Ford Forms JV In China To Manufacture Electric Vehicles

Per Reuters, Ford Motor Company (NYSE:F) and China-based Anhui Zotye Automobile will be setting up a 50-50 joint venture (JV) to produce electric vehicles for China. The companies will make a combined investment of $756 million for the same.

The new Chinese consolidation has been named Zotye Ford Automobile Co. Ltd. It has plans to build a manufacturing plant in the country’s Zhejiang province and will sell all-electric vehicles under a new Chinese brand.

In addition, the joint venture aims to launch a new brand of small all-electric vehicles. Also, with the rising demand for mobility services in China, Zotye and Ford will be examining vehicle connectivity and mobility service solutions for its customers.

Ford Motor Company Price and Consensus

By 2025, Ford intends to sell 70% of its vehicles having electrified powertrain options in China. The company has other Chinese partners in Chongqing Changan Automobile Co. and Jiangling Motors Corp besides Zotye. All these are intended to strengthen the Michigan-based giant’s presence in the mainland.

China in a bid to tackle the air pollution has implemented a new set of emission rules that would require all automakers to produce zero and low-emission vehicles, starting from 2019. This restriction on the sale of combustion engines has forced local as well as foreign automakers to emphasize more on the production of zero-emission electric vehicles in the country.

Price Performance

The stock has lost 2.7% in the last 30 days, outperforming the 7.5% decline of the industry it belongs to.

Zacks Rank & Key Picks

Ford carries a Zacks Rank #3 (Hold). Some better-ranked auto stocks are PACCAR Inc. (NASDAQ:PCAR) , Cummins Inc. (NYSE:CMI) and AB Volvo (OTC:VLVLY) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR has an expected long-term growth rate of 10%.

Cummins has an expected long-term growth rate of 12.1%.

Volvo has an expected long-term growth rate of 15%.

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