To compete with Chinese EV maker BYD, CEO Jim Farley concluded his existing team and processes were inadequate. He formed an independent group with new talent, separate IT systems, and a different philosophy to radically simplify vehicle design and manufacturing.

While government support helps, China's rapid adoption of Level 2+ smart driving is primarily driven by fierce domestic EV competition. In a crowded market where over half of new car sales are electric, automakers use advanced autonomous features as the most effective means to differentiate and attract consumers.

While China bans many US tech giants, it welcomed Tesla. A compelling theory suggests this was a strategic move to observe and learn Tesla's methods for mass-producing EVs at scale, thereby accelerating the development of domestic champions like BYD, mirroring its past strategy with Apple's iPhone.

Unlike the U.S. government's recent strategy of backing single "champions" like Intel, China's successful industrial policy in sectors like EVs involves funding numerous competing companies. This state-fostered domestic competition is a key driver of their rapid innovation and market dominance.

China's economic structure, which funnels state-backed capital into sectors like EVs, inherently creates overinvestment and excess capacity. This distorted cost of capital leads to hyper-competitive industries, making it difficult for even successful companies to generate predictable, growing returns for shareholders.

China's campaign against "evolution" (excessive competition) is not a broad economic stimulus. It specifically benefits sectors like EV batteries, steel, and cement where state control or rapid market consolidation can restore pricing power and profitability.

To challenge an incumbent with massive network effects, Dara Khosrowshahi suggests startups shouldn't attack head-on. Instead, they should find a niche, like a smaller city or a specific service (e.g., two-wheelers), build concentrated local liquidity there, and then replicate that model city-by-city.

Conceding that competitor BYD has a cost advantage from vertically integrated battery production, Ford's CEO revealed a counter-strategy: designing motors and gearboxes so efficient they require 30% less battery capacity to achieve the same range, thereby bypassing the core battery cost problem.

Contrary to the Western perception of a monolithic state-run system, China fosters intense competition among its provinces. Provincial leaders are incentivized to outperform each other, leading to massive, parallel innovation in industries like EVs and solar, creating a brutally efficient ecosystem.