Fields: Why electrified models are a good bet

DETROIT -- Ford Motor Co. is making a big investment to develop more than a dozen vehicles that it knows few consumers want to buy right now.

Ford is betting that by 2020, when it plans to offer 40 percent of its global lineup in hybrid or plug-in versions, they won't have to battle gasoline prices below $2 a gallon. But its plans to spend $4.5 billion tripling the number of vehicles it offers with some form of electrification also represent an acknowledgement that government regulations in the U.S. and abroad are forcing it on this path, regardless of what consumers want to buy.

And, CEO Mark Fields says, Ford sees longer term consumer demand moving toward electrified drive.

"In this business, you have to project where you see consumer demand going forward," Fields said in an interview last week. "Our view ongoing is still that the price of a barrel of oil is going to go up over time, so it's really important for us to anticipate that. Secondly, we have the regulations that are out there -- the one national standard. And we have to meet that."

The role those regulations play in decisions like this "should not be ... underestimated," Fields said.

Low gasoline prices -- the average price nationwide last week was about $2 a gallon, with some states dipping well below that -- are injecting even more uncertainty into automakers' product development plans as the midterm review of federal fuel economy standards approaches in 2017. Fields said Ford wants the review to involve a "very fact-based" look at not only consumer acceptance of the more efficient technologies automakers have been introducing but also what has changed since the industry and the government agreed in 2011 to pursue a target of 54.5 mpg.

"We want to be part of the solution, but we want to make sure it works for consumers and it works for us as a company," Fields said. "There's been some fundamental changes, particularly around oil supply, oil extraction costs, the ultimate end cost to the consumer and then the issue of what will this mean in terms of pricing to the consumer and what will it mean in terms of jobs. ... Clearly, price and affordability is going to play an important part in this."

In the meantime, though, Ford is dedicating significant resources toward plug-ins and hybrids. Ford has sold about 65,000 electrified vehicles this year through November and is the leader in plug-in hybrid sales.

Fields said the automaker would introduce 13 hybrid or electric cars by 2020, in addition to the six it offers today. Some would be versions of new or existing vehicles while others would be offered as electrified vehicles only.

Fields said Ford sees plug-in hybrids, which have a smaller rechargeable battery than fully electric cars and don't have the range limitations those cars do, as the variety that will grow most in the coming years.

Ford's product development chief, Raj Nair, said more than 40 percent of Ford's lineup will be offered as a plug-in or hybrid in 2020, up from 13 percent now. The investment represents Ford's largest ever in electrified vehicles in a five-year span, though it's unclear how that compares with the level of spending by competitors pursuing similar technology.

Nair said Ford expects to get the same return on investment on electrified vehicles as on gasoline-powered vehicles.

Ford also said it will start selling an updated version of its Focus Electric in late 2016, but that is not one of the 13 upcoming vehicles. The Focus will be capable of traveling 100 miles on a full charge, up from 76 miles today, and of being recharged to 80 percent within half an hour, two hours faster than the current version.

Ford hinted that it plans to unveil a larger plug-in vehicle, likely an update to the Fusion Energi, at the Detroit auto show in January. During a media event at its engineering facility last week, a car plugged into a charger was hidden under a cloth next to a sign saying it was "top secret" until Jan. 11, which is the first day of the show's media preview.

Nair wouldn't say how many of the 13 vehicles would be battery-electric vs. hybrid or discuss the plan in further detail. He said Ford's vehicles would be "competitive" in range and cost.

He conceded that low gasoline prices are hurting sales of Ford's hybrids and plug-ins now, but he said demand would rise when gas prices increase, vehicles can offer improved driving range and consumers learn more about the vehicles.

"We still see feedback that people are concerned about range on a plug-in hybrid, which, really, to be honest, doesn't make sense," Nair said. "If we do that type of education, we believe that plug-in hybrids make a lot of sense for a lot of consumers."

Ford also announced that it was expanding its electrified vehicles r&d program in Europe and Asia to accelerate work on battery technology around the world. Kevin Layden, the director of Ford's electrification programs, said battery costs are "coming down faster than anyone predicted."