1. Our research background：the Trendy Electric Cars and a Booming Chinese Market

 Globalisation and financial advances have boosted international collaboration and reduced trade barriers, increasing the intensity and scope of transportation activity. However, the industry's reliance on fossil fuels has resulted in far-reaching environmental issues such as automobile emissions and climate change, which have a negative impact on ecological balance, living circumstances, and human health (Stephens, 2018). Although alternative fuel-efficient technologies have improved air quality, the threat of climate change remains. Given that transportation accounts for 24 percent of greenhouse gas emissions, with land transport accounting for 72 percent and rising, greater stakeholder participation and efforts are required to achieve a green transportation transition (International Council on Clean Transportation, 2018). As a result, electric vehicles (EVs) have been developed as a strategic option to accomplish the transport sector's aims of decarbonization, eco-balancing, commercialization, and technological innovation (Cao &Hou 2021).

According to UN data(2021), the energy supply sector (electricity, heat, and other energy sources) is the greatest source of global greenhouse gas emissions, accounting for over 35% of total emissions. The influx of new energy vehicles, as well as rising environmental awareness, are propelling not just the growth of a single market, but also the utilisation of renewable energy sources other than thermal power. "A automobile is called green if it is greener than a typical oil-fired internal combustion engine," which includes any non-traditional vehicle that can enhance fuel economy, such as hybrids, plug-in vehicles, electric vehicles, fuel cells, biofuels, and so on.

If more specifically and professionally, electric vehicles are road vehicles that rely on electric powertrain and plug-in charging methods, including pure electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and fuel cell electric vehicles (FCEVs)(Cao&Hou, 2021). Some academic studies have found that CO2 emissions from electric vehicles are only 37.05% of those from fuel vehicles. By 2050, the annual electricity demand for electric vehicles will be 82.87 billion kWh, 77.69 billion kWh and 752.1 billion kWh under the aggressive, reference and negative scenarios respectively. Under the current electricity mix, carbon emissions would be 120 million tonnes, 110 million tonnes and 1 billion tonnes respectively.Under the current electricity mix, carbon emissions would be 120 million tonnes, 110 million tonnes and 1 billion tonnes respectively(Feng&Davis, 2013).

China's current market for electric vehicles has grown remarkably affluent, with China's market share approaching 50% as of today. While government policy pushes tram purchases, it has also gradually raised entry conditions for tram manufacturing and performance since 2018, despite which China's EV boom continues to develop (Hertzke, 2019). On May 18, Biden delivered a speech at a Ford (F.US) EV facility in which he stated that "the future of the auto industry is electric vehicles, and the United States will begin a new chapter for EVs" and promoted his $174 billion electric vehicle proposal.The Biden administration's proposal not only jump-starts the US EV business, which is now lagging behind China and Europe, but it also resonates with the worldwide new energy vehicle industry, which will gain from it (WisdomTree, 2021). Despite the fact that Ford is a long-established American brand with a significant global presence. It has, however, lagged behind in the development of electric vehicles and has a minuscule market share. 

Although Ford showed an interest in electric vehicles at the beginning of the 20th century, and has moved forward with a number of development programmes over the next few years, it has so far been unable to gain a foothold in the world market for electric vehicles. In particular, only one pure electric car has been launched in the huge Chinese market.

reference

Cao, J., Chen, X., Qiu, R., & Hou, S. (2021). Electric vehicle industry sustainable development with a stakeholder engagement system. Technology in Society, 67, 101771.

X.; Guan, D.; Liu, W.; Liu, Z.; Hubacek, K.(2013). Outsourcing CO2 within China. Proc. Natl. Acad. Sci. U.S.A. 2013, 110, 11654−11659.

Hertzke, P., Müller, N., Schaufuss, P., Schenk, S., & Wu, T. (2019). Expanding electric-vehicle adoption despite early growing pains. McKinsey & Company.

International Council on Clean Transportation(2018). China’s new energy vehicle mandate policy (final rule); International Council on Clean .

Stephens, T.; Zhou, Y.; Burnham, A.; Wang, M(2018). Incentivizing Adoption of Plug-in Electric Vehicles: A Review of Global Policies and Markets. Argonne National Laboratory.

Wang, M. et al. (2021) ‘Carbon emission of energy consumption of the electric vehicle development scenario’, Environmental Science and Pollution Research, 28(31), p. 42401. doi: 10.1007/s11356-021-13632-z.

