Fighting U

Fighting U.S. Auto Companies Looking to China

By Wayne Duggan, Contributor | Aug. 22, 2017, at 12:57 p.m.

Ford Motor Co. is exploring electrified car development with a hard in China. (Getty Pictures)

The U.S. auto industry has hit a bump in the road in 2017, but a pair of major players may soon be getting a green light in China. On Tuesday, Ford Motor Co. (NYSE: F) announced it is in talks to produce electrical vehicles in China, and a Chinese automaker just confirmed interest in buying at least part of Fiat Chrysler Automobiles (FCAU).

Ford has signed a memorandum of understanding with China’s Anhui Zotye Automobile, which produces electrified vehicles. The two auto companies are in talks to form a joint venture to sell electrical cars in China.

Ford has been criticized for falling behind its competition during the industry’s transition to the electrical era. U.S. rival General Motors Co. (GM) launched its fully-electric, long-range Chevy Bolt in December 2016, and Tesla (TSLA) began production of its highly-anticipated electrical Model three in July.

Earlier this year, Ford announced that its very first fully electrical long-range vehicle will be ready for production in 2020.

Ford investors are hoping a fresh partnership in China, fresh leadership and a fresh sense of urgency in pursuing electrical vehicle technology will help wake Ford from its slumber. Ford stock is now down thirty eight percent in the past three years.

“While the ultimate success of fresh CEO Jim Hackett remains to be seen, we believe a renewed concentrate or potential announcements on cost reductions and improvements in capital efficiency could reinvigorate interest in the stock,” Barclays analyst Brian Johnson says.

Fiat Chrysler has been actively seeking a potential buyer in latest years, but no company has stepped up with a bid. On Monday, China’s Superb Wall Motor Co. confirmed interest in acquiring Fiat Chrysler’s Jeep brand. Jeep is one of Fiat’s four major U.S. brands alongside Chrysler, Dodge and Ram.

In a statement, Fiat Chrysler says it “had not been approached by Fine Wall Motors in connection with the Jeep brand or any other matter relating to its business.” Investors emerge to be taking the reports with a grain of salt, as Fiat’s stock opened Tuesday’s session down 0.Trio percent.

U.S. auto investors are facing growing headwinds in what shows up to be the beginning of a cyclical downturn in the market. U.S. auto sales declined for the fifth consecutive month in July.

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