Weekly News Review | 13 November 2017 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

Ford is the latest company to announce electrifying news in China

Just last week, as President Trump was making his rather sycophantic visit to China, Ford Motor Company announced that it had concluded a deal with that country’s Anhui Zotye Automobile Company to manufacture a range of electric vehicles to be sold under a new and as yet unknown brand name. The two companies are preparing to invest $756 million into the new models and will, subject to governmental approval, build a new manufacturing plant in Zhejiang province as part of a 50/50 joint venture.

China is currently the world’s largest market for battery-powered vehicles and it is embracing the new technologies at an astonishing rate. Of course, for many years the country has been known for horrendous air pollution in its major cities. Its race to adopt electric vehicles is certainly an attempt to clean up its act in this regard. Ford is expected to reach almost $10 billion of exports to China within the next three years and the company has said that, by 2025, at least 70% of its own-brand vehicles exported to China will be electric or hybrid.

Ford is following in the footsteps of Volkswagen which has also entered into a joint venture (with Anhui Jianghuai Automotive Group) to manufacture electric vehicles. Until now, a joint venture was the only way for a foreign OEM to build vehicles in China but there are signs that this may be about to change. Apparently, the Chinese government is considering allowing western and other carmakers to set up electric vehicle plants in some of its free-trade zones. Truly, the times they are a-changing.

The timing of Ford’s announcement is interesting, to say the least. The company has not always enjoyed amicable relations with President Trump, as its former Chief Executive Mark Fields will undoubtedly recall. It has been only just over a year since the President berated the carmaker for its plans to shift some of its manufacturing to Mexico. New CEO Jim Hackett has, by accident or design, chosen a politically astute time to get into Trump’s good books.

China is putting its money where its mouth is by incentivising consumers to purchase electric cars. It has recently announced that loans of up to 85% will be made available to such buyers and, next year, will introduce measures to penalise companies whose fleets do not comply with emission limits. Changed days indeed.

Sam Ogle

Sam Ogle

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