Ford drops plan to manufacture EVs in India; opts out of PLI scheme

American automaker Ford on Thursday said that it had withdrawn plans to manufacture electric vehicles (EVs) in India and it won’t invest in the country under the performance-linked incentive (PLI) scheme.

“After careful review, we have decided to no longer pursue EV manufacturing for exports from any of the Indian plants. We remain grateful to the government for approving our proposal under the PLI and for being supportive while we continued our exploration. Ford India’s previously announced business restructuring continues as planned, including exploring other alternatives for our manufacturing facilities. We continue to work closely with unions and other stakeholders to deliver an equitable and balanced plan to mitigate the impacts of restructuring,” the company said in a statement.

Ford’s application, selected under the PLI scheme, was among the 20 other automakers that the Ministry of Heavy Industries had shortlisted under its Champion OEM scheme. The Centre is giving incentives worth Rs 45,016 crore to attract automakers to increase their manufacturing in India.

At that time, the company said it was exploring the possibility of using one of its plants in India to produce electric cars for exports.

In February, the Centre announced that the American automaker was among those entities which qualified for its PLI where the core objective is self-reliance. In Ford’s case, it was made amply clear that this meant production of EVs and components for overseas markets.

The decision of Ford to opt out of EV production in India has cast doubt on the future of workers at the company’s now-shut Chennai plant.

It was on September 9 that Ford India announced the shutdown of its manufacturing units at Maraimalai Nagar in Tamil Nadu and Sanand in Gujarat. The state government was in talks with Tata Motors and also Ford India later for EVs.

Tamil Nadu was betting big on EVs, with the state even extending its talks with players like Tesla. In October and December, Tamil Nadu Chief Minister M K Stalin had held a couple of rounds of talks with key Tata Motors officials, including Group Chairman N Chandrasekaran and Executive Director Girish Wagh.

Last year, the company said it would stop manufacturing vehicles in India but retain the engine-making and technology services business (Global Business Services) as part of restructuring its India operations. Approximately 4,000 employees are expected to be affected by this.

The move was prompted by the mounting losses, slowdown in the passenger vehicle market, and the crisis the pandemic brought.

Ford had been rethinking its India operations even before it had initiated discussion with Mahindra & Mahindra in 2019. It decided to cease manufacturing after considering all options, including contract manufacturing, he added.

It is the fourth US automaker to shrink India operations — after Harley Davidson, UM Motorcycle, and General Motors — in less than five years amid poor sales, high operating losses, high fixed costs, and a market that has failed to live up to the parent company’s expectations.

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