Ford Motor Company is again pushing the limits of how a century old automaker can survive and remain relevant as the automobile becomes a rolling computer. People close to conversations ongoing suggested that Ford is negotiating with Geely of China on the possibility of developing an alliance of manufacturing and technology, representing a wider trend throughout the worldwide auto industry toward cooperation and not isolation. Although nothing has been established yet, the discussions themselves speak volumes of where the future of carmaking is going as far as Ford is concerned.
The center of the discussions is Europe, which Ford has been reviewing the presence of over the years. It has been reported that one of the solutions under consideration is where Geely will use the already existing Ford factory in Europe to produce vehicles to serve the local market. In the case of Ford, this would imply that it can put unused capacity into play at the time when idle plants have become a costly liability. In the case of Geely, it would provide an option of accessing European production at a faster rate than the political and financial challenges of constructing a factory. The discussions concerning the production in Europe are perceived to be the most advanced part of the wider discussions.
In addition to the manufacture, Ford and Geely have also been considering the concept of sharing vehicle technologies. Such debates are said to feature high-technology systems involving automated driving, which is an industry where cost of development is so high and schedules are unpredictable. In the industry, car manufacturers are discovering that acting independently in terms of software, sensors, and artificial intelligence may consume resources without necessarily leading the pack. In the case of a company such as Ford, who is walking the fine line between investing into electric cars, connecting car platforms, and its time-tested internal combustion engines, the distribution of that burden is self-evident.
Individuals who are aware of the discussions indicate that they have been months old and have included top leadership in both camps. New meetings seem to have provided impetus. Ford is said to have sent a delegation to China in order to further the discussions, and this came after previous meetings had been held in Michigan between the leaders of Ford and those in Geely. These discussions indicate that the two companies perceive sufficient strategic fit to continue the conversation despite the fact that the specifics are still immature and confidential.
Ford itself has been very cautious in taking a public position. According to a statement, the company claimed, we do talk to many companies constantly on various subjects. They come to pass sometimes, and they do not other times. Any person with some long-term experience in the auto industry will be familiar with the wording. It recognizes the fact that it is always about deal-making without being determined to a particular result. Such ambiguity is deliberate, particularly when it comes to matters of geopolitical sensibility.
Such sensitivities are giant around any possible joint venture with a Chinese car maker. The barrier encounters by Chinese car companies in the United States have been enormous where tariffs and other regulatory barriers have virtually locked the companies out of the market in the recent years. These actions were explained by the national security reasons, especially the issues of data gathering and vehicle software. Any process that could result in the transfer of hi-tech Chinese vehicle technology into the American market would probably be highly scrutinized by the policymakers and the regulators.
This background explains the reasons why the arguments seem to be centred on Europe as opposed to North America. Europe presents another regulatory environment and market that both companies already experience. To Ford, Europe was a difficult yet a strategic region since the competition was stiff, the emission regulations were turning to be strict, and the consumers preferences were changing. Improving the utilization of the current facilities with the aid of partnerships might contribute to stabilizing the functioning liberating capital to be invested in the future.
Geely on its part has established a reputation of an efficient and global thinking car maker. It is a shareholder or owner of a number of international brands, as well as having experience in operating in various regulatory environments. A partnership with Ford would be in line with its larger trend of partnering with existing players to increase its reach and technological strength. On the part of Ford, the size and increasing competence of Geely in the field of electric and software-driven cars may be used to supplement its advantages.
What happens to be so iconic of the moment is that these talks are representative of a larger industry trend. All over the world, automakers are searching to find collaborations that will help them cover the colossal expenses required to electrify, automate, and digitalize. The classic system of vertically integrated car manufacturers that do not outsource anything is being strained. The concept of sharing factories, platforms and even software architectures is not an exception anymore.
It also has a human factor to this change, which is usually lost in corporate announcements. Engineers, plant managers, and executives are struggling with quick change, torn between their ego in the self-sufficiency of their company and the reality of cooperation. In the case of Ford, a company that has a history of over one hundred years, it would have not been possible to collaborate with a Chinese car manufacturer yesterday. It is included today in a determined review of what it requires to be competitive.
Nonetheless, it remains questionable what will happen. According to sources, it is still unclear how far the negotiations are going and it is not certain that they will lead to an official deal. The outlines even of an agreement may not be extensive to vast areas or technologies, instead of being a blanket alliance. The political and the regulatory response, the market factors all might affect the progress of the discussions and their peaceful disappearance.
Another aspect that Ford would need to exercise caution on is the perception of the people. Collaboration with Chinese companies will raise the eyebrows of both the consumers and legislators, especially the United States. Meanwhile, investors and industry analysts are becoming more concerned with partnerships, which can lead to cost-savings and accelerated innovation. To control these conflicting demands, it will be necessary to communicate keenly and act disciplinedly.
