Ford may use India unit for domestic EV manufacturing and exports

Ford seems to be looking again at the India market for production as the central government, in a bid to promote electric vehicles (EVs), woos global auto majors with its production-linked incentive (PLI) scheme.   

The Centre had recently said that 20 companies, including four-wheeler and two-wheeler manufacturers, along with newbie Ola Electric, have been selected to get incentives under the PLI scheme for the auto sector in the country.  

Ford’s name was in the list at the time when the scheme was announced. So, it is likely that the American auto giant will return to India with its EV offerings.

Ford Mustang EV  

It came as a surprise that Ford was in the PLI list despite having accumulated losses of a whopping $2 billion in the last 10 years. 

Also, the company, in September 2021, said it had stopped manufacturing vehicles in India. 

The US auto major added it will wind down assembly at its Sanand plant in Gujarat by Q4 of 2021 and stop manufacturing at the Chennai unit by Q2 of 2022.

At the time when production stopped, Ford’s share in India’s auto market had plummeted to around 2 per cent in the passenger vehicles category.

Kapil Sharma, head of communications at Ford India, thanked the central government for approving Ford’s proposal for the PLI scheme in the automobile sector. 

He added that Ford is exploring the option to use one of its India units for manufacturing electric vehicles. 

Ford could be looking to manufacture or export EVs from India, but from which plant it will roll out the EVs is a big question. 

The PLI scheme of the Indian government offers an incentive of up to 18 per cent in the automotive sector for any fresh investment.

Ford Motor had earlier said it wants to pump in a staggering $30 billion into its electric car line-up and battery development strategy, globally. Also, it is targeting to make 40 per cent of its vehicles electric by the year 2030. 

Ford, with its two facilities in India, will have to make the pricing right for its models if it wants to sell well in the Indian market.

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And initially, it can make low and mid segment EV hatchbacks as well as mini SUVs to get into the volume market of the country and stabilise its initial revenues. Later, Ford can venture into high-end EV models to widen the ambit of its offerings. 

Considering it has manufacturing units in India, by using cheap labour available in the country, Ford could give itself a price advantage. The company may also use its India unit as a global EV manufacturing hub. 

Now, if it sets up an EV export hub in the country, Ford could use the cheap input cost in India to sell to premium regions like Europe as well as the US.

India is an attractive destination for Ford to make its EVs not only because of the low cost. 

The newly-found bonhomie between the US and India as well as the growing rift between the US and China could make Ford a long-term player in the Indian market, both for domestic selling as well as for exports.