As EV competition with China heats up, the CEOs of Ford and General Motors (GM) are considering potential partnerships. The aim is to cut down on EV technology expenses and strengthen their competitive stance against Chinese automakers.

GM CEO Mary Barra, speaking at an investor conference hosted by Wolfe Research, highlighted the potential benefits of collaboration on non-consumer-facing technologies to enhance research and development efficiency and optimize capital utilization.

“If there’s ways that we can partner with others, especially on technologies that are not consumer-facing, and be more efficient with R&D as well as capital, we’re all in,” the GM CEO told investors.

Barra stated that GM’s brands in China would focus on premium and higher-priced segments. This strategy is an attempt to differentiate themselves as domestic Chinese automakers crowd into mainstream market segments.

Ford CEO Jim Farley echoed this sentiment, indicating a willingness to explore partnerships with other automakers to drive down EV battery costs. Both executives emphasized the need for strategic alliances amid mounting EV competition with China automakers such as BYD, which are rapidly expanding their global footprint.

BYD, in particular, is eyeing Mexico as a potential manufacturing hub to facilitate the export of EVs to the United States, according to reports from Nikkei earlier this week.

Farley cautioned that failure to effectively compete with Chinese manufacturers could jeopardize a significant portion of revenue for Western automakers in the coming years.

“If you cannot compete fair and square with the Chinese around the world then 20% to 30% of your revenue is at risk” Farley said.

Ford, currently projecting losses of $5 billion to $5.5 billion on its EV ventures for the year, has initiated a dedicated team, operating independently from its main engineering division, tasked with developing a compact, cost-effective EV to rival BYD’s Seagull model. Additionally, the company is reassessing its battery strategy in response to evolving market dynamics.

Both Ford and GM have been stepping up their efforts in the EV space. However, the increasing dominance of Chinese automakers in the industry has necessitated a rethink of their strategies. By considering partnerships, the two companies aim to leverage shared resources and expertise to develop more affordable and efficient EV technologies.

As Ford and GM consider joining forces, it could lead to a significant reshaping of the market dynamics. The outcome of this potential partnership could set the stage for future collaborations in the industry, accelerating the global shift towards cleaner, more sustainable transportation solutions.

While the specifics of the partnership are yet to be laid out, the indication of such a collaboration underlines the seriousness of American automakers to hold their own against China’s burgeoning EV market.