Yu Gan, Zifeng Lu, Xin He, Chunxiao Hao, Yunjing Wang, Hao Cai, Michael Wang, Amgad Elgowainy, Steven Przesmitzki, and Jessey Bouchard(2021)

Environmental Science & Technology (10), 6944-6956

DOI: 10.1021/acs.est.0c08217

2. The concrete of Ford Motor Company's failure in the competition of Chinese new energy vehicles

 

The concrete of Ford Motor Company's failure in the competition of Chinese new energy vehicles

 

1.     Overview

 

Because the world is paying attention to the issue of energy conservation and emission reduction, China wants to reduce the country's carbon emissions by developing new energy vehicles. Then China government made many new policies to encourage the cars productors to develop the new production.

 

So, the rapid development of new energy vehicles in China, especially the emergence of a large number of emerging new energy vehicle companies under the guidance of the government, they develop fast and strong. Nowadays, there are all kinds of new energy cars in China, such as Blade Electric Vehicles, Hybrid Electric Vehicles and so on. At the same time, other traditional car companies also have action soon. They product many types of new energy cars, and want to join the China market. This is a huge challenge for some traditional car companies which are slow or have not yet entered the market, especially Ford.

 

Unluckily, the Ford is not sensitive enough to China's policies, they just want to development the traditional cars and ignore the carbon emissions require about China government. When other car productor all concentrated on new energy cars, Ford did nothing.

 

 

Other countries have not paid much attention to new energy vehicles, such as the United Kingdom, the United States, etc. And Ford is a US company, it is unimportant for Ford to pay more energy to new energy cars. Because Ford is the best fuel cars productor.

 

 

But these traditional automobile companies, such as Ford, have relied on sufficient fuel vehicle technology reserves to occupy a large market share in China, and want to maintain their dominant position, they symbolically launched a pure electric car, but consumers have too many choices and are not interested in Ford’s new products.

 

 

2.     Current situation

 

Entered the Chinese market in June 2019. They make a new company with a China car productor named Jianghua. But at this moment, the market in China had been occupied by other brands. But at this time, Ford is no longer visible in China's new energy market. He has been classified as a “other" car brand with a very small market share among Chinese car brands. Prior to this, in 2018, Ford's sales ranking in China was still in the top 20 list.

 

Globally, they are lagging behind. Compared with other traditional auto companies such as BMW, Audi, etc. Although, in 2020, Ford still in the world's top five car companies list. If it still not pays attention to the new energy cars, it will be late.

 

Luckily, Ford realize the mistake in China, they make a plan about build the platform about new energy cars, and research and development the battery in this car. They want to increase the proportion of new energy vehicles in the entire automobile production system to 40%.

 

Ford has fallen behind too much in China's new energy vehicle market, but it is now aware of this problem and is actively making strategic adjustments, but it is not clear whether it will help the company's development in China's energy vehicle market in the future.

3.1 Reasons why Ford's electric car development in China lags behind other competitors

Reason 1

Compared to its competitors, Ford's grasp of China's policy on new energy vehicles 

( NEVs )  is untimely.

The Chinese government issued The Planning for the Development of the Energy-Saving and New Energy Automobile Industry (2012-2020) back in 2012. In this document, the Chinese government shows its expectation and support for strengthening international cooperation and exploring new commercialization models to promote new energy vehicles. 

Other essential and significant policies include the following:

①

NEVs imported for personal use are duty-free, according to the Announcement on Executing Industry Restructuring Guidance Catalogue (2011)

②

The Chinese government promotes electric vehicles through its procurement power.

### Within five years, 50% of all new cars acquired by China's central government must be new energy vehicles, according to a May 2016 directive.

③

Each Chinese car producer and importer must produce or import at least 10% electric vehicles by 2019.

In the face of numerous favorable policies and incentives, Ford China seems to be unmoved and is still moving at a slow pace in the field of new energy vehicles. While the competitors continue developing new models and investing heavily in modular platforms, Ford has only made a few conservative attempts, such as partnering with local Chinese car brand Zotye and sharing modular platform MEB (built with Volkswagen's investment)with Volkswagen.

