Ford revamps China strategy amid EV push
Fast-changing market, consumer tastes dictate new approach
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.
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.
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.”
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