Ford and China's Zotye are reviewing their collaboration agreement after almost two years of little progress, according to reports in China citing people close to one of the companies.

The two companies signed a collaboration agreement in late 2017, to jointly invest US$756m in a 50:50 joint venture for the development and production of a range of electric vehicles for the local market. But the partnership has yet to get off the ground due to "dramatic changes in China's automotive market and related industry policies".

China's overall vehicle market has declined by over 11% to 14.132 million units in the first seven months of the year, while the new-energy vehicle market has grown slower than expected – albeit up by almost 50% to 699,000 units.

The two companies are conducting a broad-based review of their partnership and its potential, including the proposed construction of a manufacturing plant and R&D centre in Zhejiang province and a nation-wide sales and services network.

Ford also has concerns about Zotye's financial health. In a filing to the Shanghai Stock Exchange, Zotye estimated it made a net loss CNY270m (US$38m) in first half of 2019 after making a net profit of CNY305m in the same period of last year.

In the first seven months of the year the Chinese carmaker sold 82,000 vehicles, a more than 48% decline on the same period last year, which is blamed on the slow introduction of new models under the Traum brand it launched in 2017.

According to local reports, Zotye so far has only launched three models and these only meet State V emission standards while a total of 18 provinces and municipalities have already introduced the stricter State VI standards - at the beginning of July.

Ford is also struggling in the Chinese market, with sales falling by 37% to 752,243 units in 2018 due mainly to a lack of new models. First-half sales fell by a further 27% to 290,321 units.

See also: What the future holds for Zotye and Traum

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