According to media reports, Ford Vice Chairman John Lawler stated that as automakers seek to counter the cost advantages of Chinese competitors, internal combustion engines (ICEs) will no longer serve as a key differentiator for automotive brands. Going forward, more ICEs will be sourced from external suppliers.
For decades, traditional automakers have regarded in-house engine development as a core selling point, showcasing their technical prowess through labels like "Turbocharged" or "Direct Injection" on the rear of their vehicles. However, Lawler noted that this era is coming to an end. "Consumers today are far less focused on the powertrain than they were 30 years ago," he said.
The transition to hybrid vehicles has also diluted many of the defining characteristics of internal combustion engines, as electric motors are now used to boost performance and reduce CO₂ emissions. "There was a time when an ICE defined the essence of a vehicle-horsepower, displacement, torque, and everything else. I believe those days are over," Lawler added.
He explained that since automakers no longer rely on ICEs for brand differentiation, companies like Ford may now benefit from partnering with others to develop the next generation of ICEs, thereby cutting costs. This trend has already begun, exemplified by Renault and Geely's joint venture Horse Powertrain, which supplies ICEs to both parent companies and Volvo, while also targeting third-party customers. Horse Powertrain CEO Matthias Giannini has called this a "win-win business model."
Currently, Ford continues to use its own ICEs for vehicles sold in Europe and the U.S., but that may change as the company faces increasing pressure from Chinese rivals.
"Chinese companies will be a global force to reckon with, and we need to compete with them worldwide," Lawler stated.
He emphasized that Chinese automakers have a cost structure that is 30% lower than "any other company in the world."
"We need to compete with Chinese brands in development speed, software capabilities, electrical architecture, and overall electrification competence," Lawler said. While Ford is largely shielded from Chinese competition in the U.S. due to high tariff barriers, the same is not true in traditional Ford strongholds like Mexico and Europe.
In response, Ford is accelerating the development of a new electric vehicle platform for small EVs to counter competition from Chinese brands, with the first model expected to launch in 2027 or 2028.
Lawler also warned that Western automakers can no longer rely on profits from the Chinese market to fund their operations. "Over the past 10 to 12 years, Western carmakers have earned over $80 billion in profits from China, but that source of profit is drying up," he said. He predicted that the decline in profitability will drive industry consolidation-including in the powertrain segment-and concluded, "The era of going it alone is over."
