Ford to build electric vehicles in Mexico, revamp Flat Rock plant for self-driving cars

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Dozens of companies in California are reportedly now test self-driving cars, with Samsung being the latest corporation to get permission from the state’s Department of Motor Vehicles. Wochit

Clarification: This version of the story clarifies Ford’s plan for its electric car production in Mexico.

Ford Motor Co. is shifting production of an all-electric vehicle to Mexico, while saying it will create 850 jobs by adding production of an autonomous car in Flat Rock, Mich.,where it will also continue building the Mustang and Lincoln Continental

It wants to sell the self-driving car to delivery fleets beginning in 2021.

In March, the Dearborn-based automaker announced it would not build a new plant in Mexico, and said it would add production of both the electric vehicle and the hybrid autonomous vehicle in Flat Rock. That plan, which Ford said would create 700 jobs, was formulated after President Donald Trump threatened to withdraw the U.S. from the North American Free Trade Agreement and ridiculed automakers for making any vehicles in Mexico.

The UAW told the Free Press on Thursday that the latest decision by Ford to produce the EVs in Mexico will not result in fewer jobs at home because the union already negotiated future job commitments.

“During the 2015 negotiations with Ford, we secured significant product investment for our members at the Flat Rock assembly plant and other manufacturing facilities in the U.S.,” said UAW Vice President Jimmy Settles. “Yesterday’s announcement by Ford to expand production of autonomous vehicles at Flat Rock, and move a low-volume electric SUV to Mexico does not affect our jobs or economic investment commitments.”

The labor union represents 59,000 Ford workers.

Separate from its electric and autonomous vehicle plans, Ford also plans to introduce a fourth vehicle to be built at Flat Rock in the next few years.

While the UAW is never thrilled when manufacturing moves to Mexico, it’s a fact of life. Automakers, regardless of whether they’re based in the U.S., Japan, South Korea, or Germany, are producing more small passenger cars in Mexico or other low-cost countries.

Fiat Chrysler Automobiles stopped building its mid-size Chrysler 200 and Dodge Dart altogether.

The exception is General Motors, which is assembling its all-electric Chevrolet Bolt, including self-driving units, at its Orion Township plant in Oakland County, the Chevrolet Volt plug-in hybrid in Detroit-Hamtramck, while splitting production of the Chevrolet Cruze compact between Mexico and Lordstown, Ohio.

Ford has dropped a flurry of news in recent weeks in an effort to change the perception that it is trailing General Motors and Google’s Waymo spinoff in the race to introduce a reliable and safe autonomous vehicle for ride-sharing purposes.

Jim Farley, president of global markets for Ford, was quoted as saying the decision shows the start of “the foundation of Ford’s bet on AV’s (autonomous-drive vehicles). We’re very excited about what we are doing.”

Farley also said Ford is aiming to sell its first fully autonomous vehicles to businesses such as construction companies and commercial delivery fleets. That contrasts with the strategy that GM and Cruise Automation have discussed. They see the first use in ride-hailing fleets such as Lyft. 

Farley told the Wall Street Journal that the move will make Flat Rock the “center of excellence” for future driverless vehicles.

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A person familiar with Ford’s future production plans said the company expects to produce only about 4,500 of the autonomous vehicles annually after 2021, while the plan calls for about 25,000 electric vehicles a year in Mexico.

Normally 4,500 vehicles a year would not require many jobs, but the AV will be a custom-designed with features that will add to its production complexity. 

For example, it will have a gas-electric hybrid powertrain. That means both a gasoline engine and a battery pack. Ford has said it will be controlled by something other than a steering wheel, accelerator or brake pedals. 

“There’s going to be huge amount of new wiring and sensors, and early on it’s going to require more people to produce and test it,” said Mike Ramsey, an analyst with the Gartner Group, specializing in autonomous mobility.

By moving the electric vehicles to Mexico Ford is taking the risk that the Trump administration will not follow through on its threat to pull the U.S. out of the North American Free Trade Agreement. 

If NAFTA were to end, the U.S. could impose a tariff of about 2.5% on the parts and fully assembled passenger car imported from Mexico, according to Kristin Dziczek, director if the Center for Automotive Research’s industry, labor and economics group. 

Industry leaders, including Joe Hinrichs, Ford president of global operations; Mary Barra, GM CEO and Sergio Marchionne, FCA CEO, are lobbying against a U.S. withdrawal from NAFTA, including at a meeting last month with Vice President Mike Pence.

Some observers wondered why the Mexico announcement wasn’t made in October, when Ford CEO Jim Hackett met with investors. At that event Hackett said Ford would introduce 13 new electric vehicles globally in the next five years.

“This is all a bit strange,” said Dave Sullivan, a product analysis manager at AutoPacific Inc. “Was the original Flat Rock announcement merely lip service to the president?

“Ford’s plans seem to be a bit scattered these days,” he said. “It wasn’t too long ago Ford canceled plans to build a plant in Mexico. This is like plant musical chairs. I mean, they broke ground in Mexico and had to pay money to get out of contracts. So now we’re back to making cars in Mexico?”

News of the shift in plans — which includes an additional $200 million investment in Flat Rock — was first reported by the Wall Street Journal while Ford officials toured China. The vehicle to be built in Michigan is said to be an entirely new model for Ford, a hybrid-electric autonomous vehicle.

Contact Phoebe Wall Howard: 313-222-6512 or phoward@freepress.com. Follow her on Twitter: @phoebesaid. 

 

 

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