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Mahindra’s Pawan Goenka (right) and Ford Motor executive vice-president Jim Farley (left) after signing their deal on Thursday. The two automobile firms will co-develop a small electric car for India.
Mahindra’s Pawan Goenka (right) and Ford Motor executive vice-president Jim Farley (left) after signing their deal on Thursday. The two automobile firms will co-develop a small electric car for India.

Mahindra, Ford sign 5 deals to develop electric vehicles, SUVs

Mahindra and Ford have signed five non-binding memoranda of understanding (MoU) to cover each of the above segment

Mumbai: Mahindra and Mahindra Ltd and Ford India Pvt. Ltd on Thursday said they have agreed to jointly develop connected vehicles, electric cars, drivetrains, compact SUVs and mid-sized SUVs.

The two companies have signed five non-binding memoranda of understanding (MoU) to cover each of the above segment, Mahindra said in a BSE filing, formalizing an alliance announced in September to co-develop a range of vehicles for India and other emerging markets.

The maker of the Scorpio SUV cited the “potential for shared investment, economies of scale, technology sharing and higher efficiencies in areas like product development and sourcing as also in new emerging growth areas of electrification and connected vehicles."

The announcement is the next step in the collaboration between Mahindra and Ford, Mahindra managing director Pawan Goenka said in the filing.

“Both teams are working together on joint development areas in keeping with industry requirements and leveraging (our) mutual strengths. We are excited about the synergies unveiled through this collaboration and the potential opportunities it will bring", he added.

Specifically, the two automakers will co-develop a small electric car. On 9 October, Mint reported that Mahindra would share its affordable EV technologies with Ford, which the American company plans to use in its small entry-level cars such as Figo and Aspire.

The report also said Mahindra was in early talks with Ford to procure a vehicle platform Ka on which the Mumbai-based company aims to build an all-new electric sedan.

Meanwhile, a mid-sized SUV—built on the Mahindra platform—will be sold independently by both companies with their individual badging. Mahindra and Ford also agreed to assess the co-development of a compact SUV, in addition to sharing their powertrain portfolios whereby Mahindra will supply powertrains to Ford to extend the latter’s limited product range in India and its neighbouring countries.

Aiming to leverage the benefits of Ford’s global reach and Mahindra’s scale in India, teams from both companies will work together for up to three years, to assess the possibility of increasing support for Mahindra in global emerging markets via Ford’s manufacturing and distribution network, in addition to evaluating future mobility needs.

“Listening to our customers and incorporating their future needs is the core premise of this collaboration", said Jim Farley, executive vice-president and president of global markets at Ford Motor Co.

“With utility vehicles and electrification as key focus areas, we are glad to see the progress our two companies have made", he added.

Mahindra’s proclivity for collaboration is apparent in its past joint ventures with other global automakers such as Renault SA and Navistar International Corp. However, these alliances either fell through, as did the JV with Ford in 1998, or did not result in significant benefits for the company.

Analysts don’t expect an outcome much different this time around.

“No material outcome is expected from these MoUs for markets to take note of, since Mahindra has worked with a lot of JV partners in the past but has not been able to gain a differentiated foothold either in the PV or UV (passenger vehicle or utility vehicle) space. Competition has especially gone far ahead lately. The company has also been struggling in India with electric cars since they bought Reva (in 2010). This will be exacerbated by the fact that India doesn’t have a concrete EV policy at the moment", said Mahantesh Sabarad, head-retail research at SBI Cap Securities.

A strong manufacturing foothold outside India will help facilitate the company’s cause; this can be done by leveraging Ford’s numerous facilities across Latin America, Europe and Asia through Mahindra’s Korean subsidiary Ssangyong (Motor Co.), Sabarad added.

On Thursday, Mahindra and Mahindra shares fell 2.14%, or Rs15.95, to Rs729.80 on the BSE while the benchmark Sensex lost 0.39%, or 129.91 points, to end the day at 33,006.27.

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