U.S.-based Ford Motor Company and India's Mahindra & Mahindra Ltd. have joined hands to explore vehicles powered by electricity, the auto companies said on Monday. Under the three-year alliance, the companies will help one another in sourcing, product development and achieving “commercial efficiencies”.
The two automakers had walked out of a collaboration to develop sedans in 2005. The future of this tie-up will be decided after three years, they said.
Monday's announcement comes at a time when electrification has hogged the spotlight and the emergence of new-age automakers like Elon Musk's Tesla Inc. have resulted in liaisons between global leaders in the industry. India is looking at having an all-electric car fleet by 2030, the then power minister Piyush Goel had said in April.
Suzuki Motor Corporation of Japan has announced a joint venture with Toyota Motor Corporation, and Volkswagen Group's Skoda Auto had a similar pact with Tata Motors Ltd., which was called off recently.
The sense of uncertainty associated with electric vehicles has resulted in these arrangements. “While their stronghold on vehicles running on conventional fuel has existed for years, the aspect of electrification is a new territory, and the risk is substantial, said Kavan Mukhtyar, partner and leader automotive, at global consultancy PwC.
The companies “need to invest a lot” and the “business model is not clear” yet, Mukhtyar said. “Infrastructure like charging points and batteries has not developed in India.” The companies were hedging their risks, he said. “The Teslas, Apples and Googles are making traditional companies sit back and think.”
Ford Motor, too, described the situation as “unprecedented transformation in the global automotive industry”.
In terms of products, the automakers may look at working together on electrifying existing vehicle platforms, a senior official from Ford India said. The details around the same would be worked out in the days to come, he said.
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Of the companies' vehicle platforms present in India, M&M has mild hybrids in its sport utility vehicles. In electrics, the Mumbai-based company has its e2o electric hatchback, which has received a lukewarm response so far. Ford Motor has an all-electric variant of its Focus hatchback present in overseas markets, though none in India.
As for the Indian manufacturer, it saw “the need to anticipate new market trends, explore alternatives and look for ways to collaborate”, said Managing Director Pawan Goenka. The partnership is expected to “open opportunities for both” the companies, he said.
M&M could “gain a lot in the connected vehicles” space from the partnership, said Mukhtyar.
The government has shown clear intent to transition to electric vehicles, with connected mobility also being a priority. It has kept the levy rate for electric vehicles at the lowest slab of 12 percent under the Goods and Services Tax. Earlier this month, Union Road Transport and Highways Minister said that auto companies unwilling to move to cleaner fuels may even be at the risk of being “bulldozed”.
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