguing that the relationships raise national-security and supply-chain concerns. Ford has pushed back, saying its Michigan battery investment brings production, jobs and operational control onto American soil.
The dispute lands at an awkward moment for North America. The United States is tightening barriers around Chinese-connected vehicles and technology, while Canada has reopened a limited door to Chinese electric vehicles under a new tariff quota. That divergence is turning decisions about batteries, factories and vehicle software into questions of industrial sovereignty—and forcing Ford to balance political pressure at home against the economics of competing globally.
Washington Turns Ford’s China Strategy Into a Security Fight
The dispute escalated when U.S. Transportation Secretary Sean Duffy sent Ford CEO Jim Farley a letter expressing “profound concern” about the automaker’s relationships with CATL, Geely and BYD. Duffy urged Ford to cut ties with major Chinese companies and argued that deeper dependence on strategic competitors could make the company a less reliable partner for U.S. transportation and industrial policy in practice today. The message elevated what might once have looked like ordinary sourcing and manufacturing decisions into a national-security issue.
Ford rejected that framing. The company called Duffy’s letter a “wrongheaded attempt to capture headlines” and emphasized that it is investing in battery production inside the United States rather than simply importing finished Chinese batteries. That response captures the central tension: Washington increasingly judges supply chains by the nationality of the technology provider, while Ford argues that ownership, location, jobs and operational control matter just as much.
CATL Puts Ford’s Michigan Battery Bet Under the Microscope
CATL is at the center of the argument because Ford is using licensed lithium-iron-phosphate battery technology from the Chinese company at BlueOval Battery Park Michigan in Marshall. Ford owns the plant, controls its operations and employs the workforce. The company says the facility is on track to ship LFP batteries in 2026 and support about 1,700 American jobs, with more than 500 employees already hired by June.
Washington sees a different risk. CATL was added in 2025 to the Pentagon’s Section 1260H list of companies identified as Chinese military companies operating directly or indirectly in the United States. That designation is not the same thing as a blanket commercial ban, but it intensified scrutiny of U.S. companies using CATL technology. Ford’s bet is that licensing chemistry while keeping production in Michigan strengthens domestic capacity. Critics argue that technical dependence can remain even when the factory itself is American.
The Geely Deal Shows Why Ford Still Wants Chinese Partners
Ford’s Geely partnership gives Washington another reason to question how far the automaker should go in working with Chinese rivals. In July, Ford and Geely announced a joint venture at Ford’s Valencia, Spain, plant. Ford will own 66% and Geely 34%. The plan calls for two Geely electric SUVs to be built there, along with a jointly developed crossover for Europe, with production beginning in 2028.
For Ford, the logic is difficult to ignore. Its Valencia factory has annual capacity of about 500,000 vehicles but operated at only 26% of capacity in 2025, according to GlobalData figures cited by Reuters. Geely brings additional volume, products and cost-sharing to a plant that badly needs utilization. U.S. lawmakers, however, see the same arrangement as helping a Chinese automaker establish a larger Western manufacturing footprint. Ford sees a competitiveness solution in Europe; Washington increasingly sees strategic exposure and geopolitical risk today.
BYD Talks Add Another Layer to Ford’s Political Problem
The BYD relationship is less concrete than Ford’s CATL licensing deal or its signed Geely venture, but it has still drawn attention. In January, Reuters reported that Ford was in discussions with BYD about buying batteries for hybrid vehicles. One option under consideration was to use BYD batteries in markets outside the United States. Ford said only that it talks to many companies about many subjects, and no supply agreement was announced.
The talks fit Ford’s changing product strategy. The automaker has been scaling back its expensive all-electric push and leaning more heavily into hybrids and lower-cost electrification. Ford said in December that it would take a $19.5 billion writedown and cancel several EV programs. BYD’s battery scale and technology could offer cost advantages, but any agreement would now face far more political scrutiny. For Ford, cheap and capable technology is no longer judged only by engineering and price.
Lincoln Nautilus Shows How Difficult Decoupling Can Become
Duffy also criticized Ford for continuing to build the Lincoln Nautilus in China and not planning to shift production to the United States until 2030. The vehicle is an example of how difficult automotive decoupling can be. Ford has sought U.S. government authorization to keep importing the China-built Nautilus because software developed in the United States is installed into the vehicle in China, bringing it under connected-vehicle restrictions.
Those rules begin affecting covered software in model year 2027, creating a deadline for Ford even though the Nautilus is an established U.S. product. The issue shows how a vehicle can be American in brand, software design and customer base while still becoming entangled in China-focused security regulation because of where manufacturing or software installation occurs. Moving a model between countries takes years of factory planning, supplier changes and capital spending, making political demands for rapid separation harder to execute.
