Ford bails out on hybrid promise

[coolcaddy]

Ford bails out on hybrid promise
Bryce G. Hoffman and Deb Price / The Detroit News

Ford Motor Co. Chairman and CEO Bill Ford Jr. is backing away from his much-publicized commitment to produce 250,000 hybrid vehicles a year by the end of the decade, saying the company intends to pursue a broader environmental strategy that focuses more on other alternative-fuel vehicles.

With timing perhaps intended to blunt criticism of the move, Bill Ford announced the strategic shift in an e-mail to employees Wednesday, the same day he and the CEOs of General Motors Corp. and DaimlerChrysler AG's Chrysler Group sent a letter to Congress promising to double their annual production of alternative-fuel vehicles to 2 million by 2010.

Critics decried the back-pedaling on hybrids as another broken promise by the automaker to build more fuel-efficient vehicles.

Bill Ford's hybrid pledge, made last September, was the centerpiece of a national advertising campaign touting the company as an environmental and innovation leader.

"What I didn't foresee at the time was how rapidly other technologies would evolve," Bill Ford wrote in the e-mail, obtained by The Detroit News. "Now, I am convinced that the objective we had set earlier to build capacity for 250,000 hybrids at the end of the decade is too narrow to achieve our larger goals of substantially improving fuel economy and CO2 performance."

Bill Ford said the company will now focus more on other fuels like ethanol, clean diesel and bio-diesel, as well as advanced engine and powertrain technologies.

Later today, Ford will announce a new partnership with VeraSun Energy to create a Midwest "ethanol corridor" with about 50 new E85 fueling stations between Kansas City and Chicago.

"Our strategy going forward is not to wed ourselves to a single technology, but to manage a more flexible approach to meet our goals for customer needs, environmental impact and shareholder interests," Bill Ford said.

Ford is not abandoning hybrids. The company still plans to introduce gas-electric hybrid versions of the Mazda Tribute sport utility vehicle in 2007 and the Ford Fusion and Mercury Milan sedans in 2008.

The company will soon announce that it is opening a new hybrid research-and-development center at its Volvo subsidiary in Sweden that will concentrate on producing hybrids for the European market.

more...

[MaxLegroom]

Does this mean he doesn't think Ford Motor Company can sell 250,000 hybrids per year, or that it just won't try to build that many? Also, he's talking about setting up in Europe to develop them for the European market. Why does Ford seem not to want to send us their very best?

[rwalth]

Originally Posted by coolcaddy

Later today, Ford will announce a new partnership with VeraSun Energy to create a Midwest "ethanol corridor" with about 50 new E85 fueling stations between Kansas City and Chicago.

This is great news, a much need boost for Ethanol. I hope more of these "corridors" are established around the country.

[coolcaddy]

Originally Posted by MaxLegroom

Does this mean he doesn't think Ford Motor Company can sell 250,000 hybrids per year, or that it just won't try to build that many?

That's what I was thinking when I read the article. I suspect Ford will build 250,000 hybrids a year when people will buy them.

I recently purchased a Ford, and I can say unequivocally that a hybrid was the last thing on my mind, especially when you're surrounded with Mustangs and Fusions.

One might argue that Ford should also have surrounded me with hybrid vehicles in that showroom so as to create some demand for a more environmentally friendly vehicle in my mind. Of course, had that been the case--i.e. had I been surrounded with hybrid Mustands and Fusions--I think I would have just as emotionally turned off as I would be in a Toyota showroom.

I'm all for hybrids--even if their claims to fuel efficiency are dubious, as many believe, I think it can only be a good thing when automakers invest in that kind of R&D for that purpose. Having said that, I have no desire for one, therefore I won't buy one.

If I want a fuel-efficient vehicle, I can get one without paying a big premium. Multiply me by millions of buyers, and it's easy to see why Ford isn't all that anxious to build 250,000 hybrids a year.

[kool_zx3]

"Bill Ford said the company will now focus more on other fuels like ethanol, clean diesel and bio-diesel, as well as advanced engine and powertrain technologies."

Do i smell the duratorq diesel's????

Basically what their doing is backing off hybrids abit and going to build more ethanol powered vehicles along with cleaner burning diesel's.... Don't see to much wrong with that.... Their still focusing on the hybrids by building the fusion and milan along with the edge hybrid later on....

[dindak]

Hybrids are a lot of hollywood and press hype. Bill knows it, most other people in the industry know it. Rotting batteries / electronics in dumps in a few years aren't doing the environment any good and the gas savings won't pay for the cost.

[SUPERBADD75]

i think hybrids work, and i think that if they were able to be built without adding such a huge premium over the price of a regular gasoline car then they'd sell better. the fact is that the cars that are currently offered in hybrid form (except the Prius, which obviously isn't offered sans HSD) don't save enough fuel over their gasoline versions to pay for the extra cost over the 3-5 year time that most people will own them for. also, investing 20-something grand on a hybrid to commute in for most people is a stupid idea when they can just go buy a compact commuter car for 10 grand. if hybrids are to work, the cost has to dramatically decrease, and/or the mileage advantage needs to seriously increase. otherwise, why not just completely detach from gasoline costs and move toward alternative fuels instead? i think Ford and GM are doing the right thing in that regard. i still think, why not try an E-85 hybrid? hybrids work, and there is a market for them, but it's not as big as some automakers (Toyota) thought it'd be.

[XCR440SP]

I expect we'll see just as many Hybrid models as previously planed, but that Ford is discovering that the demand for volume on each isn't there and instead of being a mainstream model for everyone Hybrids will remain more of a Niche off of each model like "SS" or other hi-performance models are.

