Ford’s electric car venture with Zotye to speed up US manufacturer’s expansion in China

New Zhejiang province factory to produce small all-electric vehicles

PUBLISHED : Thursday, 09 November, 2017, 7:30am
UPDATED : Tuesday, 03 July, 2018, 8:22pm

Ford has signed an agreement with Anhui Zotye Automobile to set up a 5 billion yuan (US$754 million) joint venture focusing on electric cars, in a substantial step towards tapping the mainland’s new energy vehicle segment.

A new factory will be established in Zhejiang province and a new sales and service network dedicated to the new cars will be created. The 50-50 venture, known as Zotye Ford Automobile, is subject to regulatory approval, Ford said on Wednesday.

Zotye, described by Ford as a market leader in China’s electric small vehicle segment, will become the US carmaker’s third major partner on the mainland, after Chongqing Changan Automobile and Jiangling Motors.

“Subject to regulatory approval, Zotye Ford will introduce a new brand family of small all-electric vehicles,” said Peter Fleet, the president of Ford in Asia-Pacific. “We will be exploring innovative vehicle connectivity and mobility service solutions for a new generation of young city-dwelling Chinese customers.”

The vehicles manufactured by the venture will be sold under a new brand name.

Ford joins global rivals such as General Motors and Volkswagen in vying for a share of the fast-growing new energy vehicle segment in the world’s largest car market. These big-name carmakers will also come up against Tesla, with the Silicon Valley-based electric carmaker also planning to set up a plant on the mainland.

Challengers get a three-year window to catch up as Tesla’s China factory plan uncertain

UBS analyst Hou Yankun said the mainland electric car segment will have huge potential in the coming years, with annual sales expected to reach 700,000 to 800,000 units.

Beijing has been determined to reduce pollution by encouraging the development, production and sales of new energy vehicles.

Under the so-called cap-and-trade policy, most car manufacturers will be required to sell a minimum number of new energy vehicles every year from 2019. The Ministry of Industry and Information Technology stipulates that those who fail to meet these requirements will face fines.

New energy vehicle sales on the mainland have been buoyant since 2014, driven by the government’s subsidies and other incentives such as distribution of free car licences. The sales of such vehicles jumped by 63 per cent to 336,000 units in 2016.

New energy vehicles include pure electric cars and plug-in hybrid cars.

Zotye Ford did not disclose the capacity for the new plant in Zhejiang. Ford also said that at least 70 per cent of Ford-branded vehicles sold in China will offer electrified power train options by 2025.

Volkswagen has partnered with Anhui Jianghuai Group to produce electric cars. Last month, Volvo, the Swedish car maker, formed a 5 billion yuan joint venture with its Chinese parent Zhejiang Geely Holding to build high-performance electric cars under the Polestar brand.