Ford and Renault announced a collaboration on Tuesday, December 9, to jointly develop more affordable small electric vehicles for the European market and produce commercial vans together to reduce costs and withstand the impact of cheap Chinese cars.
In Paris on Monday, Ford CEO Jim Farley stated that Europe is the best example of the industry “fighting for survival.” Traditional European car manufacturers are facing significant competition from Chinese rivals such as BYD, Changan, and Xpeng.
As part of the collaboration, the first of the two planned small electric vehicles will be produced at Renault’s factory in northern France and will enter the European market in 2028. Farley mentioned that the size of these models will be smaller than any of Ford’s plans in the American market, filling a gap in Ford’s product line. Additionally, the two car manufacturers will jointly develop vans under the Renault and Ford brands for Europe.
According to analyst Michael Foundoukidis of Oddo-BHF quoted by Reuters, this deal allows Renault to offset fixed costs and generate revenue while providing Ford with a “capital-efficient path” to enter the affordable electric vehicle market. He believes that this collaboration emphasizes the increasing necessity for traditional car manufacturers to engage in “pragmatic cooperation” to counter the competition from cheap Chinese cars.
“We can create a powerful light commercial vehicle (LCV) alliance in Europe that makes it difficult for Chinese competitors to compete,” stated Farley. While Chinese brand vans currently have low sales in Europe, the two companies compete directly with them every day in emerging markets.
Renault CEO Francois Provost expressed, “The Chinese are coming fast, that’s why I don’t want to wait.”
The collaboration came about after Renault’s team visited Ford’s Detroit headquarters in March, but both Farley and Provost emphasized that the two car manufacturers do not intend to merge. Farley insisted that “Ford is an extremely independent company.”
With Ford’s withdrawal from passenger car sales, its market share in Europe dropped from 6.1% in 2019 to nearly half at 3.3% in the first 10 months of this year. Ford has laid off employees and closed its factory in Saarlouis, Germany.
Ford is an iconic American manufacturing company. Utilizing Renault’s electric vehicle platform with Ford’s design should help Ford compete with traditional manufacturers like Volkswagen and Chinese rivals in the European electric vehicle market. Ford’s existing partnership with Volkswagen (including producing Explorer and Capri electric cars on the latter’s platform) will continue alongside the collaboration with Renault.
Renault is the smallest mainstream car manufacturer in Europe and does not sell cars in the Chinese and American markets. The collaboration with Ford will expand its manufacturing scale to reduce costs and alleviate the burden of developing new electric vehicles.
Renault is also jointly developing vans with Nissan and the Volvo Group.