Feb 15 (Reuters) - Ford Chief Executive Jim Farley said on Thursday the automaker is reworking its electric vehicle strategy to compete with Chinese rivals, and opened the door to collaboration with other automakers to cut EV battery costs.

BYD and other low-cost Chinese electric vehicle makers are now one of the biggest challenges to Ford's global business, Farley said at a conference hosted by Wolfe Research.

"If you cannot compete fair and square with the Chinese around the world then 20% to 30% of your revenue is at risk" over the next several years, Farley said.

Ford has launched a dedicated "skunk works" team - separated from the company's main engineering operations - to design a small, low-cost EV that could compete with BYD's Seagull model, the CEO said. Ford is also evaluating its battery strategy.

"We can start having a competitive battery situation. We can go to common cylindrical cells that could add a lot of leverage to our purchasing capability. Maybe we should do (this) with another OEM (automaker)," Farley said.

Ford is among several legacy automakers that have begun reining in spending on EVs and returning more cash to shareholders, after several years of touting multi-billion dollar EV development efforts.

Renault and Stellantis on Thursday said they would return cash to investors via share buybacks and higher dividends.

Earlier this month, Ford said it would return about $720 million to shareholders in the form of an 18 cents a share special dividend. (Editing by Frances Kerry)