Beijing: Ford Motor Co. and partner Anhui Zotye Automobile Co. will invest 5 billion yuan ($756 million) to make and sell small electric cars in China as automakers step up investments in low-emission vehicles in the world’s biggest auto market.
Ford and Zotye plan to build a new manufacturing facility in Zhejiang province and the vehicles will be sold under a new Chinese brand, the US automaker said in an emailed statement Wednesday. The joint venture is equally owned by the two companies and the plans require regulatory approval.
Automakers are accelerating investments into electric vehicles to meet stricter emission and fuel-economy rules set to take effect in major markets. China is implementing a cap-and-trade framework next year that will penalize companies that don’t meet fleet-based limits through fines or buying credits.
While Ford chose to team up with Zotye and Volkswagen AG has partnered with Anhui Jianghuai Automobile Group Corp. to make electric cars, companies like Tesla Inc. may benefit if China relaxes its joint venture rule. The Chinese government is discussing a plan to allow foreign carmakers to set up wholly owned electric vehicle businesses in its free trade zones, according to company officials briefed on the matter.
Ford has said it plans for 70% of all of its vehicles sold in China to have electrified powertrain options by 2025. Besides Zotye, the automaker also has joint ventures in the country with Chongqing Changan Automobile Co. and Jiangling Motors Corp.
Ford expects the market for new energy vehicles in China to grow to six million units per year by 2025, of which about four million vehicles will be all electric. Deliveries of such vehicles rose 53% to 507,000 units in 2016, according to the China Association of Automobile Manufacturers.
In May, Volkswagen received approval for a new joint venture to produce electric cars. Daimler AG and BMW AG also have electric car brands under their partnerships with BYD Co. and Brilliance China Automotive Holdings Ltd.
While carmakers including Tesla are racing to grab a slice of the electric vehicle market in China, local manufacturers such as Beijing Automotive Group Co. have had considerable success in the market, in part thanks to generous government subsidies. New entrants are also coming in.
Local startup NIO is raising more than $1 billion in a new round of financing from investors led by Tencent Holdings Ltd to develop affordable and connected battery cars, according to people with direct knowledge of the matter, who asked not to be identified as the information is private.
To give a fillip to the sector, China also eased financing for consumers on Wednesday. Buyers of electric cars can take out loans for up to 85% of the cost of a new energy car, compared with 80% for conventional vehicles. Bloomberg