Ford Plans Joint Venture to Make Electric Cars in China

By Trefor Moss 

SHANGHAI-- Ford Motor Co. will start a new company to make electric cars in China, the company said Tuesday, as the world's largest auto market begins to shift decisively away from gasoline-powered vehicles.

The proposed joint venture with local auto maker Anhui Zotye Automobile Co., which is subject to regulatory approval, will produce electric cars "sold under an indigenous brand," rather than under the Ford marque, Ford said in a statement.

The company didn't immediately respond to questions about why it was opting to use a new brand.

Chinese regulations require foreign auto makers to set up joint-venture companies to build cars locally. Imported cars incur a 25% tariff, making mass-market vehicles uncompetitive unless they are built in-country.

Ford already operates two joint ventures in China with local auto makers Changan Automobile Co. and Jiangling Motors Corp.

China is encouraging auto makers to build electric cars to help meet ambitious national targets for electric-vehicle adoption. Beijing normally limits foreign auto makers to two joint ventures, but it allows them to set up a third if it specializes in electric-car assembly.

Last year Beijing outlined draft rules requiring car makers to start producing a specific number of electric cars as a proportion of their total output from 2018. A final version of these rules is expected to be published imminently.

The onset of the new regime is forcing auto makers--many of which don't yet build electric cars in China--to find ways of quickly ramping up electric-car production. Many are struggling, according to auto analysts.

Earlier this year, Volkswagen AG said it would set up a third Chinese joint venture with Anhui Jianghuai Automobile Group to start producing electric cars next year.

Zotye, Ford's new partner, is a little-known electric-car specialist. It sold more than 16,000 electric cars in the first seven months of this year, according to Ford's statement--7% of the 228,000 electric cars sold in China so far this year.

Ford had already announced plans to start building its first electric car in China--the Mondeo Energi plug-in hybrid--next year. The Detroit auto maker wants 70% of its Chinese vehicle lineup to be electric by 2025, by which time it forecasts that Chinese consumers will be buying 6 million plug-in cars a year.

Write to Trefor Moss at [e-mail]

(END) Dow Jones Newswires

August 22, 2017 07:46 ET (11:46 GMT)

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