Ford drops plans to make EVs in India

Seven months after announcing the wind-up of its India operations, the U.S. auto major Ford Motor has dropped its plan to manufacture electric vehicles from any of its Indian plants for global markets. In its latest communication to the employees in its Chennai plant, Ford Motor said the decision to not make EVs in India was taken after a “careful review”.

"After careful review, we have decided to no longer pursue EV manufacturing for exports from any of the Indian plants," says the communication.

Ford had earlier applied for the production-linked incentives scheme in India, under which it was planning to use one of its facilities for EV manufacturing. "As part of the ongoing business restructuring in India, Ford has continued to explore possible alternatives for its manufacturing facilities. This included applying for the production-linked incentives scheme, which allowed us to explore utilising one of the plants as a potential EV manufacturing base."

The PLI scheme for automobile and auto component sectors has attracted a proposed investment of ₹74,850 crore against the target estimate of ₹42,500 crore over five years.

The PLI Scheme, which will extend incentives up to 18% to the selected manufacturers, aims to overcome cost disabilities, create economies of scale, and build a robust supply chain. It will generate 7.5 lakh additional jobs in India.

Ford has said it remains "grateful to the government" for approving its proposal under the production-linked incentives and for being supportive while it continued its exploration.

Of the total 115 companies that had applied for the PLI scheme, 95 were chosen by the Centre. Ford Motors was also among the approved names for the vehicle part of the auto PLI scheme. Other big names included Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai, Kia India, Ashok Leyland, Eicher Motors, Hero MotoCorp, Bajaj Auto, TVS Motor, and Ola Electric.

Ford has, meanwhile, reiterated its commitment to finding alternatives to keep its manufacturing units in India functional. "Ford 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."

Ford had decided to wrap up its India operations in September 2021, around 26 years after launching its operations in the country. The company's vehicle assembly at the Sanand plant (Gujarat) was shut down in the fourth quarter of FY22.

It closed the vehicle and engine manufacturing unit in Chennai by the second quarter of FY22. The company decided to discontinue its operations after raking in losses worth $2 billion in India. Before Ford, another US company Harley Davidson has bowed out of the Indian market in September 2020 as sales dwindled amid the auto slowdown.