With Ford's EV sales in China amounting to a few hundred each month, Changan Ford has taken over the entire NEV operation.
Photo by Kuang Da
By YANG Shihan
Changan Ford announced on Tuesday that it is to take over Ford China's entire EV operation in China. As part of the deal, all current Ford EV owners will get an upgrade.
With Changan Ford taking over, Ford's entire EV operation seems likely to be wholly integrated into Changan's product lineup and sales channel system.
Ford China set up Ford Electric Mach Technologies (FMeT) last year to operate its EV business in China, and to speed up its electrification transformation.
FMeT was to be "intensively engaged in the development and operation of intelligent electric vehicles.” Among other things, FmeT would set up an electrification R&D center, as well as centers for digitalization and autonomous driving. But performance fell short of Ford's expectations. Ford sold only 231 EVs in June. Tesla sold 51,471 Model Y alone.
Changan Ford has signed up nearly 300 EV dealerships, tripled its number of service centers, and expanded its coverage to 70 cities. Previously, what few EVs managed to sell were distributed through a dedicated sales network called Ford Select.
To say Ford is a long way behind in the EV field would be a gross understatement.
Ford formed its first JV in China in 2001, six years after GM and more than a decade behind Volkswagen. Production capacity in China includes Ford's largest factory in the southwestern city of Chongqing with other plants in Hangzhou and Harbin.
Changan Ford is a 50/50 JV between Changan Automobile and the Ford Motor Company. The company was founded in 2012. Changan Ford manufactures Ford-branded passenger cars for the Chinese market. Currently, Changan Ford's entire production base is the largest Ford location outside Detroit. Changan is betting that Ford's EVs, including the new Mustang Mach-E, will boost a rather flimsy product lineup.
Before retiring earlier this year, former Ford China CEO CHEN Anning came up with something he called "Ford China 2.0." The hopeful plan basically proposed over 30 new models, including at least 10 EVs, within the next three years. "Ten new models" is a long way to go for a company that's been around for 120 years and can't even sell 10 new cars each day.
The new energy vehicle market in China is probably one of the most challenging in the world. While some carmakers are stuck with overcapacity, others cannot deliver the vehicles they have sold, with almost everything blamed on the catchall "supply-chain" issue.
Co-existence with traditional fuel vehicles is proving much more difficult than anyone anticipated. It's sure to be a long, tough road ahead for Changan Ford, which has struggled in recent times. In May, Changan cut its capacity by a million vehicles, almost unable to cut production as fast as sales fall. At its peak, Ford never sold more than 1 million vehicles in a year in China. The numbers speak for themselves.
Globally, Ford expects to lose US$4.5 billion (32.25 billion yuan) on EVs this year. Last year, losses were US$2.1 billion.
Ford has tried to blame the increased losses on lower raw material prices and reduced prices for electric pickups, but it’s the same marketplace for everyone. Additionally, very few drivers in the United States seem especially interested in EVs.
So far, the whole EV ethos has been a nonstarter in the US and Ford has had to delay production plans, a fact that perhaps says more about Ford's plans than any other factors.
As Ford struggles to reduce the cost of its EVs, CEO Jim Farley has chosen to slow the ramp-up of electrification in the US, shifting his attention to commercial vehicles and planning to quadruple sales of hybrids over the next five years. Ford lost more than US$32,000 on each EV delivered in the US in Q2.
China's EV market may be the most technologically advanced in the world, but the United States is certainly the most litigious and Ford is under fire over safety issues.
On July 28, Reuters reported that Ford would recall around 870,000 trucks due to the risk of the electric parking brake system accidentally engaging. Nineteen incidents had been reported where the parking brake was activated during driving, posing a serious safety hazard.
