Less than a year ago, Ford India decided to quit manufacturing in India but later applied for India's incentive scheme to make electric vehicles (EV). Now Ford has made another U-turn, dropping its EV manufacturing plan in India.
According to Reuters, a Ford India spokesman said in an email that after careful review, the company has decided to no longer pursue manufacturing EVs at any Indian plants for export. Ford will continue to work closely with unions and other stakeholders to deliver an equitable and balanced plan to mitigate the impacts of restructuring.
According to The Economic Times, people in the know said that Ford dropped the EV plan as the business case could not meet the volume projection and internal targets, adding that the company is likely to pursue its initial plan to sell its two plants in Sanand, Gujarat and Chennai, Tamil Nadu.
Furthermore, the Times of India quoted an unnamed union official saying that Ford India management had called for the resumption of talks on the compensation plan that had been set aside after Ford's plan to make EVs in India.
Optimistic about the potential size of the middle-class market, Ford invested in India and set up four production lines in two Indian cities for vehicle assembly and engine production. However, after years of low market share in India, Ford announced its withdrawal from India manufacturing in two phases, closing the Sanand plant by December 2021 and Chennai plant by the second quarter of 2022.
To the industry's surprise, after India announced the Production Linked Incentive (PLI) scheme for clean vehicles and advanced automobile components, Ford submitted an application and became one of the 20 eligible companies, which drew curiosity about whether Ford would resume manufacturing in India.
In April, The Economic Times reported that the Ford and the Tamil Nadu government were discussing transforming the Chennai plant to manufacture EVs for export. A Ford spokesman also told Financial Express that they were exploring the possibility of using a plant in India as an export base for EV manufacturing.
According to Vahan Dashboard, from 2017 to 2020, Ford's market share by vehicle registration in India ranges between 1.24% and 1.84%. In 2021, when Ford announced its withdrawal from India, the registration dropped to 32,933 units, accounting for 0.8% of the market.
Ford has reportedly dropped a plan to make EVs in India.