© Reuters. Ford CEO says Chinese EV makers are ‘incredibly undervalued’, expects ‘boost’ soon
Ford Motor Co. (NYSE:NYSE:) CEO Jim Farley said Wednesday that Chinese electric vehicle companies are “incredibly undervalued” and that he expects them to become more important in the future.
What happened: Farley, who led Ford’s transition to electric vehicles, said he expects to see “big changes” in the highly competitive space.
“I would say that new electric vehicle companies will probably become simpler. And Chinese [firms] will become more important,” Farley said at Alliance Bernstein’s 38th Annual Strategic Decisions Conference.
The 60-year-old executive believes a host of electric vehicle companies are tackling markets that aren’t big enough to justify the capital they’re spending or their valuations. But he disagreed with Chinese companies.
“Chinese EV manufacturers…if you look at the $25,000 billing hardware for an EV in China, that’s probably the best in the world. And I think they’re incredibly underpriced,” said Farley.
“And they haven’t had or shown any interest in exporting other than Norway… there’s a jolt coming. And I feel like that’s going to favor a lot of new Chinese players.
Farley said he expects consolidation among older automakers, and many smaller players would struggle.
U.S.-listed Chinese electric vehicle manufacturers such as Nio Inc (NYSE: NIO), Xpeng Inc. (NYSE:NYSE:), BYD Co (OTC:BYDDY) and Li Auto Inc (:LI) were faster with their launches than their traditional rivals. BYD, backed by Warren Buffett, also sells electric vehicles for $25,000 or less.
See also: Ford emphasizes Tesla-like strategy, says online sales a ‘bigger part’ of its future
Farley said some new players would face capital constraints that would make them better.
“EV startups will be forced to solve core problems like Tesla Inc (NASDAQ:TSLA) did.”
Price action: Ford shares closed down 0.95% at $13.55 on Wednesday and are down 38% this year.
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