Traditional Indian drummers perform for a ground-breaking ceremony on a plot of land acquired by Ford India for its automobile manufacturing plant near Sanand, some 60 kms from Ahmedabad, on September 5, 2011.
(Photo : SAM PANTHAKY/AFP via Getty Images)
Ford sent shockwaves across the auto industry when it decided to shut down its operations in India six months ago. That decision may be short-lived, with the U.S. carmaker strongly considering returning to the subcontinent as a manufacturer and exporter of electric vehicles.
Ford's strategy dramatically shifted after the Indian government approved the automaker to seek incentives under the country's new $3.5 billion Production Linked Incentives (PLI) scheme. That initiative was created by Indian authorities to support the production of hydrogen fuel cells and battery electric vehicles locally.
Autocar India obtained a statement on Ford's possible return to India from a company representative, who said that the automaker is considering building electric cars in the country soon.
Ford India thanks Indian government for grant
Kapil Sharma, the communications director at Ford India, thanked the Government of India for approving his company's proposal to avail of the PLI scheme for the auto sector. He added that Ford is exploring the possibility of using a plant in India as an export base to manufacture EVs, helping the automaker's goal of leading its customers "through the global electric vehicle revolution."
Ford's U-turn is a complete surprise considering the company just closed both of its manufacturing plants in India last year. After it had accumulated losses amounting to $2 billion, Ford arrived at that decision as the company struggled with a rapidly decreasing market share. At the time of Ford's departure, the Detroit automaker only had less than 2 percent of the passenger vehicle market in India.
They have struggled for more than two decades to record a profit in India, making its decision to stop production altogether a no-brainer. Ford's shock exit dealt a huge blow to Prime Minister Narendra Modi's "Make in India" campaign.
That campaign is up and running again with the help of the "Champion OEM Incentive Scheme" with the Indian government giving incentives and benefits of up to 18 percent of new investments to 20 carmakers, including Ford, to build electric vehicles in the country.
Will Ford sell electric vehicles in India?
According to Gaurav Vangaal, Associate Director of Light Production Forecasting at IHS Markit, Ford has a cost benefit to manufacture in India again, with the company exporting vehicles to Europe and North America in the past. Both of those continents have flourishing EV markets, making them a prime target for possible Ford Indian exports in the near future.
Vangaal noted, however, that "Ford will have to prove India can also be cost-competitive for making EVs." He said that Ford would need big investments to localize the supply chain, particularly in sourcing lithium-ion batteries, vital components of electric vehicles.
The main question now is, will Ford consider selling electric vehicles in India as well? The spokesman for Ford India did not rule out that possibility, saying "it is not out of the realm of future consideration."
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