Ford Motor Co. (NYSE:F) and India’s Mahindra and Mahindra Ltd have called off their joint venture which began almost two years ago because of the challenges caused by the pandemic.
Pandemic challenges force Foprd to call off JV with Mahindra
The company had indicated that their joint venture was for collaboration on technology and products. The companies issued separate statements regarding the calling off of the JV. Ford indicated that its move was motivated by significant changes in economic and business circumstances globally. The statement issued from the company’s headquarters in Dearborn in Michigan indicated that the automakers had reached a mutual and amicable decision to call off the collaboration. However, Ford maintains that it will continue its operations independently in India. The decision comes following the expiration date of the definitive agreement the companies signed in October 2019.
Ford Spokesperson T.R. Reid said that currently, the economic and business conditions globally have changed. Reid said that they had a deadline of December 31 to finalize the joint venture but the companies agreed to end the agreement instead of closing the transaction or extending the timetable to close the deal.
Ford and Mahindra were to co-develop electric vehicles
According to the details of the defunct JV, Mahindra was supposed to acquire Ford’s operations in India with the US automaker holding 49% of the joint venture. The automakers could then work to manufacture new platforms, SUVs, and cars including electric vehicles. The JV was a way of cutting costs in the development and production of cars for emerging markets. At the time the companies had indicated that they expected to unveil three new utility cars starting with a midsize SUV and co-develop electric vehicles.
Reid didn’t confirm if the vehicles they expected to launch had been cancelled stating that for now, the JV is off. Ford has indicated that it is evaluating its businesses across the globe including India to make choices on capital allocation in a manner that advances its plan to attain an 8% adjusted EBIT margin and strong free cash flow.