I just hope we get the European diesels in cars, that I can see becoming a big seller to the average car buyer.

[XCR440SP]

[quote=SUPERBADD75]i think hybrids work, and i think that if they were able to be built without adding such a huge premium over the price of a regular gasoline car then they'd sell better. the fact is that the cars that are currently offered in hybrid form (except the Prius, which obviously isn't offered sans HSD) don't save enough fuel over their gasoline versions to pay for the extra cost over the 3-5 year time that most people will own them for. also,QUOTE]

I have to disagree on the pay-off factor. Lets take the 2007 Mercury Mariner Hybrid for example. It's $4,190 more than a V6 Mariner. However it includes some standard features that come in the comfort package on V6 Mariner cutting the difference to $3,595 to make the vehicles equal. Now lets take the Income tax credit off (I'll use the 2006 Credit of $1950 since 2007 hasn't been anounced, but vehicles is the same). This makes the Hybrid cost $1,645. Also incentives used to further separate the Hybrid, but currently Ford is offering the same incentives on Hybrids as non-Hybrids, and expect this to continue. Now lets look at mileage. In you're example you list a 3-5 year time line so I'll use 4 years and 15,000 miles a year. 60,000 Miles on the V6 Mariner will cost you $7,971.43 (using 60,000 miles / EPA 21 MPG combined * $2.79 a gallon). On a Hybrid Mariner it would cost $5,399.99 (60,000 miles / EPA 31 MPG combined * $2.79 per gallon) making your 4 year savings $2,571.44 in fuel. taken off of you're $1,645 means you'd be $926 ahead on fuel prices.

Now for the next factor, resale. Its guessing the future to try to tell, but I can use the past for an example. The're wasn't a Mariner Hybrid 4 years ago, but I'll use 2003 Civic to compare. Based on July NADA retail a Hybrid is worth $1,775 more than the next highest priced model. So if you add this to the $926 your $1775 resale gain, you'd be $2,701 ahead to have bought a Hybrid.

So I ask, how is it that Hybrids don't pay for the extra cost in the first owners lifetime?

However, I do agree that they'd sell better if the price was closer. People don't want to have to calculate if it's worth while to buy. I also think it would be easier if Hybrid were a option instead of a separate model to make it easier for consumers to compare to what they'd buy in a normal model.

[crooner214]

I think this is a good move of FoMoCo's part.

It's too bad Billy has to eat his words!

[asim]

OWNED...I guess that is why you don't make crazy promises like this.

[coolcaddy]

Originally Posted by XCR440SP

I have to disagree on the pay-off factor. Lets take the 2007 Mercury Mariner Hybrid for example. It's $4,190 more than a V6 Mariner. However it includes some standard features that come in the comfort package on V6 Mariner cutting the difference to $3,595 to make the vehicles equal. Now lets take the Income tax credit off (I'll use the 2006 Credit of $1950 since 2007 hasn't been anounced, but vehicles is the same). This makes the Hybrid cost $1,645. Also incentives used to further separate the Hybrid, but currently Ford is offering the same incentives on Hybrids as non-Hybrids, and expect this to continue. Now lets look at mileage. In you're example you list a 3-5 year time line so I'll use 4 years and 15,000 miles a year. 60,000 Miles on the V6 Mariner will cost you $7,971.43 (using 60,000 miles / EPA 21 MPG combined * $2.79 a gallon). On a Hybrid Mariner it would cost $5,399.99 (60,000 miles / EPA 31 MPG combined * $2.79 per gallon) making your 4 year savings $2,571.44 in fuel. taken off of you're $1,645 means you'd be $926 ahead on fuel prices.

Now for the next factor, resale. Its guessing the future to try to tell, but I can use the past for an example. The're wasn't a Mariner Hybrid 4 years ago, but I'll use 2003 Civic to compare. Based on July NADA retail a Hybrid is worth $1,775 more than the next highest priced model. So if you add this to the $926 your $1775 resale gain, you'd be $2,701 ahead to have bought a Hybrid.

So I ask, how is it that Hybrids don't pay for the extra cost in the first owners lifetime?

However, I do agree that they'd sell better if the price was closer. People don't want to have to calculate if it's worth while to buy. I also think it would be easier if Hybrid were a option instead of a separate model to make it easier for consumers to compare to what they'd buy in a normal model.

You may have a point, at least as far as the Mariner is concerned. However, the big problem with your explanation is that most consumers will lose you after the first sentence or two. After that, it sounds like one of those "except on Tuesday" propositions.

[kenman923]

It would be better for Ford. They have the potential to be the leading edge in alternative fuel vehicle production.

[TaHoE]

Bold Move.

[yamahr1]

On Ford's announcement, it's hard not to suspect that pure economics came into play, and they don't have the development dollars to do too many hybrid models. The Escape hybrid didn't exactly light up the sales charts, so they might feel a bit burned. They've been doing E85 vehicles for years and it's a cheap conversion, so why not join that promotional fray.

Personally, I like the Vue Hybrid system, because it's relatively simple, less expensive, easily adapted to other platforms, drives pretty much like a normal car (no CVT whining up to peak power band), and has almost all the efficiency advantage of the fancier hybrids. When we replace our Envoy XUV (V8 with AFM) in 2008, I would definitely be interested in checking out a GM hybrid, but I think the Vue is probably too small. I'm interested in the new Avalanche, and the hybrid version of that will be the new 2-mode, which sounds intriguing, but complicated and expensive. Will just have to see what's out there at that time. I think what I'd really like is a Buick Enclave AWD with the Saturn Vue type of hybrid option, but I don't think they have plans of doing that.