Jun 29, 2006 (From the CalCars-News archive)
Ford's commitment to rapidly expanding its hybrid program is decreasing in favor of the easier goal of making more of their fleet flex-fuel capable. (To do this requires little more than small modifications of electronics and tubing, costing $100-$150 per car.) In doing so, as the article reports, Ford is simply staying even with GM and DaimlerChrysler. This approach enables automakers to contend, "we're doing our part; we'll help build the fuel infrastructure, but we're off the hook." And it assumes we need to increase the ethanol supply from today's 4 billion gallons/year to 140 billion, instead of the 40 billion we'd need if we fuel cars first with electricity for local miles, using E85 for range extension.
Ford had cited its goal to increase its hybrid fleet by 10x as one reason why it was hard for it to pay sufficient attention to the CalCars-Andy Frank proposal for a partnership on PHEVs. We continue to believe that Ford has a large opportunity to jump ahead of the pack -- especially now with Toyota acknowledging a PHEV research program and GM is reported to be planning a PHEV prototype -- by being open to working with the modern inventor of the PHEV and with us to take advantage of the emergence of a market of ready buyers for PHEVs. (We detailed the plans of our proposal in our letter to Bill Ford, http://www.calcars.org/calcars-news/395.html.
Tthe Associate Press reports, "Big Three to Make More Biofuel Cars," followed by two stories on Ford.
The Big Three U.S. automakers said Wednesday that they would double production of flexible-fuel vehicles by 2010, adding cars and trucks capable of running on ethanol blends and other biofuels to reduce dependence upon foreign oil.
Leaders of General Motors Corp., Ford Motor Co. and DaimlerChrysler's Chrysler Group wrote members of Congress about their plans, urging oil companies and lawmakers to promote the production of ethanol and biofuels and increase the number of service stations that offer the fuels.
"Our hope is that with this commitment, fuel providers will have even more incentive to produce ethanol and other biofuels and install pumps to distribute them," the automakers wrote.
The letter was signed by GM Chairman and Chief Executive Rick Wagoner, Ford Chairman and CEO Bill Ford and Chrysler Group President and CEO Tom LaSorda.
The Big Three automakers have produced 5 million flexible-fuel vehicles, capable of running on gasoline and fuel blends of up to 85% ethanol, and are expected to produce 1 million more this year. Their commitment would lead to 2 million annually by 2010.
In meetings on Capitol Hill last month, Wagoner, Ford and LaSorda stressed their work on alternative fuels but highlighted the lack of service stations offering the fuels. Only about 700 of the 170,000 gasoline stations nationwide offer E85, a mix of 85% ethanol and 15% gasoline.
GM and Ford said they could not provide specifics of how they would increase production of the vehicles, which typically cost a few hundred dollars more to produce. Chrysler said it would produce 500,000 of the vehicles by 2008.
Ford Raises Flex-Fuel Target By NEAL E. BOUDETTE and JEFFREY MCCRACKEN June 28, 2006 5:55 p.m.
DEARBORN, Mich. -- Ford Motor Co. is planning to build fewer gas-electric hybrid vehicles than it previously pegged by 2010, but will double the projected number of flexible fuel cars and trucks that can run on ethanol, Chairman William C. Ford Jr. said Wednesday.
In an interview with The Wall Street Journal, Mr. Ford said interest in biofuels like corn-based enthanol has "exploded" since the company said last fall that it would produce 250,000 hybrids a year by 2010. As a result, Ford is "rejiggering" the mix of hybrids and flexible-fuel vehicles it expects to build in the next several years.
"Hybrids were the only game in town when we looked at what was possible nine months ago," Mr. Ford said in a flower-filled, paneled office at Ford's world headquarters here outside of Detroit.
"We will produce fewer hybrids," he said, declining to give a precise figure for how many the company now expects to produce. Ford now plans to make 500,000 flexible-fuel vehicles per year by 2010. It had not previously stated a target for flexible-fuel vehicles but had internally expected to make about 250,000 a year by 2010.
Because of the doubling of flexible-fuel vehicles, Ford's new plan has greater potential for lowering the country's gasoline consumption and carbon dioxide emissions into the atmosphere, he said. "It's a reduction of hybrids but an acceleration of the overall plan" in terms of fuel-economy and emissions, Mr. Ford said.
He said the company is still committed to offering hybrids, and plans to accelerate an effort to offer hybrids in Europe.
Ford's Chief Cites Hurdles to Turnaround Push
Chapter 11 'Not an Option,'
But SUV Sales Slide More;
S&P Cuts Rating Further
By JEFFREY MCCRACKEN
June 29, 2006; Page A3
Ford Motor Co. is running into a stronger head wind than the auto maker anticipated a few months ago, a development that is stressing the "Way Forward" turnaround plan it unveiled in January, Chairman and Chief Executive Bill Ford said in an interview.
The latest blow came yesterday when Standard & Poor's cut its rating in Ford debt deeper into "junk" territory. S&P cut Ford debt one notch to single-B-plus from double-B-minus, saying it believes "2006 would be a more difficult year for Ford than previously anticipated."
