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Ford, in strategy shift, to develop EV vans for China
Reuters | 2017/10/6

BEIJING - Ford Motor Co. likely will develop electric commercial vans for China as part of its bid to catch up with global rivals in China¡¯s fast-moving market.

Two high-ranking company insiders told Reuters that the new China strategy comes as CEO Jim Hackett rethinks the company¡¯s global "One Ford" strategy.

The shift in China would match Ford¡¯s assumption that it can profitably develop electric and autonomous delivery vehicles, a segment where it is already strong in the United States and Europe.

The ¡°One Ford¡± strategy ¨C which helped the automaker¡¯s turnaround under former CEO Alan Mulally ¨C doesn¡¯t fit all regions, 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 is familiar with Ford¡¯s Chinese strategy.

In a sign that Ford is turning away from a global push of its Ford and Lincoln brands, the U.S. automaker wants to position its truck-making Chinese partner Jiangling Motors Corp. in the market for electric commercial vans.

Such a move is "potentially lucrative" as China¡¯s big cities effectively ban gas and diesel trucks and vans, said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight.

¡°None of the foreign automakers has made any major investment or strategic move in this emerging electric commercial vehicle segment,¡± Zhang added.

Sherif Marakby, Ford¡¯s vice president of autonomous vehicles and electrification, told Reuters that 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,¡± Marakby said. ¡°Don¡¯t be surprised to see more partnerships in electric vehicles in different markets.¡±

China ventures
In August, Ford said it was considering a joint venture with Anhui Zotye Automobile Co. to build electric vehicles in China under a new brand, tapping Zotye¡¯s low-cost technology. One insider said Ford is seeking China¡¯s regulatory approval for this.

Ford has also brought in Jason Luo, a Chinese-born American, from U.S.-based airbag supplier Key Safety Systems to run its Chinese operations. 

One insider said Luo has been tasked to build closer ties with local partners Jiangling Motors and Changan Automobile Co. He also has been asked to work more effectively with regulators and respond more quickly to changing consumer tastes.

¡°One big issue at Ford China is that 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 has hobbled the company¡¯s ability to move quickly.

Ford¡¯s China sales are expected to decline 4.6 percent this year, according to LMC Automotive, a far cry from double-digit growth just five years ago.

Slow lane
Ford has no affordable electric plug-in cars for the Chinese market, even though Beijing announced new quotas last month for battery-electric cars and plug-in hybrids.

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

Ford was slow to expand Jiangling Motors ¨C in which it owns a one-third stake ¨C from the light commercial sector into entry-level passenger cars. That segment now has now become saturated with domestic Chinese models plus joint-venture brands like Baojun and Nissan Motor Co.¡¯s Venucia.

Ford¡¯s missteps in China were caused by rigid adherence to the ¡°One Ford¡± mantra and a lack of local knowledge, one insider said. Company executives sent into China often lacked the cultural ties to work with Chinese regulators, policymakers and partners.

China¡¯s market, consumer tastes and government policies shift rapidly, the source noted. ¡°Ford is having difficulty keeping up with ¡®China speed¡¯. Everything here moves so fast.¡±

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