Ford broadens China expansion with electric-car tie-up
Ford Motor Co.’s growing footprint in China is evidence that the company sees opportunity in the world’s largest car market.
The Dearborn-based automaker on Wednesday announced plans to form a $756 million Chinese joint venture to sell all-electric vehicles there. It’s the latest move Ford has announced for that market, and further proof that the Blue Oval and other automakers see the country as a lucrative expansion despite heavy regulatory requirements.
The partnership with Chinese electric-vehicle giant Anhui Zotye Automobile Co. will be known as Zotye Ford Automobile Co. Ltd. It will build a new research and development center in China, and establish a sales network. The company plans to build a new manufacturing facility in the Zhejiang Province. The venture is owned equally by both companies.
Ford has said China is its second-largest export market, and Peter Fleet, Ford’s president of Asia Pacific, was scheduled to tell President Donald Trump as much during the president’s visit to China on Thursday. Fleet was to join other business leaders there to brief the president on Chinese operations.
The partnership comes about five months after Ford announced the next-generation Ford Focus would be made in China to be exported to North America. The automaker recently began exporting the 2017 F-150 Raptor to China, and expects exports there to increase 30,000 units by 2019.
The company in 2016 sold a record 1.27 million vehicles in China, and plans to export nearly $10 billion in product from North America — most of which will come from the U.S. — to China over the next three years.
“It’s good to see Ford getting into this business,” said Dave Sullivan, analyst with AutoPacific. “Under (former CEO) Alan Mulally, they sold off many of their businesses such as their luxury brands. This signals a major change in direction. With China’s market continuing to boom, this is a good time to get in before the gold rush to expand Ford’s footprint there.”
The Zotye joint venture will be Ford’s third in China. Ford already has joint ventures in the country with Chongqing Changan Automobile Co. and Jiangling Motors Corp.
The move into the electric-car business in China could be a workhorse given stricter emission and fuel-economy standards that country plans to implement next year. Ford has said it plans for 70 percent of all its vehicles sold in China to have electric powertrain options by 2025. The automaker has said it expects Asia Pacific profits to improve from the $627 million it made there in 2016.
To sell vehicles in China, automakers are required to partner with a Chinese company. The Chinese government is discussing a plan to allow foreign carmakers to set up wholly owned electric-vehicle businesses in its free trade zones, however.
Ford expects the market for new-energy vehicles in China to grow to 6 million vehicles per year by 2025, of which about 4 million will be all-electric. Deliveries of such vehicles rose 53 percent to 507,000 units in 2016, according to the China Association of Automobile Manufacturers.
Zotye was one of the first electric vehicle-makers in China. The company sold more than 22,500 all-electric vehicles year-to-date through October, representing a growth of over 14 percent year-over-year.
Ford and Zotye will also work on mobility services in China. That would expand on similar efforts in the U.S., where Ford is attempting to launch a new segment of the company devoted to moving goods and people outside of the traditional consumer-owned passenger vehicle.
In addition to amplifying Ford’s effort to establish a greater presence in China, the new joint venture amplifies Ford’s electrification goals. The company has already invested $4.5 billion to make electric vehicles, and plans to bring 13 new electric vehicles to market in the next five years.
That includes an all-electric small SUV to be sold in Asia, North America and Europe. That unnamed vehicle is slated to be built at Ford’s Flat Rock Assembly Plant. Ford’s Changan Ford joint venture announced it would introduce the Mondeo Energi plug-in hybrid sedan in early 2018.
Bloomberg news contributed