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Ford’s Plan to Hedge on Hybrids

The company will share parts and production lines between hybrids and conventional vehicles.
June 14, 2010

Ford is taking a markedly different approach to making hybrids and plug-in hybrids than competitors such as General Motors–and the company hopes this difference will provide it an edge in a potentially volatile market for such vehicles.

Electric Focus: The Focus will soon be available as a gas-powered car or the electric version, shown here. Hybrid and plug-in hybrid versions will be available by 2012.

Ford’s strategy will allow it to easily switch between making conventional gas-powered cars and a range of other, different designs: diesel-powered cars, hybrids, plug-in hybrids, and electric vehicles. Rather than making a distinct plug-in hybrid electric vehicle model, as General Motors is doing with the Volt, which it will start selling at the end of this year, Ford plans to make a variety of electric propulsion options available on all of its top-selling cars worldwide.

“Going down the same assembly line, you can do battery electric, a plug-in hybrid, a hybrid, an efficient petrol, or an efficient diesel vehicle,” says Nancy Gioia, Ford’s director of global electrification. “That makes it very robust to what undoubtedly will be a volatile market for the next 10 years.”

Over the next decade, automakers, which until now have produced petroleum-powered cars almost exclusively, will start making cars that run on a variety of power sources to address government regulations and high fuel prices. But it’s not clear how well these new vehicles will sell.

As a first step in its strategy, Ford has announced that an assembly line in Michigan that currently produces the Ford Focus will also produce an electric version of the car starting next year, and hybrid and plug-in hybrid versions in 2012. (Plug-in hybrids, like hybrids, have both electric motors and gas-power engines, but they also have larger batteries that can be recharged via a normal electrical outlet.) While other automakers, including Ford, have in the past converted conventional cars models to hybrids, Ford plans to do this on a wider scale, making it an option for more than 10 different models; and it plans to include plug-in hybrid and electric options as well.

Ford also recently announced that it will start designing and assembling key components of hybrid and electric vehicles. It will start making batteries for its next generation of hybrids, due out in 2012, instead of buying them from outside suppliers. But Ford hasn’t brought all of its battery design in-house, and it’s also working with partners to produce its first electric vehicles, such as an electric version of the Ford Transit Connect that will go on sale later this year.

The key advantage of Ford making electric versions of its conventional vehicles and designing its own batteries is cost savings. The fact that the body, wheels, suspension, and so on are the same will allow Ford to make higher volume orders than it could if it was just ordering enough to supply a hybrid or electric model.

Electric insides: A rendering of the Ford Focus shows how the company plans to tuck batteries and other electric components into the car.

What’s more, Ford has designed its hybrids so that they use the same electronics boards used to control systems in the engine of its conventional vehicles. In hybrids, the electronics board will control the charging and discharging of the battery. As a result, Ford will be able to order between half a million and a million of these controllers. “That’s a level no one else in the industry can achieve so far,” because of the relatively low volumes of hybrid sales, Gioia says.

Ford is using a similar cost-saving approach with its plug-in hybrids. Some automakers, such as GM, have opted to make plug-in hybrids that are significantly different from their hybrid vehicles, so they don’t share many common parts. But Ford’s plug-in hybrid will have the same electric motors, power electronics, control systems, and transmission as regular hybrids, allowing for large-scale production of these parts. The only significant differences will be the battery and the battery charger. Toyota will take an approach to plug-in hybrids that’s similar to Ford’s.

Ford’s plug-in design also allows it to save money on the battery. GM has decided to make the Volt run exclusively on electricity for the first 40 miles of driving, without any help from the on-board gasoline engine. The engine only kicks on after the battery is depleted, when it serves to generate electricity and recharge the battery, rather than directly driving the wheels. The advantage is the car can use no gasoline at all for commuting. But Ford has decided to let the gasoline engine help with heavy acceleration and for sustained highway speeds, and it is aiming for a shorter electric range of 30 miles. This means its plug-in hybrids will use a relatively small battery pack that stores less than 10 kilowatt-hours of energy–far less than the 16 kilowatt-hours stored by GM’s Volt.

Most of the cars that Ford will sell in the coming decade, by far, will still be powered by gas or diesel. Gioia estimates that hybrids, plug-in hybrids, and electric vehicles will account for between 10 and 25 percent of total worldwide sales by 2020, and only about one in 100 vehicles will be all-electric, in part because of their higher costs. “But estimates could change very rapidly based on policy and fuel prices,” she says.

Such estimates are reasonable based on the history of hybrid vehicle adoption says Mike Omotoso, senior manager of power-train forecasting at JD Power and Associates. Last year–a decade after they were first introduced in the United States–291,000 hybrids were sold, which is just 2.8 percent of all new vehicle sales. Omotoso estimates that it could take more than seven years for electric vehicle sales to break 100,000.

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