Ford to invest $4.5B in electric car research

Michael Martinez
The Detroit News

Ford Motor Co. is supercharging its investment in electric vehicles, even as sales have slumped in an era of $2 gasoline.

The automaker said Thursday it will invest $4.5 billion in electric vehicle research and add 13 new EVs by 2020 to give buyers more choices and to conform to strict federal fuel-efficiency standards. It’s Ford’s biggest investment over a five-year period in the technology to date.

Ford’s current portfolio includes six hybrid or all-electric vehicles across its Ford and Lincoln brands. By 2020, Ford said 40 percent of its nameplates worldwide will be electrified, up from about 13 percent today. Ford declined to say if any of the 13 new EVs would be self-driving.

“What’s driving us to do this? It’s customer needs, followed by regulation,” said Ford President and CEO Mark Fields. “We’re really building on our Ford power-of-choice strategy, offering a wide range of products meeting needs while improving fuel economy and reducing greenhouse gas emissions.”

A Focus Electric with a 100-mile range and a fast charge that puts the battery at 80 percent in 30 minutes will go into production by the end of 2016. The current Focus Electric can travel 76 miles between charges.

Ford hinted it will debut an electric vehicle at the Detroit auto show in January. At Thursday’s announcement in Dearborn, a vehicle resembling its Fusion Energi was covered in a black tarp.

“It’s a long-term play and it needs to happen,” said Stephanie Brinley, senior analyst of the Americas at forecasting firm IHS Automotive. “Regulation is a significant driver for this issue, and there’s no indication it will lighten up.”

Despite hefty discounts, low gas prices are dragging down sales. At the same time, buyers have shifted from cars to crossovers and sport utilities.

Through November, sales of Ford’s C-Max Hybrid are off 21 percent, according to Autodata Corp. Sales of Toyota’s Prius models are down about 8 percent overall. And Chevrolet’s plug-in hybrid Volt and Nissan’s battery Leaf are off, respectively, 23 percent and 41 percent. Only Tesla bucked the trend; it has sold 19 percent more of its electric cars through November.

Fiat Chrysler lagging

Ford is not the only Detroit automaker investing in electric cars.

General Motors Co. earlier this year reaffirmed its commitment to electrics. In Michigan alone, GM has invested at least $2 billion in electrification since 2009.

The automaker recently introduced the second-generation Chevrolet Volt plug-in hybrid electric with an increased battery range of 53 miles. The battery-only Chevrolet Bolt EV with a 200-mile range will go into production late next year. With a starting price expected in the $30,000 range after a federal tax rebate, the Bolt will be a direct competitor to the upcoming Tesla Model 3 as the auto companies compete to make an affordable electric car.

In spring, GM will introduce a gasoline-electric hybrid Chevrolet Malibu. And the 2017 Cadillac CT6 luxury sedan on sale later next year will have a plug-in hybrid version.

Fiat Chrysler Automobiles NV lags other automakers in alternative powertrain development. CEO Sergio Marchionne in October said the company’s next-generation minivan — scheduled to be unveiled at the Detroit show — will be its first hybrid.

The minivan is expected to have a plug-in version. Marchionne said “most of the fleet” will have hybrid technology by 2020 to 2025.

Fiat Chrysler spent roughly $2 billion on the development and production of the minivan, including the largest retooling for its massive Windsor Assembly Plant since the 1980s.

Cheap gas hurts sales

Raj Nair, Ford’s product chief, knows electric cars will be a hard sell as long as gas is cheap.

“The gas prices we’re seeing right now don’t help electrified vehicle sales; range anxiety still exists,” he said.

“We have a lot to do to inform and educate the customer about the advantages.”

Because of slow sales, Ford earlier this year cut a shift at its Michigan Assembly Plant in Wayne, which makes the Focus and C-Max hybrids. It will discontinue those two models at the plant and likely will move them to Mexico by 2018.

Nair said regulatory requirements are a major factor in its push toward greater electrification. By 2025, automakers face federal fuel-efficiency standards of 54.5 miles per gallon fleet-wide; that’s nearly twice the benchmark of 2012.

Despite the challenges, Fields said the acceptance of hybrids and electrics is growing. They’re most popular with customers ages 30-40, and 97 percent who try an electric vehicle say they’d try it again, Ford research shows.

Expanding research

Ford said Thursday it would expand its electrified vehicles research and development program in Europe and Asia this year.

The company recently expanded its EV offerings to Taiwan and Korea, where it sells the Mondeo hybrid. Ford also announced it is bringing the C-Max Energi plug-in hybrid and the Mondeo hybrid to China.

Since Ford introduced a hybrid in 2004, the weight of its battery packs has been reduced by half. That helps to increase travel range between recharging.

“About 200 miles seems to be the rule of thumb, but that doesn’t mean 100 can’t satisfy people,” Brinley said. “That can propel sales.”

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Staff Writers Melissa Burden and Michael Wayland contributed.