Ford (NYSE:F) said on Monday that it will invest $1.8 billion over the next five years to expand its research and development efforts in China.
Speaking at an event in Shanghai, CEO Mark Fields also said that Ford will bring new hybrids -- and eventually, fully electric cars -- to the world's largest auto market over the next few years.
It's the latest set of moves by Ford to boost its presence in the world's largest auto market -- moves that, so far, have paid off with big sales for the Blue Oval.
"Accessible innovation" for Chinese car-buyers
Fields described Ford's latest investment as one intended to "deliver accessible innovation driven by the needs of Chinese consumers."
Under Fields, Ford's publicity folks have been fond of the word "innovation." But there's real substance here: The money will be put toward efforts on multiple fronts, including self-driving vehicle technologies, carpooling and car-sharing, and what Ford calls "new energy vehicles," or NEVs. A good deal of that research will happen in China, at Ford's Nanjing Research and Engineering Center, Fields said.
Fully self-driving vehicles aren't coming to China (or anywhere else) anytime soon. But cars will gradually acquire the ability to do the driving for you in more and more situations over the next several years. Some of the technologies that will make that possible are already available, such as adaptive cruise control and parking-assist systems. Ford will invest in bringing more of those to Chinese drivers in an affordable way.
Ford also said in a statement that its upcoming new Sync 3 "infotainment" system will be the first to support the QQ messaging system. QQ is China's largest social-media platform, with over 840 million active users. And it's working with Dida, a Chinese company that facilitates carpools, to promote the idea of informal car-sharing.
Another hint that Ford is planning a big push into electrics
We've seen several hints over the last couple of years that Ford is quietly gearing up for a big push into more advanced hybrids and electric cars. In the near term, what it's bringing to China is nothing new to Americans -- it's the plug-in hybrid version of the C-Max and the regular hybrid version of the Mondeo sedan (the car that Americans know as the Fusion).
Fields didn't get into specifics, but he did say that there are more "electrified vehicles" to come. He also promised cleaner and more efficient versions of its EcoBoost gasoline engines for China over the next few years. The upshot, Ford says is that the average Chinese Ford customer will reduce his or her annual fuel consumption by over 200 liters in 2020 versus 2015. That, Ford says, will reduce carbon dioxide emissions by more than 500 metric tons a year in China.
At a moment when the Chinese media is giving a lot of play to Volkswagen's massive emissions-cheating scandal, playing up its commitment to green technologies in China is a savvy move by Ford.
A well-timed moment for Ford's high-tech green push
Ford was a latecomer to China, but its sales have grown much faster than the overall market over the last few years. It had just a tiny presence when then-CEO Alan Mulally launched a $5 billion effort to make Ford a major player in China, about three years ago.
Now, it's the fifth-largest foreign carmaker in China. It blew past most of its Japanese rivals thanks in part to a relentless push to incorporate Chinese customers' tastes and needs into the regional versions of its global models.
This is another move in that direction. Chinese regulators have been making a bigger push to deal with severe air pollution in major cities. Cars that can operate without gasoline -- whether fully electric or plug-in hybrids -- are increasingly favored in places like Beijing. And mainstream Chinese consumers are just as interested in getting the latest high-tech features in their cars as are consumers in the U.S. or Europe.
Long story short: It's a good moment for Fields and Ford to be playing up the company's push toward greener, high-tech products for a Chinese audience.
John Rosevear owns shares of Ford. The Motley Fool recommends Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.