Ford and Chinese automaker Zotye will partner up on a new line of electric vehicles, we learned Wednesday. The pair is creating a joint venture?Zotye Ford Automobile Company?that they say will offer "a range of stylish and affordable electric vehicles for consumers in China." It's a 50/50 partnership, with the pair investing roughly $756 million (RMB 5 billion). The as-yet unnamed brand will get its own dedicated R&D center, and a new factory in Zhejiang Province will build the EVs for domestic consumption.
The Chinese market is especially coveted by Western automakers, which see lots of untapped potential?and the chance to make lots of money. It's a particularly important market for EVs; even though only 1.5 percent of Chinese vehicle sales are electric, in 2016 that figure accounted for 40 percent of global EV sales. And that's only going to grow as the country plans to phase out the internal combustion engine in the coming decades.
But tapping that market requires compromises on the part of foreign car companies. China levies a hefty 25 percent import duty on imported vehicles, so cars need to be built locally to remain competitive on price.
And other trade protection regulations prevent non-Chinese OEMs from just opening their own factories as they might in most other parts of the world. Instead, the operations have to be partnerships with Chinese companies, and preferably sold under a China-only brand?hence this deal. (Recently the Chinese government squashed plans by Volkswagen Group to sell Seat-branded EVs in the country, even though they were to be built in a joint venture with JAC.)
Not every car maker is happy to play that game due to intellectual property concerns?Tesla's planned factory in Shanghai's free trade zone won't be a joint venture, but any cars built there for the Chinese market will still be subject to the import duty. And it's not like those fears are entirely misplaced, either. Take Zotye's current model range: there's what looks to be clones of the Smart Car, Range Rover Evoque, VW Passat, VW Tiguan, and the company has been accused of ripping off the Porsche Macan for its latest SUV. But Ford is evidently OK with it, and it's not the Blue Oval's first experience of working with a Chinese partner; the company already has joint ventures with both Changan Automobile and Jaingling Motors.
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