Ford’s Endeavor to Go Greener
Rajesh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Ford Motor (NYSE: F) is showing high commitment in the development of its electric car segment where it proposes to put in about $135 million in the designing, engineering and production of key components. The Dearborn based automaker desires to double its battery testing capacity by next year.
The company is in the process of building an in-house production facility to fasten the development of its hybrid and electric vehicles by 25 percent and bring it to the market. Building an in-house unit instead of outsourcing the job will not only help the company to speed up the entire manufacturing process, but simultaneously reduce costs as well. This will also improve the flexibility of Ford to respond as per consumer demand
In addition, to overcome the challenge of expensive batteries and electric drive component, Ford is trying to increase the number of models that can be manufactured on a single line. For instance, in its transmission plant near Detroit, the company makes the hybrid version on one side and uses the other side of the aluminum palette to manufacture the conventional six-speed automatic transmission. Earlier, the company would buy these transmissions from a Japanese auto parts supplier Aisin. However, building it in-house allowed the second largest US automaker to trim down development costs by 20 percent as it saves on shipping and component costs.
Ford looks extremely committed in the electric car zone. The carmaker already has over 1,000 engineers working in the electric car unit. Last year the company added around 60 more engineers to its work force and is expected to employ more in the future. These engineers will exclusively be committed to conduct the R&D at the company’s Dearborn lab to develop new technologies that would help in bringing out reasonably priced fuel efficient cars.
The carmaker’s focus in this segment is increasing. This is in response to the accelerating demand from customers who want fuel efficient electric cars with better specifications, improved battery life and infrastructure. Competition to build a greener engine is intensifying. Let’s check out the current scenario.
Players going green
Currently the electric vehicles segment is being dominated by archrival Toyota Motors (NYSE: TM) with 72 percent market share in the first half of the year. On the other hand Ford captured only 4 percent of the EV market. However, the second largest American carmaker has ambitious plans of giving prime attention in the operation and development of hybrids, plug-in hybrids and electric vehicles. It expects the sale of electric vehicle to constitute a quarter of its new vehicles sales by 2020 compared to a mere 3 percent in the previous year. Other than Toyota, Ford also competes with General Motors (NYSE: GM), Nissan Motor, and the new entrants Tesla Motors and Fisker Automotive.
The automaker is preparing itself to fight the market leader Toyota with its current line of offerings this fall.
So, what’s in the pipeline?
In May, the company launched the electric version of its Focus car which is known for its fuel efficiency and directly competes with Nissan Leaf. The 2013 Ford C-Max Hybrid and Ford C-MAX Energi plug-in Hybrid are expected to arrive this fall. The automaker claims that its C-Max can cover 570 miles compared to Toyota Prius v that can go 450 miles on a tank of gas. The automaker, which holds 500 hybrid patents, is also getting ready to launch All-new Fusion Hybrid that targets the same consumer segment as Toyota Camry Hybrid. The company also expects to start working on the Fusion Energi plug-in hybrid by this year end and aspires to make it the most fuel efficient car in the midsize segment.
The electric vehicle segment is still a nascent market and Ford is yet to develop in this arena. This market is expected to experience exceptional growth as the demand for environmentally friendly vehicles are rising and are backed by government support. Several other factors such as the rising prices of crude and increasing pollution are brightening the future outlook of the electric vehicle market. With focused plan of operation, Ford can benefit from this in a big way.
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