America’s Regulatory Wall Around Chinese Cars Is Getting Higher
Ford is also operating inside a broader U.S. push to harden the automotive border against Chinese technology. A Commerce Department rule finalized in January 2025 restricts connected vehicles and certain hardware or software with links to China or Russia. Restrictions on covered software and Chinese or Russian connected-vehicle manufacturers begin with model year 2027, while covered connectivity hardware restrictions phase in for model year 2030.
Congress is considering going further. On September 3, the Alliance for Automotive Innovation—whose members include Ford, GM, Toyota, Volkswagen, Hyundai, Honda and Stellantis—urged lawmakers to ban Chinese connected vehicles, hardware and software. The group also wants Congress to prevent companies such as BYD from using waivers to gain access to the U.S. market. That creates a position for Ford: it supports strong barriers against Chinese vehicles in America while using or exploring Chinese technology in other parts of its global business.
Canada Is Opening a Door Washington Wants Closed
Canada is moving in a noticeably different direction. Beginning March 1, Ottawa replaced its previous 100% surtax on Chinese electric vehicles with an annual quota allowing 49,000 EVs from China to enter at Canada’s 6.1% most-favoured-nation tariff. The second quota period took effect September 1. The overall quota is designed to rise by 6.5% annually, and government documents describe the first-year amount as less than 3% of Canada’s new-vehicle market.
That is not an open border, but it is a meaningful policy break with Washington. Prime Minister Mark Carney’s government has framed the arrangement as a way to improve affordability, restore trade with China and potentially attract joint-venture investment in Canada’s EV supply chain. Ontario Premier Doug Ford has opposed the shift, warning that cheaper Chinese EVs could undercut domestic auto production. North America is therefore no longer presenting a single strategy toward Chinese electric vehicles anymore.
China’s Export Surge Explains Washington’s Growing Urgency
The political pressure is rising partly because Chinese automakers are expanding abroad at extraordinary speed. China’s passenger-vehicle exports reached 894,000 units in August, up 77.5% from a year earlier, according to China Passenger Car Association data reported by Reuters. Exports of electric and plug-in hybrid vehicles grew even faster, rising 154.7%, while domestic vehicle sales in China fell 23.7% and extended a decline.
BYD and Geely were among companies setting export records, giving U.S. policymakers a concrete reason to worry that Chinese manufacturers will increasingly look to foreign markets for growth. BYD’s ambitions are large: brokerages that met with management said the company is targeting more than 2.5 million vehicle exports in 2027, although BYD has not confirmed that figure. For legacy automakers, China is no longer just a low-cost sourcing base. It is home to competitors with the scale to reshape global pricing.
Ford Has an Economic Reason to Keep Looking East
Ford’s dilemma today is economic as much as political. In Europe, the company has lost ground: Reuters reported that Ford sold just over 426,000 vehicles last year, down from more than one million a decade earlier. Its underused Valencia plant shows the challenge. Partnering with Geely can spread fixed costs across more vehicles, preserve industrial activity and give Ford products for an intensely competitive European market.
Ford’s EV retrenchment also shows why management is searching for cheaper technology and more flexible partnerships. The company’s $19.5 billion EV-related writedown underscored how costly the first phase of the electrification race became. Chinese firms have built expertise in batteries, plug-in hybrids and manufacturing efficiency. Washington wants U.S. automakers to reduce reliance on that ecosystem, but Ford still has to compete against it everywhere else. The strategic question is whether isolation speeds up American capability—or raises costs while rivals keep advancing.
North America Is Developing Two Different China Strategies
The consequence is a widening policy split inside North America. The United States is building legal and political barriers around Chinese vehicles, software and battery relationships, while Canada is admitting a volume of Chinese EVs and discussing Chinese-linked investment. Chinese automakers have been preparing for Canada, with companies including BYD, Chery and Geely-linked brands exploring dealerships, regulatory approvals and market entry.
This does not mean Canada has abandoned its U.S. automotive relationship, nor does it guarantee that Chinese vehicles will gain access to the American market through Canada. U.S. connected-vehicle rules are specifically designed to block covered technology regardless of geographic routing. But the strategic philosophies are diverging. Washington increasingly treats separation from Chinese auto technology as a security objective. Ottawa is trying to use limited access, competition and investment as economic tools. Ford now sits between those approaches—and its global partnerships make the collision visible.