MEB( Modular Electric Drive)

In contrast to Ford's conservative actions, Tesla, also an American brand, has quickly taken the opportunity to enter the Chinese market during the years when the Chinese government has been vigorously promoting the development of NEVs. With nearly 8 years' efforts, Tesla has gradually gained a firm foothold in the Chinese market under the country's multiple incentives for the consumption and sale of NEVs. Even at the end of 2019, Tesla officially inaugurated its super factory in Shanghai ( Tesla Giga Shanghai), China, the first Tesla super factory outside of the United States.

Tesla Giga Shanghai

Reason 2

Poor sales results and financial crisis and its knock-on effects continue to slow down Ford's electrification transition (electric revolution) in China.

According to Ford's official website for Ford's sales in China from 2016 to 2019, annual sales are in a steady decline, and the annual sales in 2019 are not even half of those in 2016. This figure is terrifying and alarming and inevitably adds to the pressure on Ford's sales and operations in the Chinese market. 

Against the backdrop of sluggish sales results, it can be noted that there have been considerable personnel changes at the top of Ford China since the start of 2018. Marked by the arrival of the new President and CEO, Anning Chen, Ford China has continued to bring in several local Chinese executives. Although the former CEO, Jason Luo, claimed that his departure was due to personal reasons, it is still difficult not to link this series of personnel changes to rescue the sales slump. 

Anning Chen

When Ford China focuses mainly on restructuring a new top team to salvage its dismal sales results, it is increasingly unrealistic to concentrate enough manpower and resources on developing and producing NEVs. 

In this series of personnel changes, the departure of Zhu Jiang, Chief Operating Officer of the Electric Vehicle Division and head of the Mustang Mach-E electric vehicle project, has undoubtedly added to Ford China's confusion and concern about the road ahead for NEVs during a period of time.

According to Ford's annual report data from 2016 to 2020, net income shows an overall downward trend. Even in 2020, net income is in deficit, the first time Ford has suffered an annual loss since the global economic crisis of 2008.

In response to salvage the crisis of a steady decline in annual net income, Ford's first move was not to switch to the new energy vehicle market but to adjust the layout of the sales of traditional fuel vehicles. Ford cut back on numerous low-margin or unprofitable car models instead of selling higher-margin trucks and commercial vehicles.

With the focus on restructuring the sales of conventional fuel vehicles, Ford has apparently overlooked the importance of timely electrification and has failed to balance its innovative business with its traditional business.

New energy vehicles are very new to traditional car companies like Ford, so it is difficult for Ford to make an accurate estimate of the amount of money and manpower that will need to be invested in the initial stages of development. Given the enormous financial pressure and the unpredictable capital investment, it is difficult for Ford to make a quick decision on whether to prioritize the development of new energy vehicles or the adaptation of traditional models. Ford is also not confident about the return on investment in the new energy vehicle sector.

Reference:

2012. The Planning for the Development of the Energy-Saving and New Energy Automobile Industry (2012-2020).

Briefing, C., 2021. Shifting Gears: Investing in China's Electric Vehicles Market - China Briefing News. [online] China Briefing News. Available at: <https://www.china-briefing.com/news/china-shifts-gears-electric-vehicles/> [Accessed 18 October 2021].

2011. the Announcement on Executing Industry Restructuring Guidance Catalogue (2011).

3.2 Resons why Ford's electric car development in China lags behind other competitors ?

 

Ford have below 5% market share in China Automotive industry and considering this fact and also for increasing the sales, in Aug’ 2017, Ford Motor boosted up its global electrification strategy and signed a business partnership with China based automaker, Anhui Zotye, for the production and sales of electric vehicle in China. Peter Fleet (Vice president of Ford Group ) and Ying Jianren (Board director of Zotye Auto) signed the JV deal of 50:50, value $756 million ( approx 5 Billion RMB). This deal signed due to the Ford overall car sales in China was down by 7 % in 2016, worse than the industry average of a 3.8 % climb, Battling fierce competition from a band of local competitors and heavy support from government on the production of Electic Vehicle, these factors were also worked as catalyst for this deal. As per new JV, plan is to build a manufacturing plant in zhejiang proviance and selling of small electric cars. Territory EV was the Ford’s first purely electric vehicle in china with the mileage of 224 miles per charge this car was a small electric SUV.

