Ford Vows to Go Electric

In return for U.S. backing, the automaker is preparing to have ready a "family" of hybrid and electric vehicles by 2012

By David Kiley

In an attempt to show a doubting Congress that its industry is not hopeless and is worth preserving, Ford Motor (F) said on Dec. 2 it is accelerating some of its hybrid and plug-in electric vehicle plans. Ford, along with General Motors (GM) and Chrysler, also said it was limiting executive pay and reopening contracts with union workers in the hopes of getting rank-and-file pay and benefits more in line with foreign carmakers with factories in the U.S.

All three of the U.S. automakers—Ford, GM, and Chrysler—are filing reports with Congress on Tuesday outlining how they propose to use some $25 billion in requested taxpayer loans. The companies, burning their cash reserves at an alarming rate, say they probably won't survive (BusinessWeek.com, 11/12/08) the current recession and dramatic downturn in sales without government loans to tide them over.

Ford is in the best shape of the Detroit Three and has said it may not need government money. But it is asking Congress for about $9 billion in loans to use as a backstop just in case. GM is asking for $12 billion. That leaves about $4 billion for Chrysler, though the company said last month it was looking for about $6 billion to $7 billion. Chrysler's report to Congress is expected to state that the company is looking for more alliances with other automakers to lower costs. While the automaker is deliberately keeping the language vague, it is widely seen as the company's attempt to sell itself or merge with another automaker.

Battery Power

Ford said on Tuesday it will put "a family of hybrids, plug-in electric vehicles (BusinessWeek.com, 10/3/08), and battery-electric vehicles" on sale by 2012. Specifically, the plan calls for a battery-powered electric commercial van in 2010 and a battery-powered retail sedan in 2011. The company is also believed to be developing plug-in versions of its Focus and Fusion cars by 2012-2013.

Overall, Ford said that 80% of its investments in 2010 will be in cars and crossovers—as opposed to trucks and SUVs. In 2007 the share of investment in cars and crossovers was 60%.

Ford's global chief of product development, Derrick Kuzak, said in a recent interview that the biggest change at Ford in the last two years related to fuel economy is that the company has set a goal of being "best-in-class" in every vehicle segment. "Previously, we tended to just strive to be competitive with our chief competition, and that, in the long run, made us uncompetitive," Kuzak says.

General Motors and Chrysler are expected to make their specific plans known later on Tuesday. GM, as previously reported by BusinessWeek (BusinessWeek.com, 12/1/08), is widely expected to announce that it is reopening talks with the United Auto Workers to get pay and benefit concessions from workers and retirees. It is trying to sell its Saab and Hummer brands, examining the future of the Saturn brand with an eye toward closing it, and winding down Pontiac to a very small niche brand that would sell perhaps a sports car and an affordable high-fuel-economy car in the same showrooms as Buicks and GMC trucks. Ford also said it is in talks with the UAW to lower wages and benefits for hourly workers.