Ford Motor Co announced on Monday they would launch a strategic alliance with Indian car manufacturer Mahindra that the pair say will help to counter challenges posed by rapid technological developments and global competition, Reuters reports.
As increasing numbers of policy makers throughout the world signal that they will transition to entirely electric vehicles, manufacturers of traditional combustion engine vehicles come under pressure to find ways to remain profitable.
One potential benefit to Ford of a partnership with Mahindra is access to lower cost electric vehicle designs and local suppliers it needs to compete in markets such as India.
Ford has less than a 3 per cent market share in India, although its exports from India are expanding. Mahindra could help Ford lower its distribution costs or send production work to Ford’s Indian plants.
Mahindra’s EV concept at the 2017 Geneva motor show.
Mahindra plan on increasing productions from the current 200 vehicles per month to 5000 in the next two years. Mahindra believe that the future of passenger vehicle travel is in electric vehicles, for their environmental, economic and costs saving benefits.
Mahindra’s managing director stated in May that the company plans to increase production from the current 200 vehicles per month to 5000 in the next two years.
“We plan to expand our range of electric vehicles in the country beyond the four products that we currently have in our line-up,”…”“As the pioneers of electric vehicles in the country, the Group is committed towards making electric vehicles more accessible in order to build a clean and green tomorrow,” he said.
Ford has also made moves to enter the Chinese market recently, and has shifted the production of the Ford Focus (for the US market) to China, rather than Mexico as initially planned.
Following the announcement of the agreement between the two companies, Ford shares rose 0.9 per cent.
Ford president of global markets, Jim Farley, and Ford’s head of Asia Pacific operations, Peter Fleet, told Reuters on Monday that teams from the companies will start meeting next week to discuss ways to benefit in the short and medium term.
“We are focused on the now and near with this initiative. We want to work on the opportunities that are right in front of us,” Farley said.
In the shorter term, Ford and Mahindra suggested they could benefit from collaborating on distribution of vehicles in India, pooling purchasing and collaborating on forays into ride services.
Longer-term projects could include sharing technology or development efforts for electric vehicles, the companies said.
Ford, like global rivals, faces a challenge because electric vehicles engineered for the United States or Europe are too expensive for Indian or Chinese customers. Policymakers in China and India, as well as some European countries, have signaled they want the industry to phase out diesel and gasoline vehicles over the next two to three decades.