Ford re­vamps China strat­egy amid EV push

Fast-chang­ing mar­ket, con­sumer tastes dic­tate new ap­proach

Global Times - Weekend - - AUTO - Reuters – Global Times

US au­tomaker Ford Mo­tor Co is over­haul­ing its China plans as its global “One Ford” strat­egy is hold­ing it back in the world’s big­gest auto mar­ket, two high-rank­ing com­pany in­sid­ers said.

The re­view of its China op­er­a­tions, part of a broader strat­egy re­view un­der new CEO Jim Hack­ett, will likely see Ford fo­cus on elec­tric com­mer­cial vans, which China is en­cour­ag­ing in its pol­luted and con­gested city cen­ters, as well as elec­tric ve­hi­cles (EVs).

China, In­dia, France and the UK all have an­nounced plans to phase out ve­hi­cles pow­ered by com­bus­tion en­gines and fos­sil fu­els be­tween 2030 and 2040.

A shift to e-vans and e-trucks in China would also fit with Ford’s reck­on­ing that a best play glob­ally for elec­tri­fi­ca­tion and au­ton­o­mous driv­ing might be in com­mer­cial and de­liv­ery ve­hi­cles – a part of the mar­ket where it is al­ready strong in the US and Europe.

The “One Ford” strat­egy – which helped the au­tomaker’s turn­around un­der for­mer CEO Alan Mu­lally – doesn’t fit all sit­u­a­tions, the two in­sid­ers said, par­tic­u­larly in China and In­dia, two cru­cial mar­kets where Ford’s sales have slowed.

“That’s why no­body in­ter­nally talks about ‘One Ford’ [in those mar­kets] any­more,” said one of the in­sid­ers, who are fa­mil­iar with Ford’s Chi­nese strat­egy. Nei­ther wanted to be iden­ti­fied as they are not au­tho­rized to speak with re­porters.

In a sign that Ford is turn­ing away from what is es­sen­tially a global push of its Ford and Lin­coln brands, the US-based au­tomaker wants to drive its truck-mak­ing China part­ner Jian­gling Mo­tors Corp (JMC) more to­ward elec­tric com­mer­cial vans.

Such a move is “po­ten­tially lu­cra­tive” as China’s big cities ef­fec­tively ban gaso­line- and diesel-pow­ered trucks and vans, and “none of the for­eign au­tomak­ers has made any ma­jor in­vest­ment or strate­gic move in this emerg­ing elec­tric com­mer­cial ve­hi­cle seg­ment,” said Yale Zhang, head of Shang­hai-based con­sul­tancy Au­to­mo­tive Fore­sight.

Sherif Marakby, Ford’s vice pres­i­dent of au­ton­o­mous ve­hi­cles and elec­tri­fi­ca­tion, said he couldn’t com­ment on spe­cific part­ner­ships that haven’t been an­nounced.

“But we are ab­so­lutely open to [EV] part­ner­ships in dif­fer­ent mar­kets, and we con­tinue to talk to other com­pa­nies and Tier One sup­pli­ers. Don’t be sur­prised to see more part­ner­ships in elec­tric ve­hi­cles in dif­fer­ent mar­kets,” he said.

Ford Mo­tor Co has formed a team, called “Team Edi­son,” to ac­cel­er­ate global de­vel­op­ment of elec­tric cars, whose mis­sion will be to “think big” and “make quicker de­ci­sions.”

By 2022, Ford plans to cut spend­ing on fu­ture in­ter­nal com­bus­tion en­gines by about $500 mil­lion, putting that money in­stead into ex­panded elec­tric and hy­brid ve­hi­cle de­vel­op­ment, on top of $4.5 bil­lion pre­vi­ously an­nounced.

Ford had al­ready promised 13 new elec­tric or hy­brid ve­hi­cles within the next five years.

In In­dia, Ford and lo­cal au­tomaker Mahin­dra and Mahin­dra Ltd said in Septem­ber that they will launch a strate­gic al­liance in a mar­ket shift­ing to ve­hi­cle elec­tri­fi­ca­tion.

China-spe­cific brand

In Au­gust, Ford said it was con­sid­er­ing a joint ven­ture with An­hui Zo­tye Au­to­mo­bile Co to build elec­tric cars in China un­der a new brand, tap­ping Zo­tye’s low-cost EV tech­nol­ogy. One of the in­sid­ers said Ford was seek­ing Chi­nese reg­u­la­tory ap­proval for this.

It has also brought in Ja­son Luo, a Chi­nese-born Amer­i­can, from US­based air bag pro­ducer Key Safety Sys­tems to run its China op­er­a­tions.

He has been given the re­spon­si­bil­ity, one of the in­sid­ers said, of build­ing closer ties with lo­cal part­ners in­clud­ing JMC and Changan Au­to­mo­bile Co, work­ing more ef­fec­tively with reg­u­la­tors, and re­spond­ing faster to chang­ing con­sumer tastes.

“One big is­sue at Ford China is our de­ci­sion-mak­ing process is too slow,” one of the knowl­edge­able in­sid­ers said.

“We try to man­age ev­ery­thing, all as­pects of the busi­ness un­der ‘One Ford’,” and that hob­bled the com­pany’s abil­ity to move quickly, cost­ing mar­ket share, the in­sider noted.

Ford’s China sales are fore­cast to de­cline 4.6 per­cent this year, a far cry from dou­ble-digit growth just five years ago, ac­cord­ing to UK-based mar­ket con­sul­tancy LMC Au­to­mo­tive.

Slow lane

Ford has no af­ford­able elec­tric plug-in cars for the Chi­nese mar­ket, de­spite it be­ing lit­tle se­cret that China planned new quo­tas for all-elec­tric bat­tery cars and heav­ily elec­tri­fied plug-in hy­brid ve­hi­cles. Those quo­tas were an­nounced late in Septem­ber.

Nor does Ford have a high-vol­ume brand of af­ford­able en­try cars for China – such as the Bao­jun cars sold by ri­val Gen­eral Mo­tors Co and its China part­ner SAIC Mo­tor Corp. Launched in 2010, Bao­jun sold more than 2 mil­lion ve­hi­cles last year.

With JMC, its nearly one-thir­downed ven­ture with JMC Group, Ford was slow to ex­pand the light com­mer­cial ve­hi­cle maker into low­cost en­try pas­sen­ger cars – a mar­ket that has now be­come sat­u­rated with Chi­nese-brand cars and for­eign-op­er­ated China-only brands like Bao­jun and Nis­san Mo­tor Co’s Venu­cia.

Ford’s mis­steps in China were partly through a rigid ad­her­ence to the “One Ford” mantra and a lack of lo­cal knowl­edge, one of the in­sid­ers said, not­ing com­pany ex­ec­u­tives sent into China often lacked the cul­tural ties to work with Chi­nese reg­u­la­tors, pol­i­cy­mak­ers and part­ners.

Also, China’s mar­ket, con­sumer tastes and gov­ern­ment poli­cies shift rapidly, the per­son said.

“Ford is hav­ing dif­fi­culty keep­ing up with ‘China speed’. Ev­ery­thing here moves so fast.”

Photo: VCG

Ro­botic arms spot welds on the chas­sis of a Ford Tran­sit Van un­der as­sem­bly at the Ford Clay­como As­sem­bly Plant in Clay­como, Mis­souri. Page Ed­i­tor: zhangye@glob­al­

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