From: Thomson Reuters Carbon Markets Community
Published February 12, 2009 09:59 AM

Ford jumps back into green car fray

Henry Ford once famously said "you can't build a reputation on what you are going to do."

But a renewed commitment to build more fuel-efficient and battery-powered cars and hybrids has become central to the high-stakes turnaround plan at Ford Motor Co as it looks to ride out the industry's worst downturn in decades.

In recent weeks, Ford has shown it wants back in the green car game by detailing an aggressive plan to roll out electric and plug-in hybrid vehicles over the next three years.

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The moves by Ford have already won over critics and set the No. 2 U.S. automaker up to retake ground in the public perception that it had ceded to Toyota and cross-town rival General Motors Corp, whose plans for a plug-in hybrid Chevy Volt have been highly touted.

"It's impressive how a changing of the guard and a changing of the times can bring significant changes at a company," said David Friedman, research director for clean vehicles at the Union of Concerned Scientists.

Ford, the only Detroit-based automaker not already operating under a government bailout, was lauded by environmentalists five years ago when it launched the first U.S.-made hybrid with the Escape SUV and followed up with a bold promise to sell hundreds of thousands more.

But Ford's mounting financial problems and sputtering progress toward its goal forced the automaker to abandon its promise just a year later as Toyota Motor Corp cemented its grip on the hybrid market with its Prius.

Now Ford plans to introduce a battery-powered commercial van in 2010, a battery-powered small car the following year and a plug-in hybrid to challenge the Volt starting in 2012.

The stakes are high because Ford's planned investment is coming at a time when the U.S. government is demanding steep increases in fuel economy and has put money forward to help automakers adopt new fuel-saving technologies.

Ford also has made its standard gas engines more efficient, a nuts-and-bolts approach that has won over some critics looking to drive automakers toward improving fuel economy and reducing carbon emissions.

"If all they were doing were the electric vehicles, to be honest, I would be skeptical," Friedman said. "That's the history of the auto industry, they are always searching for the silver bullets."

DIFFERENT TIMES, DIFFERENT COMPANY

With U.S. auto sales falling 18 percent in 2008 and the downturn in a fourth year, the times have changed and so has Ford's management under Chief Executive Alan Mulally.

Ford posted a record $14.6 billion net loss in 2008, but has said it has enough cash to complete a turnaround without government loans if the downturn does not worsen, distancing itself from GM and Chrysler.

Ford executives say the automaker learned valuable lessons in building the Escape hybrid that advanced the technology for its Fusion hybrid sedan going on sale this year.

The new Fusion hybrid can accelerate to up to 47 miles per hour and remain on electric power.

"From Ford's perspective that wealth of knowledge has allowed them to field more immediately usable electric hybrid type of vehicles," said Michael Robinet, an analyst at CSM Worldwide.

The automaker has announced suppliers for its electrification program within weeks of outlining the plan, an illustration of its progress.

Ford is working with Smith Electric Vehicles, a unit of the Tanfield Group on a battery electric powered Transit Connect light work van to be sold in North America next year.

Ford and auto parts supplier Magna International are working on bringing a lithium ion battery-powered car to North America in 2011 on a Focus-sized platform.

The automaker also has said the partnership between Johnson Controls Inc and France's Saft will supply the complete battery system for Ford's first plug-in hybrid vehicle to be introduced in 2012.

U.S. sales of hybrid vehicles and smaller cars in general surged in 2008 when gas prices shot to above a $4 per gallon national average in July, but have plunged with a drop in gas prices and the downturn in the economy.

Environmental groups had been driven to protest at past Ford annual meetings, spurred in part by their belief that Ford had failed to live up to promises to improve fuel economy.

"We are pleased to see this big jump back into the fray in terms of electric drive technology," said Danielle Fugere, San Francisco-based program director for the Friends of the Earth environmental group.

"Electric drive technology is the future," she said. "Ford, I think, realizes this and if they don't get on board they won't exist because there are a lot of other challengers."

(Additional reporting by Kevin Krolicki; editing by Richard Chang)

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