Just a few years ago, hardly any industry experts would have predicted that Chinese car manufacturers would be regularly cranking out some of the most compelling and technologically advanced EVs on the market. And yet, that’s precisely what is happening. This reality hit Ford CEO Jim Farley and CFO John Lawler like a ton of bricks last year, leaving them in shock at just how fast China has caught up—and, in many cases, overtaken Western automakers.

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Ford has had a strong presence in China for many years and in early 2023, Farley and Lawler flew to the country to experience an electric SUV from Changan Automobile, a local firm with which the Blue Oval has a joint venture. A recent story from The Wall Street Journal says that Farley jumped behind the wheel, with Lawler in the passenger seat. They were both very impressed with what they discovered.

Read: Ford Says It Will Launch A $30k EV By 2027, And Make A Profit On It

“Jim, this is nothing like before,” Lawler reportedly told Ford’s CEO. “These guys are ahead of us.” The publication has made no mention of the specific Changan model that the duo drove, but it was apparently impressive enough that Farley told Ford board member and ex-Goldman Sachs executive John Thornton that “this is an existential threat,” the WSJ report says.

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Tariffs on Chinese-made EVs should help to somewhat shield Ford from the wave of electric cars emerging from the East. However, despite knowing about just how good cars in China have become, Ford is still taking its expansion into the electric car industry cautiously.

At the start of July, Farley said the brand would be ready to launch a $30,000 EV by the start of 2027. This smaller vehicle has been designed to compete with compelling alternatives out of China and will be profitable for the brand. While work on this new model is ongoing, the Blue Oval has scaled back some of its EV ambitions.

In the third week of July, it said plans to go all-electric in Europe by 2030 were no longer feasible, and it will continue to sell pure ICE, hybrids, and BEVs in the market. Come August, Ford axed plans for a three-row electric SUV that was supposed to enter production in 2025. A large electric truck has also been delayed from 2025 to 2027.

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