Ford Forms Joint Venture With Chinese Firm Anhui Zotye Automobile

Ford has announced that it will making a major investment in the electric-car manufacturing sector in China, currently the biggest market in the market for vehicles powered by batteries. The second-biggest automaker in the United States disclosed earlier this week that it had finalized a partnership deal with Anhui Zotye Automobile Co, a Chinese firm, with a view to manufacturing and selling electric vehicles.

Both companies will jointly invest approximately $756 million to develop electric vehicles which will be sold under a new name that will specifically target the Chinese market. The announcement by Ford of the new alliance and investment coincided with the visit of U.S. President Donald Trump to China and Peter Fleet, Ford’s highest-ranking executive in Asia, is expected to meet with both Trump and Xi Jinping, China’s president.

Government policy

Under Jim Hackett, Ford’s new CEO, the strategy of the second biggest automaker in the United States is to aggressively push into autonomous and electric vehicles. In China Ford has indicated that a minimum of 70% of the cars it will produce under its own brand name will be hybrid or electric by the year 2025.

This is line with the policy of the Chinese government to gradually phase out combustion engine vehicles in order to reduce air pollution in the country. China is aiming to do this by imposing stricter fuel-economy and emission rules. Next year for instance a cap-and-trade framework will be unveiled and this will be used to penalize firms which fail to meet fleet-based limits via buying credits or fines.

“Quality of life is also freedom of mobility. We will have electric vehicles. We will have plug-in hybrids. We will have hybrids,” said the chief financial officer of Ford, Bob Shanks, in an interview last month.

Zhejiang province

Zotye and Ford’s 50-50 joint venture will see the two firms build a manufacturing plant in China’s Zhejiang province. Plans are currently awaiting regulatory approval. Zotye is not the only Chinese firm that Ford has a partnership with as the U.S. car manufacturer has also formed joint ventures with other Chinese companies such as Jiangling Motors Corp and Chongqing Changan Automobile Co.

By 2025 Ford expects the new-energy vehicles market in China to have grown to 6 million units a year, of which 4 million will be purely electric. Per the China Association of Automobile Manufacturers, the number of new-energy cars which were delivered last year rose by 53% to reach a figure of 507,000 units.

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