Ford CEO: Fuel-Efficient Engines Pose Tough Fight for Hybrids

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Ford CEO Alan Mulally at 2010 Washington DC Auto Show

Ford CEO Alan Mulally at 2010 Washington DC Auto Show

Ford has built hundreds of thousands of hybrids since 2004, but unlike Toyota, it hasn't staked its future on the pricey technology that mates an electric motor to a combustion engine.

Ford's CEO Alan Mulally says that's because hybrids will face continuing competition from increasingly more fuel-efficient engines.

2009 Ford Escape Hybrid

2009 Ford Escape Hybrid

2010 Ford Fusion Hybrid

2010 Ford Fusion Hybrid

2011 Ford Fiesta

2011 Ford Fiesta

2010 Detroit Auto Show

2010 Detroit Auto Show

Ford CEO Alan Mulally at 2010 Washington DC Auto Show

Ford CEO Alan Mulally at 2010 Washington DC Auto Show

$10K penalty for hybrid

At today's press preview day at the 2010 Washington DC Auto Show, Mulally responded to a question from a New England fleet manager who cited the cost difference between a standard 2010 Ford Escape (at roughly $17,000) and the 2010 Ford Escape Hybrid (closer to $27,000).

On hybrids, "we'll exceed expectations going forward," said the boyish, always ebullient Mulally. "And we'll continue to work on cost" for hybrids.

But, said Ford's CEO, there will be a strong "competition between lower-cost hybrids" and far greater fuel efficiency to be obtained from standard combustion engined cars, both gasoline and diesel.

Hybrid projections unrealistic?

Many hybrid and plug-in advocates haven't focused on this theme, but industry analysts suggest that projections that hybrids could reach 20 percent of global production within 10 years may be unrealistic.

"Our Number One priority," Mulally said, "is to continue to improve our combustion engines" and their fuel efficiency.

Best-in-class fuel efficiency

The 2011 Ford Fiesta subcompact, for instance, offers a model rated at 30 mpg city, 40 mpg highway.

And Ford has pledged to deliver "best in class" fuel efficiency in its 2012 Ford Focus compact, though its fuel economy has not yet been rated.

Cutting component cost

Beyond improving gasoline engines, Ford continues to hammer away at reducing the cost of its hybrid models.

In 2012, it will announce its first hybrid with a lithium-ion battery pack. And like Toyota and Honda, Ford is working hard to reduce the cost of its electric motors and power electronics.

To a similar end, General Motors announced today that it would design and build its own electric motors, to go into production at its Baltimore Transmission plant starting in 2013.

Batteries yes, motors no

Ford does not currently plan to do built its own electric motors, Mulally said in response to a question. But both companies will design and build their own advanced battery packs.

Earlier this month, GM announced that lithium-ion battery packs for the 2011 Chevrolet Volt had gone into volume production at a plant in Brownstown Township, Michigan. Then, at the 2010 Detroit Auto Show, Ford said it would bring the design and manufacture of battery packs back to the U.S.

Prognosis: Slow hybrid growth

Hybrids will continue to grow as a percentage of Ford's total U.S. sales, Mulally said.  But for Ford, better gas mileage from standard engines is clearly the highest priority.

And given that global production is still roughly 96 percent gasoline and diesel vehicles, that's the best way to displace the most petroleum.

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