Ford shifts mak­ing of elec­tric car from Michi­gan to Mex­ico

The Buffalo News - - MONEY & MARKETS - By Keith Naughton BLOOMBERG NEWS

Ford is chang­ing gears again in Mex­ico, shift­ing planned pro­duc­tion of a small elec­tric-pow­ered sport util­ity ve­hi­cle to a plant south of the bor­der in­stead of a Michi­gan fac­tory.

Send­ing the elec­tric ve­hi­cle to Mex­ico, where la­bor costs are lower, will help the busi­ness case for the costly model. It also risks rais­ing the ire of Pres­i­dent Trump, who had been sharply crit­i­cal of an ear­lier plan by Ford to build a small car fac­tory in Mex­ico that the com­pany ul­ti­mately can­celed.

“They have to do what’s best fi­nan­cially and this elec­tric ve­hi­cle is not go­ing to be huge” in terms of sales vol­ume, said Michelle Krebs, an an­a­lyst with car-shop­ping web­site Au­to­trader. “It’s not like they’re not putting money into the U.S.”

Mov­ing pro­duc­tion of the as-yet-un­named elec­tric SUV to Mex­ico will al­low the car­maker to boost planned out­put of self­driv­ing ve­hi­cles at its fac­tory in Flat Rock, Mich. The Wall Street Jour­nal re­ported the au­tomaker’s change of plans ear­lier.

Ford is boost­ing its in­vest­ment by $200 mil­lion and adding 150 more jobs to the Michi­gan plant as part of the shift, Mark Truby, the com­pany’s com­mu­ni­ca­tions chief, said in an email. The driver­less car is to de­but in 2021.

The SUV to be built in Mex­ico start­ing in 2020 will go 300 miles on a sin­gle charge and is the cen­ter­piece of a planned $4.5 bil­lion over­haul of Ford’s lineup to add 13 elec­tric or hy­brid mod­els, in­clud­ing a gas-elec­tric F-150. Ford has been viewed by Wall Street as play­ing catch-up to ri­vals such as Tesla and Gen­eral Mo­tors, which al­ready sells the bat­tery-pow­ered Chevy Bolt and plans to in­tro­duce ro­bot taxis in 2019.

Ford’s chief ex­ec­u­tive of­fi­cer, Jim Hack­ett, has been ac­cel­er­at­ing the au­tomaker’s moves in elec­tric and au­ton­o­mous cars, while an­nounc­ing $14 bil­lion in cost cuts to im­prove the what he calls the com­pany’s “fit­ness.” Af­ter re­plac­ing Mark Fields as CEO in May, one of Hack­ett’s first moves was to shift a plan to make the Fo­cus small car in Mex­ico to one of the au­tomaker’s plants in China.

Trump did not tweet his dis­plea­sure this sum­mer with Hack­ett’s plan to build small cars in China to be ex­ported to the U.S., nor has he blasted the au­tomaker af­ter news broke Wed­nes­day of the elec­tric SUV’s shift to Mex­ico.

“Au­tomak­ers have been out of the line of fire of late with so many other is­sues brew­ing in D.C.,” Krebs said, adding that the im­pact of the pres­i­dent’s planned changes to the North Amer­i­can Free Trade Agree­ment rep­re­sents an “un­known” for Ford as it shifts the elec­tric SUV to Mex­ico.

The self-driv­ing car Ford will build in Michi­gan will be a com­mer­cial ve­hi­cle specif­i­cally de­signed for ride-hail­ing and de­liv­ery ser­vices, Jim Far­ley, ex­ec­u­tive vice pres­i­dent of global mar­kets, wrote in a Medium post Wed­nes­day. The au­tomaker will be­gin test­ing the car in an un­named city next year.

“Next year will be an im­por­tant time for us as we be­gin to test both our self-driv­ing tech­nol­ogy and busi­ness model in a va­ri­ety of pi­lot pro­grams in the first city in which we plan to op­er­ate an au­ton­o­mous ve­hi­cle busi­ness,” Far­ley wrote. Ford’s au­ton­o­mous busi­ness will “serve lead­ing com­pa­nies, such as Lyft, in the move­ment of peo­ple and goods.”

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