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Business News/ Companies / Ford India exits electric vehicle consortium

Ford India exits electric vehicle consortium

As a result, launch of the ambitious electric vehicles project, which was expected to kick off on 15 July, has been delayed

With Ford India’s exit, only three firms are left in the electric vehicles consortium, namely Maruti Suzuki, Mahindra and Mahindra, and Tata Motors. Photo: BloombergPremium
With Ford India’s exit, only three firms are left in the electric vehicles consortium, namely Maruti Suzuki, Mahindra and Mahindra, and Tata Motors. Photo: Bloomberg

New Delhi: Ford Motor Co. has vetoed an earlier decision of its Indian unit to participate in a consortium that was to create a supplier base for critical hybrid and electric vehicle parts, dealing a blow to India’s plans to boost electric vehicle production.

Ford India will now have to withdraw from the programme, said three people familiar with the matter, all of whom requested anonymity.

“The direction that has come from the headquarters suggests that the programme is financially unviable and Ford India should rather focus on strengthening its financial and sales performances," said one of the three people.

As a result, the launch of the ambitious project, which was expected to kick off on 15 July, has been delayed, a second person said.

The consortium of companies, a joint effort by the Indian government and automobile lobby group Society of Indian Automobile Manufacturers (Siam), was formed to develop a network of suppliers to support the efforts of consortium members to build six electric and hybrid vehicles, Mint reported on 15 June.

ALSO READ | India car firms form consortium for electric vehicle components

The remaining members of the consortium are Maruti Suzuki India Ltd (India’s biggest car maker), Mahindra and Mahindra Ltd, Mahindra Reva India Pvt. Ltd and Tata Motors Ltd.

The move is part of the Indian government’s efforts to have 6 million electric and hybrid vehicles on the roads by 2020 under the National Electric Mobility Mission Plan 2020 and FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) programmes. Under these programmes, the government and industry plan to invest 12,000 crore each. In the Union budget for this year, the government allocated 200 crore for these programmes.

“Ford was brought into the programme after the government of India, which will fund half the project, had showed willingness to include a multinational auto firm into the consortium for global know-how in the space," said the second person cited earlier, adding that Fiat India also wanted to be a part of the project but its parent advised against it because of the Indian unit’s feeble performance.

Ford India and Siam declined to comment on the matter.

For the project, code-named xEV One, the department of heavy industry has sanctioned an initial grant of 22 crore while each firm will invest an initial 4.4 crore for every model it wants to make.

The members of the consortium were to focus on the design, development and manufacturing of certain key components such as the motor, motor controller, charger, DC-DC converter and battery; help nurture one developer for each component; build roadworthy prototype vehicles using these components; and evaluate prototype vehicles for functional performance and safety.

The consortium planned to finalize common standards for these components within five months of the launch, by December. By April 2017, it was to seek an expression of interest for sourcing components. The first prototypes were expected to be rolled out by January 2018 and the deadline for the evaluation of the vehicles was set for June 2018.

Sales of electric vehicles in India rose 37.5% to 22,000 units in the year ended 31 March from 16,000 in 2014-15, according to Siam. However, only 2,000 units were four-wheelers.

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Updated: 25 Jul 2016, 11:02 AM IST
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