Ford cancels EV production plans in India

Ford has withdrawn its application from the Centre’s production-linked incentive (PLI) scheme. The American carmaker was in the first tranche of manufacturers who got approval for this scheme. Now, however, the company will not use any of its existing facilities in India – at Maraimalai Nagar, Tamil Nadu and Sanand, Gujarat – for this purpose. The state of these plants lies in limbo now. Future of 24,000 employees in Tamil Nadu doubtful Ford will continue to import and sell cars in the country Tata and Hyundai rumoured to be eyeing Ford's plants What is the PLI scheme? The PLI scheme, for the uninitiated, caters to both the automobile as well as the auto components industries. Incentives under the PLI Scheme will be disbursed to the industry over the course of five years. The scheme aims to draw fresh investments of over Rs 42,500 crore by 2026 and promote incremental production of over Rs 2.3 lakh crore for the automobile and auto component industries. Mnaufacturers like Maruti Suzuki, Tata, Hyundai and others had got approval previously. What's in store for its employees From its employees’ point of view, this will be a big setback as electric vehicle production would have given them some hope. The Tamil Nadu government will also be concerned, and will have to do its bit to scout for a buyer. This can be tricky as 2,400-odd people were employed at Maraimalai Nagar, and they are unsure if they will be jobless once vehicle production ceases at the plant. It is not the easiest of situations handling anger and anxiety, and this is where the state government will have to tread carefully. Talks have apparently been on with other automakers, but observers believe the best fit will be Hyundai, which has big plans for India. The Korean carmaker has a plant in Sriperumbudur, which is not too far from the Ford facility near Chennai. This is a vibrant auto hub with a host of other brands like Renault-Nissan, Daimler India Commercial Vehicles, Royal Enfield, Yamaha and more. Why could Ford have dropped out? Ford could possibly have chosen to drop India from its EV plans as the present state of geopolitical tensions across the world – the war in Ukraine and the lockdown in China – have led to a massive increase in input costs for EVs. Ford, perhaps, did not think it appropriate at this point in time to contemplate new investments in electric. Sources also say that the capacity at Maraimalai Nagar could also have been a challenge from a long term point of view for production worldwide. Ford is betting big on this business and would have ideally needed more capacity to make this a reality. Ford's future in India By the end of the day, it is now clear that Ford has wrapped up its India innings and there is no question of restarting operations. As previously reported, Ford will continue importing cars as Completely Built Units (CBUs), and though the EV foray kindled hopes, with the shelving of the PLI scheme, the company will join a growing list of automakers that have exited India. The biggest casualty each time this happens is the workforce as evident with Peugeot and Daewoo two decades earlier followed more recently by General Motors and Harley-Davidson. Speculation was rife that the Maraimalai Nagar plant near Chennai would be right for EV manufacturing since reports have been doing the rounds that the other unit at Sanand, Gujarat, will be sold to Tata Motors. Also see: Ford faces tough future in India   The two big challenges for Ford’s CBU only plan What are your thoughts on Ford withdrawing from the PLI scheme? Let us know in the comments below.

Ford cancels EV production plans in India
Ford electric vehicles India

Ford has withdrawn its application from the Centre’s production-linked incentive (PLI) scheme. The American carmaker was in the first tranche of manufacturers who got approval for this scheme. Now, however, the company will not use any of its existing facilities in India – at Maraimalai Nagar, Tamil Nadu and Sanand, Gujarat – for this purpose. The state of these plants lies in limbo now.

  • Future of 24,000 employees in Tamil Nadu doubtful
  • Ford will continue to import and sell cars in the country
  • Tata and Hyundai rumoured to be eyeing Ford's plants

What is the PLI scheme?

The PLI scheme, for the uninitiated, caters to both the automobile as well as the auto components industries. Incentives under the PLI Scheme will be disbursed to the industry over the course of five years. The scheme aims to draw fresh investments of over Rs 42,500 crore by 2026 and promote incremental production of over Rs 2.3 lakh crore for the automobile and auto component industries.

Mnaufacturers like Maruti Suzuki, Tata, Hyundai and others had got approval previously.

What's in store for its employees

From its employees’ point of view, this will be a big setback as electric vehicle production would have given them some hope. The Tamil Nadu government will also be concerned, and will have to do its bit to scout for a buyer.

This can be tricky as 2,400-odd people were employed at Maraimalai Nagar, and they are unsure if they will be jobless once vehicle production ceases at the plant. It is not the easiest of situations handling anger and anxiety, and this is where the state government will have to tread carefully.

Talks have apparently been on with other automakers, but observers believe the best fit will be Hyundai, which has big plans for India. The Korean carmaker has a plant in Sriperumbudur, which is not too far from the Ford facility near Chennai. This is a vibrant auto hub with a host of other brands like Renault-Nissan, Daimler India Commercial Vehicles, Royal Enfield, Yamaha and more.

Why could Ford have dropped out?

Ford could possibly have chosen to drop India from its EV plans as the present state of geopolitical tensions across the world – the war in Ukraine and the lockdown in China – have led to a massive increase in input costs for EVs. Ford, perhaps, did not think it appropriate at this point in time to contemplate new investments in electric.

Sources also say that the capacity at Maraimalai Nagar could also have been a challenge from a long term point of view for production worldwide. Ford is betting big on this business and would have ideally needed more capacity to make this a reality.

Ford's future in India

By the end of the day, it is now clear that Ford has wrapped up its India innings and there is no question of restarting operations. As previously reported, Ford will continue importing cars as Completely Built Units (CBUs), and though the EV foray kindled hopes, with the shelving of the PLI scheme, the company will join a growing list of automakers that have exited India. The biggest casualty each time this happens is the workforce as evident with Peugeot and Daewoo two decades earlier followed more recently by General Motors and Harley-Davidson.

Speculation was rife that the Maraimalai Nagar plant near Chennai would be right for EV manufacturing since reports have been doing the rounds that the other unit at Sanand, Gujarat, will be sold to Tata Motors.

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What are your thoughts on Ford withdrawing from the PLI scheme? Let us know in the comments below.