Ford might look East for innovation. That’s a bad idea.

Subscribe to enjoy similar stories. Ford Motor might be considering helping Chinese auto makers establish a beachhead in the lucrative American car market. It sounds like a bad idea.

Investors don’t have much to worry about—yet. Still, understanding what’s likely to happen can help them avoid any portfolio mistakes. Over the weekend, Bloomberg reported that Ford and the White House discussed Chinese automotive partnerships.

Ideas were pretty vague and included joint ventures majority-owned by Americans producing, presumably, Chinese-designed cars domestically. The question that Barclays analyst Dan Levy pondered on Tuesday was, of course, why? Currently, Chinese auto makers are pressuring Europe with imports. They haven’t entered the U.S.

partly because of stiff import tariffs. Why invite new competition? There isn’t a great reason, but auto executives often talk about partnerships. They are littered throughout history.

Ford and Volkswagen, for instance, had an agreement to share platforms. That kind of deal can cut the cost of developing new, hopefully high-volume cars, making it a win-win for both firms. China’s car industry was partly built on partnerships.

General Motors and SAIC formed a venture before the turn of the century. By 2014, it was producing some $2 billion in net income for GM. Things didn’t stay that good.

Profit declines culminated in a 2024 $4.4 billion loss, which included asset impairments. The Chinese market simply got more competitive, and local buyers pivoted toward local brands, often with electrified platforms. Plug-in hybrids and all-electric cars are expected to account for about 60% of new vehicle sales in China this year.