Alibaba Group and the Ford Motor Company have signed a Letter of Intent today to collaborate on connectivity, cloud computing, AI, and mobility services. The main thrust of the agreement seems to be on ways to sell the new electric vehicles Ford will be manufacturing in China.

Details so far are slim, but a release from Alibaba states the three-year agreement will aim to “redefine how consumers purchase and own vehicles, as well as how to leverage digital channels to identify new retail opportunities”. This suggests the agreement is less on the core aspects of a vehicle, and more about how to keep selling services to owners, a business model familiar to Alibaba.

“Our data-driven technology and platform will expand the definition of car ownership beyond just having a mode of transportation and into a new medium for smart lifestyle,” said Alibaba Group CEO Daniel Zhang in the release.

“Collaborating with leading technology players builds on our vision for smart vehicles in a smart world to reimagine and revolutionize consumers’ mobility experiences,’’ said Jim Hackett, Ford’s President and CEO.

Four of Alibaba’s business units are involved in the collaboration: AliOS, Alibaba Cloud, Alimama and Tmall. The first project will see Ford and Alibaba conducting a pilot study on digital solutions for retail. These will include pre-sales, test drives, and financial leasing options.

The announcement follows Tuesday’s news that Ford is planning to introduce 15 electric and hybrid car models in China by 2025. The Chinese government has been actively promoting the development of the electric vehicle industry with consumer incentives. The 10% tax rebate has fueled rocketing demand in China. The government is also allowing foreign manufacturers to set up plants without establishing joint ventures.

The government if so firmly focused on an electric future that is has also committed to establishing a timetable for banning internal combustion engines. For domestic manufacturers, they will also have to develop electric vehicles to be able to go on selling traditional cars. VW, GM and Daimler are all committing to enter the electric vehicle fray in China.

The agreement with Ford brings Alibaba further into a government-backed industry. Meanwhile it gives Ford access to Alibaba’s retail prowess.

Speaking in Shanghai on Tuesday for Ford’s announcement, Ford’s chairman, William C Ford  summed up the company’s stance on China: “When I think of where EVs [electric vehicles] are going, it’s clearly the case that China will lead the world in EV development.”

Frank Hersey is a Beijing-based tech reporter who's been coming to China since 2001. He tries to go beyond the headlines to explain the context and impact of developments in China's tech sector. Get in...

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