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Ford is coming back to India!

TFI Desk by TFI Desk
14 February 2022
in Business
Ford India EV Vehicles

Source: Google

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Companies around the world have realized that India is on the cusp of the Electric Vehicle revolution. And nothing can be a better example of this than the fact that Ford Motor Company, which sold the Indian business and exited the market a few months ago, is considering setting up an EV unit in the country.

Recently the government rolled out the Automotive Production Linked Incentive to ensure that automakers do not import components from foreign companies. Also, the PLI was rolled out for EV makers under the new non-automotive OEM scheme for which many new players like Ola Electric, Axis clean mobility made the cut.

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Ford said that it was exploring the possibility of using one of its plants in India to produce electric cars for exports. “The company is exploring the possibility of using a plant in India as an export base for EV manufacturing. The previously announced business restructuring is continuing and remains in line,” the company said in a statement.

Owing to Ford’s policy of selling cars suited for western markets in India, Ford had to withdraw from the Indian market after incurring a cumulative loss of $2 billion in the country; In 2020, the company was able to sell only 4,000 cars in India.

Moreover, even in global markets, Ford is not performing well. Its market share in China shrank to 10.7 percent in the first 8 months of 2018, compared to 12.2 percent during the same period in 2017. In Europe too, Ford is struggling to keep its plants operating after Brexit cut off its supply chain from the European Union.

Read More: TATA can buy Ford’s India business

Ford lost the markets to Japanese and South Korean automotive players in the last two decades. Ford revolutionized the automotive industry and invented one of the most important methods of the industrial revolution (mass production) in the early 20th century. Today the company is struggling for survival and entering the EV market is the best bet for it.

Also Read: Not just India, Ford’s fortunes are sinking in the US, Europe, and China too

In the last decade, the EV market has boomed across the world thanks to billions of dollars of government incentives and innovative companies like Tesla. Although the products of Tesla are not innovative, Elon Musk is a master when it comes to marketing, and he brought EVs into popular culture. Today India provides the most conducive environment when it comes to automobile manufacturing and is a large market also.

India is the world’s fourth-largest automobile market currently, with around 3 lakh crore rupees of exports and 4.5 lakh crore rupees of domestic consumption. The country currently manufactures 26 mil vehicles including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers, and quadricycles in April-March 2020, of which 4.7 mil are exported. India holds a strong position in the international heavy vehicles arena as it is the largest tractor manufacturer, second-largest bus manufacturer, and third largest heavy trucks manufacturer in the world.

When it comes to growth in the automobile market, it is expected to be among the highest in the world given the emerging middle class and post-pandemic utility of personal vehicles.

Also read: India is preparing to become the world’s leading automobile market and it’s too late for Chevy and Ford to make amends

Although Ford plans to enter manufacturing to EV for exports, its ambition to serve the Indian market cannot be negated. Kapil Sharma, director of communications of Ford said the company has not yet envisioned that plan, saying, “There have been no specific discussions on this right now as Ford also plans to serve customers in India with must-have, iconic vehicles, including the Mustang coupe.”

Ford’s entry into the Indian market within a few months of exit shows the attractive place the country has become to do business. Today India is being seen as a combination of low-cost manufacturing that China offered for the last four decades and high-skill IT services, consulting, and R&D that the United States offers. And this combination will make the country one of the largest economies in the world in the next three decades.

Tags: Automobile IndustryEV SectorFord IndiaManufacturing hub
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