Ford to Make New Brand of Electric Cars Only for Chinese Market

Ford will be joining hands with Chinese car manufacturer Zotye to make a new range of electric vehicles exclusively for the Chinese market. The two companies will create a joint venture company named Zotye Ford Automobile Company which will specialize in what they say will be “a range of stylish and affordable electric vehicles for consumers in China.” Both companies will have a 50 per cent stake in the joint venture, with each partner investing about USD 756 million. The name of the brand has not been decided yet and it will have its very own R&D center to work on models that will cater to the needs of the regional market. The vehicles will be built at a new factory in Zhejiang Province.

In view of its size, many car manufacturers are eyeing the Chinese car market, especially in the case of EVs as the government is promoting the use of EVs to reduce pollution levels. This segment offers plenty of scope for growth as though only 1.5 per cent of vehicle sales are of electric vehicles, this accounted for 40 per cent of EV sales at the global level in 2016. With the government planning to phasing out internal combustion engine powered cars in the next few years, this market is set to grow exponentially.

This does, however mean that foreign companies have to make certain companies. In view of the significantly high 25 per cent duty on imported vehicles, they have to ensure that the vehicles they sell in the Chinese market are built locally so that they are priced attractively for local consumers.

China also has trade protection rules in place that make it difficult for foreign companies to set up fully owned subsidiaries. They have to partner with Chinese companies in joint ventures and preferably sell their products under a China-only brand. These are the factors that prompted Ford to set up a joint venture and a brand solely for selling electric vehicles in the Chinese market.

Ford already has joint ventures with Jiangling Motors and Changan Automobile in China.