This Partnership was the “Best of Ford, Best of China” strategy, as Zoyte was pioneer in all electric vehicle segment whereas Ford Motor company is a pioneer in Global product development and technology capabilites But consecutive loss in Zotye, 11.2 Billion Yuan loss in 2019 and in between 6 to 9 billion yuan in 2020, and CNY 731. 825 million in 2021, results in the End of their partnership. However Ford commented on that it was due to change in China EU industry and change in policies by the chinese communist party (subsidy) on the Electric Vehicles. There were many other allegations also imposed on the company, Zoyte Automobile, for instance Lithium battery supplier, Bak Power, filled a law suit due to outstanding payments etc. It seems as Ford motor ended up in wrong partnership with the EV industry in China. This partnership was the part of stratrgy by Ford Motors to invest in electric market in china ($22 billion through 2025) and launch more than 30 vehicles for example electric version of their famous F-150 truck and Transit Van.

Along with the end of partnership, there were two another reasons also causing slow down in Ford Motor electric vehicles sales. First one is the trust of car dealers in china. Although Ford Motor established a direct sales network, which operates in 20 cities. Name of this strategy was “One Stop, everything online” service appointments, pick-up and delivery of car but still Ford Motor did not able to please the customers in China automotive industry. Another reason of Ford motor’s sluggish sale is, Company's outdated product lineup as Ford did not launch any new model quick enough and also the mainstream models were also not updated for years in china. Even After getting in the partnership with the local chinese Automaker, Zoyte, only one electric car model was launched till 2020. This also raised the concern in between the automotive industry customers in China.

4. Suggestions for the development of Ford’s electric vehicles in China

In current automobile market, the automobile revolution brought by new energy is an important issue in the current market. This revolution, on the one hand, affects the health of tens of thousands of people in cities, on the other hand, it affects the future of the earth and the ecological environment of the next generation.

 

1. The rationality of the price of new energy vehicles

 

China has given subsidies to both the sales industry and buyers of new energy vehicles. For the new energy vehicle sales industry，the Chinese government offers sales incentives in some areas. For example, on July 1^st, 2020, a series of policies on new energy vehicles have been promulgated in Nanchang, Jiangxi Province, China. Among them, in order to support the development of new energy vehicle enterprises, new energy passenger car single model, annual sales of more than 1,000 units, will be awarded 1.6 million yuan；annual sales of more than 2000 vehicles will be rewarded with 3.2

million yuan(by parity of reasoning). For the buyers, the Chinese government also offered some purchase incentives. If the purchase price is less than 100,000 yuan, the subsidy is 6,000 yuan; 8,000 yuan for the price of 100,000 to 200,000 yuan; the purchase price of more than 200,000 yuan each car will be awarded 10,000 yuan. 

According to the policies put forward by the Chinese government for new energy vehicles, I suppose that Ford can first gain an advantage in price positioning for its development in the Chinese market. With the continuous launch of new energy vehicles, a brand also should pay attention to the rationality of the price. If the price is reasonable and coupled with government subsidies, I think consumers will be more attracted to choose.

2. Electric vehicle types should be more electric 

As countries attach importance to environmental protection, new energy vehicles begin to attract more consumers. 

China is promoting green and low-carbon means of transport. For example, supporting facilities for new energy vehicle charging have been strengthened in urban infrastructure to meet the charging needs of electric vehicle consumers. 

I think Ford can design more pure electric cars in the configuration of electric cars. Because pure electric cars are more environmentally friendly and it can response to the government's promotion of green travel. In addition to this, pure electric car does not need oil raw material supply, it makes the travel cost is greatly reduced. Finally, the improvement of charging facilities has satisfied the problem of long-distance travel, making more pure electric car owners no longer have to worry about travel.

3. Form core competitiveness in the Chinese market

China's auto market has gone from high growth to flat growth, and competition has remained fierce. In my opinion, For the development of new energy in the Chinese market, Ford should follow closely the policies of China, investigate the needs of Chinese consumers, and innovate the types of cars. 

Ford's CEO Mark Fields has also emphasized that one goal is to give consumers choice. So I suppose that if Ford company combined with the demand of The Chinese market, Ford new energy series will have a good development prospect in China.

 

 

Reference

1.https://zhuanlan.zhihu.com/p/268820925

2.http://m.diandong.com/zixunmip/20126.html

3.https://card.weibo.com/article/m/show/id/2309404632478512971925