Ford drops India EV plans; to exit Chennai and Sanand facilities
Ford was among 20 carmakers that were under the Champion OEM Incentive scheme, a part of the performance-linked incentive (PLI) scheme | File Photo

Ford drops India EV plans; to exit Chennai and Sanand facilities

Ford India while withdrawing from the scheme said that it won’t invest in the country under the PLI scheme and that it would “no longer pursue EV manufacturing for exports from any of the Indian plants”

Detroit automobile giant Ford has dropped plans to manufacture electric vehicles (EVs) from plants in Maraimalai Nagar near Chennai and Sanand in Gujarat. It said in a statement the decision was taken after a “careful review.”

Ford’s Indian management told employees at its Chennai plant on Thursday evening that it has dropped its plans to make EVs in India, which it had originally planned to ship to global markets. Ford India was among the 20 companies selected under the Centre’s Production Linked Incentive (PLI) Scheme in February 2022.

Exits PLI scheme

“We remain grateful to the government for approving our proposal under the Production-Linked Incentives and for being supportive while we continued our exploration,” said the statement. Ford’s recent EV project was under the Champion OEM Incentive scheme, part of the PLI scheme.

Also read: Nissan’s manufacturing plant in Chennai continues to function: TN Minister

This marks the second instance of Ford exiting an India venture. In 2019, Ford had announced an agreement with Mahindra to work on a joint venture. Less than two years later, the venture ended. The joint venture was aimed at the development and production of cost-effective vehicles for emerging markets.

In September 2021, Ford announced its decision to stop operations in India. However, it said, it was working on a business restructuring and would explore alternatives for its manufacturing facilities, especially under PLI, to utilise one of the plants as an EV manufacturing base.

Also read: Months after quitting India, Ford considers making EVs in the country

Ford India, while withdrawing from the scheme, further said that it won’t invest in the country under the PLI scheme. While expressing gratitude for having its proposal approved, the Ford announcement added: “After careful review, we have decided to no longer pursue EV manufacturing for exports from any of the Indian plants.”

The Champion OEM Incentive Scheme has a budgetary outlay of about Rs 26,000 crore.

Also read: Hyundai, Tata Motors, M&M among 20 auto makers shortlisted under PLI scheme

In the meantime, Ford has been having dialogues with other Indian manufacturers regarding selling its two plants in India. Its Gujarat plant is all set to be sold to Tata Motors, said media reports.

The Chennai plant is said to employ around 2,700 permanent workers and 600 non-permanent staffers. At the Sanand plant, the total headcount is estimated at 2,000.

Passenger cars lag in EV segment

Ford India’s withdrawal is another setback for efforts in India to manufacture EV cars. The Central and some state governments had announced specified incentives to promote e-vehicles. While there has been much activity in the two-wheeler front, it’s not the same for cars. Where passenger car manufacturing is concerned, the market has over time lost multiple manufacturers, Datsun being the latest one to exit.

The electric car market in India is at present small. This is wholly dominated by Tata Motors currently. Other manufacturers who are selling at least one electric car in India, have kept the price high. For the market to grow, it’s an open playfield for manufacturers like Maruti, Hyundai and Honda to introduce budget EV cars, the report added.

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