Ford Motor May Build Electric Cars in China With Partner, CEO Mulally Says

Ford Motor Co. (F) may make electric cars with its partner in China as the auto industry moves toward producing more fuel-efficient vehicles, Chief Executive Officer Alan Mulally said.

“Our plan is to make the vehicles people want and value, in China and around the world,” Mulally, 66, said in a Bloomberg Television interview on Sept. 24 in Chongqing, China. “As we move to more electrification you’re going to see more hybrids, plug-in hybrids and all-electric.”

Mulally, who was in China to attend the groundbreaking ceremony of an engine transmission plant at its venture with Changan Automobile Group, didn’t provide a schedule for building electric cars. Rivals Daimler AG (DAI) and General Motors Co. (GM) have announced plans to add alternative-energy vehicles in China as the country, the world’s largest polluter, seeks to reduce emissions. The government aims to have 1 million electric- powered vehicles on the road by 2015, according to the Ministry of Science.

GM on Sept. 20 signed an agreement to develop electric cars in China with its partner SAIC Motor Corp. GM, which plans to introduce the plug-in hybrid Chevrolet Volt in China in the fourth quarter, will not give SAIC or the Chinese government intellectual property for the Volt as part of the agreement, GM Vice Chairman Steve Girsky said.

Ford will also consider introducing its luxury brand Lincoln in China to tap into the growing high-end sedan market, Mulally said. The carmaker currently sells models such as its Mondeo sedan and Focus small cars in the country.

“We have a great luxury brand in Lincoln, which we have recommitted ourselves to,” he said. “There’s going to be tremendous pull from China to have access to these great vehicles.”

Additional Models

Ford is spending $1.6 billion to build four factories in China, where it plans to triple its lineup by offering 15 models by mid-decade. The U.S. carmaker, dependent on the U.S. and Europe for most sales and profits, had 2.7 percent of the passenger-vehicle market in China through June, according to J.D. Power & Associates, while GM controls 10 percent.

China’s demand for luxury cars will grow about 35 percent this year, analysts at J.D. Power forecast. This compares with a 5 percent increase for overall auto sales as predicted by the China Association of Automobile Manufacturers.

Expansion in Asia is part of Mulally’s wider plan to boost annual global sales by 50 percent to 8 million vehicles by 2015. Ford’s China sales have risen 11 percent this year to 341,746 units, the company said on Sept. 6.

Overall vehicle sales in China reached 18.06 million units last year, boosted by government tax breaks and rural subsidies.

Delivery Slowdown

Ford is encountering pricing pressure in China as the auto market there slows, Joe Hinrichs, group vice president and Asia chief, said on Aug. 10. Overall deliveries in China are forecast to slow this year from the 32 percent gain in 2010, after the government removed sales-tax breaks in January and the central bank raised interest rates five times since October.

“China has a very good plan to have sustainable growth, to manage the inflation as well as the economic activity and automobile purchases move along with that,” Mulally said. “So, even though it’s lower than the previous year, it’s a lot more sustainable for the long term.”