Ford claimed that it had signed a memorandum of understanding with Anhui Zotye that they would establish a new 50/50 joint venture. This represents another step on the international automobile competition to save the share in China’s fast growing alternative energy vehicle market.
Facing enormous regulatory threats in the world's largest car market, international car manufacturers are looking for strategies for products and technology development to get ground in the competition for new energy cars in China.
Ford China has recently announced to establish a joint venture with China’s Anhui Zoyte car enterprise to leverage the production and sales of electric passenger cars in the current largest market for alternative energy vehicles. The partnership will have a 50-50 stake and the new cars being built will be sold under a new local brand as well. The new company will mainly engage in the research, manufacture, sales and after-sale service of battery energy passenger cars.
According to Reuters, Ford’s plan is aiming to increase the commitment in the Chinese market. Following other international car manufacturers, Ford wants to achieve the offer of hybrid or fully electric versions of its models in China in several years.
Ford describes, that the goal of the Memorandum of Understanding with Anhui Zoyte is to explore the establishment of a joint venture for the development, production, marketing and servicing of a new line of all-electric passenger vehicles in China. The company plans for 70% of its vehicles sold in China to have electrical options as well by 2025.
As part of its global electrification strategy, Ford has invested USD4.5 billion in the development and manufacture of electric cars so as to provide electric cars of high performance to consumers. It plans to launch 13 types of electric vehicles in the global market in the next five years, including a new small battery electric SUV that will be available in Asia, North America and Europe.
Anhui Zoyte is one of the leading enterprises for electric small vehicles in China, witnessing a growth of 56% year-on-year in July 2017. The company is privately owned, with the headquarter located in the economic strong coastal region south of Shanghai in China.
Zoyte Auto is a pioneer in the Chinese all-electric vehicle segment and was one of the first automakers to produce all-electric passenger vehicles in the country. It is the market leader in China’s all-electric small vehicle segment. Zotye sold more than 16,000 all-electric vehicles through July this year.
The chairman of Anhui Zotye, Jin ZheYong, said that this joint venture is aiming to enable both enterprises to leverage each other’s strengths and he described the new partnership as a win-win situation for both parties to grow quickly in China’s steady growing EV market.
China’s AEV market and the rush of international players
According to market intelligence firm CCM, China’s AEV market is continuing booming, showing the largest number of new registered electrical vehicles with a number of 352,000 in 2016 alone. After all, China wants to achieve a share of not less than 11% for sold cars shall be alternative energy vehicles by 2020. In total numbers, this will be about 2 million units of cars by the end of the decade, from a sale of 507,000 units in 2016.
The year 2016 has already faced the announcement of Joint ventures and mergers by other huge automobile players. For example, Germany’s car manufacturer giants Volkswagen and Daimler have both recently made agreements with Chinese enterprises to strengthen their presence in China’s AEV market and boost production of green cars. Also the Renault-Nissan Alliance announced it's forming a joint venture with Dongfeng Motor Group with the aim of developing and building plug-in electric cars specifically for the Chinese market. These steps reflect the rush of foreign enterprises to increase zero-emission car sales in China, as the country is getting strict regarding environmental protection. However, the biggest competitor in China’s AEV market, Tesla, has no partnership with any local domestic car enterprise in China yet.
The rush of car makers to invest in China’s AEV market is also connected to the zero-emission vehicles mandate of the country, which requires the share of at least 8% of new car sales are zero-emission cars in 2018. The number will furthermore grow to 12% by 2020. Recent efforts of the car lobby were able to convince China to postpone the mandate for one year, but still, car manufacturers have a hard time to reach this number in the near future.
CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.
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