Ford announces its return to India! Will it repeat the same mistake this time?

Financial Associated Press (Shanghai, editor Niu Zhanlin) news, the second largest U.S. automaker Ford Motor announced on Friday Eastern Time, is considering setting up a factory in India to produce electric vehicles for export, may also be sold in the Indian domestic market. Just a few months ago, due to years of persistent losses, Ford announced its withdrawal from India, stopping selling and producing cars in India. In the US stock market, Ford's stock price did not fluctuate significantly.

Ford's latest remarks mark a shift in its strategic goals. The company said in September that it would bear a loss of about $2 billion and would exit the Indian auto market because it could not see a path to profitability. Ford's decision was also a blow to Prime Minister Narendra Modi's Make in India campaign.

Ford has two auto plants in India. In a statement on Friday, the company said it was "exploring the possibility of using a plant in India as an export base for electric vehicle manufacturing." ”

Asked if the company would also consider selling electric vehicles in India, a spokesperson for Ford India said: "There is no specific discussion on this at the moment, but it will be within the scope of future considerations."

In what Ford calls the "global electric vehicle revolution," Ford is increasingly focusing on consumers. The automaker has previously said it plans to invest $30 billion in electric vehicles and batteries by 2030.

When Ford stopped production in India, its share of the local passenger car market was less than 2%, and it was only based on years of accumulated losses, continued overcapacity in the industry, and the growth of the Indian auto market that was not as expected, ford decided to terminate the production of new cars in India. However, analysts are positive about the business restructuring.

Gaurav Vangaal, senior director of production forecasting at IHS Markit, said the Indian market would continue to open its doors to Ford if it made a decision at a later stage.

Vangaal said it's cost-effective to produce cars in India, and Ford's Indian plant has exported cars to North America and Europe in the past — both of which are now large and growing markets for electric vehicles.

"Ford will have to prove cost-competitive in making electric vehicles in India, and for that it will require significant investment to localize the supply chain," he said. He added that Ford also needs to figure out how to get lithium-ion batteries.

Before Ford announced its strategy to return to India, the Indian government also announced on Friday that 20 car companies, including Ford and Hyundai, are eligible for the government's total of $3.5 billion in clean energy vehicle incentives. According to a plan adopted by the Indian government last year, the plan will incentivize car manufacturers to manufacture electric and hydrogen energy vehicles and related components over the next five years.