Ford launches cash-for-clunkers program in UK, may begin manufacturing cars in China

August 22, 2017

In the UK and in China, Ford is working to put motorists behind the wheels of cleaner, more efficient automobiles--though it's going about it in two different ways. 

Asian electrification

In China, the Detroit automaker has announced a budding partnership with Anhui Zotye Automobile Co., a manufacturer of electric vehicles based in the city of Hefei, in Anhui province. The two companies have signed a memorandum of understanding, which marks the initial stage of a potential joint venture.

If that venture pans out, it would create a 50/50 partnership "for the development, production, marketing and servicing of a new line of all-electric passenger vehicles in China," according to Ford. The company notes that the partnership would be in keeping with Ford's mission to build a more sustainable auto industry and to address the twin problems of climate change and worsening air quality.

Why would Ford choose Anhui Zotye rather than, say, striking out on its own? For starters, the Chinese government places a lot of restrictions on foreign automakers and levies hefty tariffs on vehicles that aren't made domestically or aren't manufactured in partnership with a Chinese firm. That helps explain why Ford has already launched two joint ventures in the country, Changan Ford and Jiangling Motors Corporation.

Zotye is one of the leading manufacturers of electric vehicles in China, especially in the small vehicle segment. Although sales of its fully electric vehicles have been very modest, with 16,000 sold this year, that's an increase of 56 percent over 2016. Ford expects that by 2025, roughly 4 million battery electric vehicles will be sold each year in China alone. 

And that number could go higher, if the Chinese government continues its aggressive push to encourage more eco-friendly vehicles. Those policies encouraged Ford to announce earlier this year that it would offer electrified powertrain options on 70 of all vehicles manufactured for China by 2025, and they've surely played a large role in the proposed partnership with Zotye.

Cleaning up UK clunkers

Meanwhile, in Europe, Ford has launched a cash-for-clunkers program to encourage consumers to ditch their older, gas- and diesel-guzzling vehicles in favor of greener rides. Folks who own cars registered in 2009 and earlier can receive an additional £2,000 when they trade those vehicles for a number of efficient Ford models. 

In doing so, Ford joins a growing list of car companies encouraging consumers to upgrade to eco-friendlier rides. BMW, Mercedes-Benz, and Vauxhall began similar programs in the UK over the summer, and other automakers could follow. 

Why would Ford (and other automakers) do such a thing?

First and foremost, it's good for business. Sales of new cars in the UK have experienced four straight months of declines. By offering additional incentives and explaining to motorists that those incentives stem from a desire to improve the planet's climate and atmosphere, Ford and other automakers play on consumers' desire for bright, shiny things and for eco-friendly purchases. 

(FWIW, the automakers were given a leg up on those marketing efforts last month when British officials declined to launch a coordinated, nationwide cash-for-clunkers program. Now, the companies can say, in essence, "This is the right thing to do for the environment, the government isn't doing it, so we're going to do it ourselves.")

Also, it's worth noting that the UK has proposed outlawing sales of new gas and diesel vehicles by the year 2040. While that might seem a long way off, in the auto world, it's just a little over three model cycles, which tend to be about seven years long. By encouraging the adoption of greener vehicles, automakers like Ford will have longer to learn from those vehicles--what customers like, what they don't, what can be improved, and so on. If all goes well, the scrappage scheme could help Ford (and some of its competitors) be better prepared for their all-electric futures. 

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