In an interview that took place yesterday before the rate cut was announced, Mr. Ford dismissed any talk that bankruptcy was a threat, saying "it's not an option."
He said his family's company has no interest in taking itself private, despite reports that the company has studied doing so amid a falling share price and a flurry of private-equity-backed deals.
Mr. Ford said his company is planning to build fewer gasoline-electric hybrid vehicles in the future than planned, and instead is "rejiggering" the mix it expects to build of hybrids and flexible-fuel vehicles that can accommodate alternative fuels like ethanol.
Since Ford detailed its plan, auto-industry conditions have gotten tougher than the Dearborn, Mich., company planned for, he acknowledged. The tougher treading contrasts somewhat with rival General Motors Corp., which faces similar declines in U.S. market share and reported a $10.6 billion loss last year but since has made some progress in reducing costs.
Ford's shares fell to a 52-week low yesterday of $6.36, down 18 cents, or 2.8%, at 4 p.m. in New York Stock Exchange composite trading, while GM's shares rose 76 cents, or 2.9%, to $26.66.
Mr. Ford said sales of sport-utility vehicles have fallen off faster than planned because of the recent run-up in gasoline prices. That hurts Ford because trucks and SUVs make up more than half of its sales. Prices of metals, plastic and other materials have also risen faster, he said.
"I think we had some fairly conservative assumptions in the Way Forward plan, just because the world never develops like you think it is going to, and the world has gotten tougher," Mr. Ford said.
Mr. Ford said the turnaround plan is ahead of schedule when it comes to reducing headcount -- he anticipates 12,000 hourly workers will depart this year, largely through buyouts -- but it was off track when it came to the consumer exodus from SUVs like the Ford Explorer. Ford's market share is down again this year, with truck sales nearly 9% below the year-earlier period, despite an 8% jump in car sales.
The plan anticipated a shift in the mix of sales of trucks, SUVs and smaller cars, but the shift is happening at a faster pace than forecast, he said. "If that pace continues, that is tough for us."
Sales of Ford's best-selling and most-profitable vehicles are down this year. Explorer sales, despite a redesign in 2005, are down 27% this year. Other Ford SUVs, such as the Ford Expedition or Lincoln Navigator, are down 30% and 12%, respectively.
Mr. Ford said the trends in April and May, where sales of Ford cars rose because of products like the Ford Fusion but its truck sales tumbled, are what it sees for June. Most auto makers make more on big pickup trucks and SUVs than on cars.
Ford's North American auto operations had losses of $1.6 billion in 2005 and $457 million in the first quarter of 2006. As part of the Way Forward plan, it said North America would return to profitability by 2008.
Ford last fall said it would produce 250,000 hybrids a year by 2010. Mr. Ford didn't give a figure for how many the company now plans to produce, although it will continue developing hybrids and will accelerate plans to sell hybrids in Europe.
Ford's shift amounts to a bet that bio-fuels are gaining momentum in the rush to bring more environmentally friendly vehicles to the road. "Hybrids were the only game in town when we looked at what was possible nine months ago," Mr. Ford said.
GM made a significant step forward in its restructuring earlier this week when it said some 35,000 hourly employees had agreed to take packages to leave the company or retire by the end of the year. GM said this week its sales in the next few months will show declines compared with the strong sales it had a year ago when employee-pricing discounts caused a temporary spike in sales.
The auto maker's shift amounts to a bet that biofuels are gaining momentum in the rush to bring more environmentally friendly vehicles to the road. Ford has helped set up fueling stations along highways linking Kansas City and Chicago that offer E85, a mixture of 85% ethanol and 15% gasoline. This "Midwest ethanol corridor" will enable drivers to flexible-fuel vehicles to drive the entire 530 miles between the cities on E85 alone.
Ford's shift to put more emphasis on vehicles capable of running on ethanol is part of a broader effort involving the company and its Detroit rivals, General Motors Corp. and DaimlerChrysler AG's Chrysler Group, to win more government backing for biofuels.
On Wednesday, GM and Chrysler also pledged to double their output of flex-fuel cars and trucks by 2010, and issued a joint letter to members of Congress to help get more ethanol-based fuel on the market.
"We need business and government to work together to enhance the production, distribution and use of renewable biofuels," said the letter, which was signed by Mr. Ford, Chrysler Group Chief Executive Tom LaSorda and GM Chairman and Chief Executive G. Richard Wagoner Jr. (Read the letter.1)
"Congress and the administration need to continue to promote the production of biofuels, increase incentives for refueling infrastructure, and continue incentives for automakers to produce biofuel vehicles," the letter said.
Some five million flex-fuel vehicles on the road today, and the three domestic automotive companies will add a million more cars and trucks this year alone, the letter continued, but the are only about 700 E85 pumps among the nation's 170,000 gas stations.
"Eventually, we need to get to the point where most Americans have reasonable access to these fuels at a price that is competitive with gasoline," the CEOs said in the letter.
Write to Neal E. Boudette at neal.boudette@... and Jeffrey McCracken at jeff.mccracken@...