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Ford to partner with Chinese automaker to build electric cars

The Ford logo is seen on a car in a park lot in Sao Paulo, Brazil. Photo: Reuters

American carmaker Ford Motor and Chinese firm Zotye Automobile have recently signed a memorandum of understanding to set up a joint venture to develop and produce electric passenger vehicles in China, a path most foreign players have taken to sell cars in the country suffering from chronic air pollution.

In a statement, Ford said that the 50-50 joint venture will build electric vehicles under a new brand, but it did not provide details of financial commitments nor say by when it will take a firm decision on the joint venture. More details about the brand, products and production volume will be released at a later date once the partners reach a final agreement and receive regulatory approvals, the statement said.

If the deal is approved, the joint venture with Zotye will be Ford's third venture in China. According to Chinese law, a foreign car company has to work with local automakers to produce vehicles if it wants to do business in the country, a way seen to steer clear of high import taxes on vehicles.

The announcement of the joint venture with Zotye came after Ford outlined its plans aimed at offering by 2025 hybrid or fully electric versions of 70 percent of its models built in China with its local joint venture partner Changan Automobile.

Ford has long seen new energy car as a new growth driver in China, the world's largest auto market, as the Chinese government has poured tens of millions into investment, research funding and subsidies, encouraging many new carmakers to launch electric car projects in the shadow of heavy smog. The Dearborn, Michigan-based automaker has predicted that the Chinese demand for the new energy vehicles would hit six million by 2025, two thirds of which would be fully electric cars.

Sales of all electric cars and gasoline-electric hybrids in China jumped 50 percent last year over 2015 to 336,000 vehicles, or 40 percent of the global demand, according to media reports.

"The potential to launch a new line of all-electric vehicles in the world's largest auto market (the Chinese market) is an exciting next step for Ford ... electric vehicles will be a big part of the future in China and Ford wants to lead in delivering great solutions," said Peter Fleet, president of Ford Asia Pacific.

Zotye, which Ford describes as a leader in the Chinese electric vehicle market, sold 16,000 electric cars in the first seven months of 2017, representing a growth of 56 percent year-on-year. The Chinese automaker also produces sport utility vehicles and cargo trucks.

With Beijing supporting sales of electric cars with subsidies and favorable policies, some leading foreign carmakers have announced plans to localize manufacturing in China, which expects electric and plug-in hybrid cars to make up approximately a fifth of the country's auto sales by 2025. Volvo Cars announced its plans this year to make electric cars in China for the global market starting in 2019. General Motors, Volkswagen and Nissan Motor also have announced similar plans to make electric vehicles in the country.

Among these foreign car brands, Tesla draws the closest attention with ceaseless rumors about its plans to make electric cars locally. In June, Tesla announced in a statement that it was in talks with the Shanghai municipal government to explore the possibility of creating a manufacturing facility in the region to serve the Chinese market, even though Shanghai Lingang Holdings and Shanghai Electric Group refuted the rumor that they would be involved in the American electric car maker's push. Since entering the Chinese market in 2014, rumors about Tesla's selection of a location and local partners for a manufacturing facility in China have been rife.

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