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Ford, Zotye seal deal to produce EVs in China
2017/11/10
source: Bloomberg
Ford Motor Co. is going all-in on electric vehicles in China, the world¡¯s largest market for battery-powered vehicles, and it wants U.S. President Donald Trump to know about it.
 
 
The automaker said Wednesday that it finalized an alliance with China¡¯s Anhui Zotye Automobile Co. to manufacture and sell a full line of EVs. The companies will invest 5 billion yuan ($756 million) to develop the cars they¡¯ll sell under a new brand unique to the Chinese market.

To underscore the deal¡¯s significance, Ford¡¯s top executive in Asia, Peter Fleet, was scheduled to meet Trump and China President Xi Jinping in Beijing on Thursday.

The news comes as Ford accelerates its push into EVs and self-driving vehicles under CEO Jim Hackett. Thursday¡¯s meeting will be the first public outreach to Trump since Hackett replaced previous Ford CEO Mark Fields, who met several times with the president as he looked to maintain a delicate relationship with the White House.

In the meeting, Fleet said he will confirm Ford¡¯s plan for nearly $10 billion in exports from the U.S. to China over the next three years.

Ford has said that at least 70 percent of its own Ford-brand vehicles sold in China will offer electric or hybrid propulsion by 2025. The push to low- and zero emissions vehicles fits with China¡¯s desire to clean up the country¡¯s fouled air.

Mobility freedom
¡°Quality of life is also freedom of mobility,¡± said Ford CFO Bob Shanks in an October interview. ¡°We will have electric vehicles. We will have plug-in hybrids. We will have hybrids.¡±

Ford and Zotye plan to build a new manufacturing facility in Zhejiang province as part of the 50-50 joint venture, the U.S. automaker said in an emailed statement. The plans still require regulatory approval.

China is implementing a cap-and-trade policy next year that will penalize companies that don¡¯t meet fleet emissions limits.

While Ford and Volkswagen Group each have formed joint ventures to produce electric cars, the Chinese government is discussing a plan to allow foreign carmakers to set up wholly-owned EV businesses in free trade zones.

Automakers such as Tesla Inc. would likely benefit if China relaxes its joint-venture rule.

Growth forecast
Besides Zotye, Ford also has joint ventures in China with Chongqing Changan Automobile Co. and Jiangling Motors Corp.

Ford expects China¡¯s EV market will grow to 6 million units per year by 2025, of which 4 million vehicles will be all-electric. Deliveries of such vehicles rose 53 percent to 507,000 in 2016, according to the China Association of Automobile Manufacturers.

In May, Volkswagen received approval for a new joint venture with Anhui Jianghuai Automobile Group Corp. to produce electric cars. Daimler AG and BMW AG also have electric car brands under their partnerships with BYD Co. and Brilliance China Automotive Holdings.

China competition
While carmakers are racing to grab a slice of China¡¯s EV market, local manufacturers such as Beijing Automotive Group Co. have had considerable success, in part thanks to generous government subsidies. New entrants are also coming in.

Local startup NIO is raising more than $1 billion in a new round of financing from investors led by Tencent Holdings to develop affordable and connected EVs, according to people with direct knowledge of the matter.

China also has eased financing for EV purchasers.