You are here: Home » Companies » News
Business Standard

Ford drops plan to manufacture EVs in India; opts out of PLI scheme

At that time, the company said it was exploring the possibility of using one of its plants in India to produce electric cars for exports

Topics
Ford | Electric Vehicles | PLI scheme

Arindam Majumder & Shine Jacob  |  New Delhi 

Ford
The move was prompted by the mounting losses, slowdown in the passenger vehicle market, and the crisis the pandemic brought

American automaker on Thursday said that it had withdrawn plans to manufacture (EVs) in India and it won’t invest in the country under the performance-linked incentive (PLI) scheme.

“After careful review, we have decided to no longer pursue EV manufacturing for exports from any of the Indian plants. We remain grateful to the government for approving our proposal under the PLI and for being supportive while we continued our exploration. India’s previously announced business restructuring continues as planned, including exploring other alternatives for our manufacturing facilities. We continue to work closely with unions and other stakeholders to deliver an equitable and balanced plan to mitigate the impacts of restructuring,” the company said in a statement.

Ford’s application, selected under the PLI scheme, was among the 20 other automakers that the Ministry of Heavy Industries had shortlisted under its Champion OEM scheme. The Centre is giving incentives worth Rs 45,016 crore to attract automakers to increase their manufacturing in India.

At that time, the company said it was exploring the possibility of using one of its plants in India to produce electric cars for exports.

In February, the Centre announced that the American automaker was among those entities which qualified for its PLI where the core objective is self-reliance. In Ford’s case, it was made amply clear that this meant production of EVs and components for overseas markets.

The decision of to opt out of EV production in India has cast doubt on the future of workers at the company’s now-shut Chennai plant.

It was on September 9 that Ford India announced the shutdown of its manufacturing units at Maraimalai Nagar in Tamil Nadu and Sanand in Gujarat. The state government was in talks with Tata Motors and also Ford India later for EVs.

Tamil Nadu was betting big on EVs, with the state even extending its talks with players like Tesla. In October and December, Tamil Nadu Chief Minister M K Stalin had held a couple of rounds of talks with key Tata Motors officials, including Group Chairman N Chandrasekaran and Executive Director Girish Wagh.

Last year, the company said it would stop manufacturing vehicles in India but retain the engine-making and technology services business (Global Business Services) as part of restructuring its India operations. Approximately 4,000 employees are expected to be affected by this.

The move was prompted by the mounting losses, slowdown in the passenger vehicle market, and the crisis the pandemic brought.

Ford had been rethinking its India operations even before it had initiated discussion with Mahindra & Mahindra in 2019. It decided to cease manufacturing after considering all options, including contract manufacturing, he added.

It is the fourth US automaker to shrink India operations -- after Harley Davidson, UM Motorcycle, and General Motors -- in less than five years amid poor sales, high operating losses, high fixed costs, and a market that has failed to live up to the parent company’s expectations.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, May 12 2022. 15:08 IST
RECOMMENDED FOR YOU
.