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Ford Will Build Electric Cars in Mexico, Shifting Its Plan

Ford Will Build Electric Cars in Mexico, Shifting Its Plan

By NEAL E. BOUDETTE

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A Ford Fusion equipped with driverless controls at a Michigan test center. Ford says it will build driverless vehicles at a Michigan plant previously designated for electric car production.

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Jeff Kowalsky/Agence France-Presse — Getty Images

Almost a year ago, after heavy criticism from President-elect Donald J. Trump, Ford Motor Company canceled plans to build a $1.6 billion car plant in Mexico and announced that it would instead equip a Michigan factory to make electric and hybrid models.

Now the automaker is changing its plans again, saying it intends to assemble new battery-powered cars in Mexico, not Michigan. But the Michigan location will get an even larger investment than previously planned and will focus on making a range of self-driving cars.

The switch comes as the Trump administration has been pushing to renegotiate the North American Free Trade Agreement with Canada and Mexico. Few industries are more heavily affected by the accord than the auto sector, which has rushed to build plants in Mexico over the last several years to take advantage of lower labor costs and that country’s extensive network of trade agreements.

Late last month, Vice President Mike Pence met with top executives from Ford, General Motors and Fiat Chrysler to discuss trade and the renegotiation effort.

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Automakers have been concerned that changes to the trade accord, such as rules requiring the use of more American-made parts, could raise the cost of vehicles produced in Mexican plants and hurt the value of the plants they have built.

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Sherif Marakby, Ford’s vice president for autonomous vehicles and electrification, said Thursday that the company had altered its plans for the Michigan plant — in Flat Rock, 25 miles southwest of Detroit — because it now expected the market for self-driving cars for taxis and delivery fleets to grow rapidly after it rolls out its first model in 2021.

“We want to make sure we have the capacity at Flat Rock when we launch,” he said in an interview. “We are very optimistic that we will grow the volume in the autonomous business.”

Ford now plans to invest $900 million in the Flat Rock location, up from $700 million. The company said the retooling for autonomous vehicles would create 850 jobs there, 150 more than it previously expected.

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Producing electric cars in Mexico will enable Ford to take advantage of lower labor costs and improve the “fitness” of that business, Mr. Marakby said.

Ford’s change in plans was reported by The Wall Street Journal and later confirmed by the automaker.

Electric vehicles tend to be expensive to build and generate thin profit margins or even lose money because batteries remain costly and sales volume low. Auto wages in Mexico rarely exceed $10 an hour, compared with about $29 an hour in the United States.

“If you’re worried about your margins on your E.V., moving production to Mexico is not a bad idea,” said Mike Ramsey, an automotive analyst at Gartner.

Ford plans to begin assembling a small, battery-powered sport-utility vehicle in a plant in Cuautitlán, north of Mexico City, in 2020. The vehicle is supposed to go 300 miles before needing to recharge its battery, giving it a greater range than any electric cars now on the market.

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Ford plans to follow that model with at least 12 electric vehicles as part of a broader, global strategy. Ford and other automakers expect sales of electric cars to take off in the years ahead as China, European Union countries and others push automakers to cut tailpipe emissions.

Ford’s shift drew no immediate public comment from President Trump. While campaigning last year, he criticized the company repeatedly for its plan to build a small-car plant in Mexico. He also criticized G.M. for importing Chevrolet hatchbacks from a Mexican plant.

In January, in the days leading up to Mr. Trump’s inauguration, Ford announced that it was canceling the new plant and investing in Flat Rock instead. That drew compliments from the president-elect.

In May, however, Ford ousted its chief executive, Mark Fields, and replaced him with Jim Hackett. Under Mr. Hackett, Ford seems to have taken a different tack. In one of his first moves, he set a plan to import Focus compacts into the United States from a plant in China.

A version of this article appears in print on December 8, 2017, on Page B4 of the New York edition with the headline: Ford to Build Electric Cars in Mexico and Autonomous Vehicles in Michigan. Order Reprints| Today's Paper|Subscribe

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