Ford Signs Deal with Alibaba to Enter EV Segment in China

The market for electric vehicles is booming in China, with considerable support from the government. Ford has signed a deal with Alibaba, the largest e-commerce firm in China to break into this lucrative market. The two companies will set up a joint venture that will lead to the availability of 15 electric or hybrid models for sale in China by 2025.

The focus of the partnership would be on the development of a direct sales channel to reach Chinese consumers. Alibaba is known for its Taobao marketplace and T-Mall service for brands. The firm has put in place a ‘Next Retail’ strategy that combines both online and offline commerce and this could possibly be used for the sale of Ford vehicles.

Alibaba is turning more and more to physical retailing and as part of this strategy recently invested in the national hypermarket operator Sun Retail. Automotive is another segment where the combination of online and physical retailing is an attractive option for customers. People like to conduct their preliminary research online in the comfort of their homes without wasting their time in multiple showrooms. At the same time, as it is generally a big ticket purchase, they would like to touch, and test drive the cars before they finalize their purchase.

Another option that Alibaba might consider is a “vending machine” style approach that has already been tried in Germany and Singapore.

The two companies also said that they would work together on technical aspects like cloud computing for big data analysis, digital marketing services and using Alibaba’s AliOS operating system.

Media reports have predicted that over 800,000 green vehicles are likely to be sold in China this year, which is 50 per cent more than in 2016. The incentive from the Chinese government covers 26 different models. China is thus one of the most attractive markets for electric cars and has attracted players like Tesla, which is planning to set up its very own factory in China. VW is another company that has invested in China to increase its market share.

Commenting on the partnership, Jim Hackett, Ford President and CEO, said in a statement that China is one of the largest and most dynamic digital markets in the world where customers’ online and offline experiences are converging rapidly. Collaborating with players like Alibaba will help the company build on its vision for smart vehicles in a smart world to help revolutionize the mobility experiences of consumers.

This is not Alibaba’s first partnership in the automotive segment. It had announced a partnership with SAIC last year through AliOS and said AliOS is powering more than 400,000 vehicles across China’s roads today. The deal with Ford is Alibaba’s first with an overseas automotive company.