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Phil Covington headshot

Ford Bets Big on Electric Vehicles, Invests In U.S. Plant

By Phil Covington

The first week of the new year was a newsworthy one for Ford Motor Co. What's getting most of the attention is the company’s announcement that it will opt against opening a new $1.6 billion manufacturing plant in Mexico.

Instead, Ford will invest $700 million in its plant in Flat Rock, Michigan, adding 700 American jobs in the process. Though a certain high-profile individual would have you believe he forced Ford’s hand in this decision, the automakers’s own analysis of its business imperatives was behind this change of plans.

Other news from Ford, however, should not be overshadowed: This week the company also announced details of its growing commitment to electrified vehicles, with an important expansion in its range of offerings over the next five years.

Perhaps most notable is Ford’s 2020 plan to launch a new fully-electric small SUV that will have an estimated range of at least 300 miles, according to a company press release.

The new SUV will be designed from the ground up, as opposed to using an existing vehicle platform - a new approach for the company, Hau Thai-Tang, group vice president of purchasing and Ford’s EV champion, told us in a telephone interview this week.

“This is the first time we have optimized architecture for a full-battery electric vehicle,” Thai-Tang explained. This allows the company to deliver the full benefits of an electric vehicle -- in terms of both vehicle packaging and how the car’s engineering is configured -- as well as provide an optimized occupant experience.

But as well as introducing the pure EV SUV, Ford will also launch several new hybrid electric vehicles over the next five years, which Thai-Tang said will allow the automaker to “showcase the full benefits of electrification, beyond just fuel-efficiency benefits.”

Specifically, three iconic Ford sub-brands will get the hybrid treatment; both the venerable Mustang and F-150 pickup truck will see hybrid versions added to the line. In its commercial vehicle sector, Ford will add a plug-in hybrid to the Transit line of vehicles.

In the case of the Mustang, adding hybrid technology will allow the company to showcase both performance and low-end torque, Thai-Tang explained. The hybrid F-150 will showcase capability, and the Transit will be all about enhancing productivity.

These attributes -- performance, capability and productivity -- are key benefits of electrification that go beyond fuel efficiency.

Fuel efficiency is a given, but Thai-Tang conceded it’s a tough selling point by itself while fuel prices are so low; so part of Ford’s mission will be in educating customers about these additional performance benefits which electrification adds.

We asked whether Ford’s commitment to EVs is based mainly on demand for them outside of the U.S., and what would be the effect if the incoming administration doubles down on emphasizing fossil fuels. In answering, Thai-Tang indicated Ford has to take the global -- and long-term -- view:

“As engineers and scientists and business people, we have a much greater understanding of the importance of CO2 on climate change. We know our consumers around the world, and municipalities, are concerned about air quality; we know consumers are concerned about access to sustainable, clean sources of energy and all these are global societal trends.”

That said, Ford recognizes many cities in Europe and China are more active in terms of regulatory measures that restrict vehicle access to city centers and demand zero-emissions cars -- something seen in California, too. On top of this, China also regards electrification in terms of energy independence, and their government sees it as a way to level the playing field.

“So we look at all these factors; we are a global company, and electrification will reach a tipping point,” Thai-Tang insisted.

In fact, Ford thinks deliveries of electrified vehicles will exceed those of gasoline-powered vehicles within the next 15 years. And as Thai-Tang added, “10 to 15 years is only two product cycles away.” Consequently, Ford believes a combination of pure EVs and hybrid vehicles is the future for which the automaker must plan.

Ford also sees a future in autonomous vehicles. In another big announcement to start 2017, Ford says it will have a fully autonomous, steering wheel-less vehicle ready by 2021.

On top of that, the company says it came to a memorandum of understanding with several other automakers to create an ultra-fast charging network at around 400 sites in Europe -- a network that will be faster than the most powerful charging systems deployed today.

Finally, Ford also plans to pilot wireless charging technology in the U.S. and Europe -- which, according to this week’s press release, will make charging as easy as pulling into a parking space.

All of this comprises Ford’s $4.5 billion investment in electrification by 2020.

Oh, and about that Mexico plant cancellation: Thai-Tang explained it was essentially the result of an analysis of what was best for Ford's business.

“We looked at consumer demand in the North American market by segment. For small vehicles, there is a plateau -- perhaps decline -- in demand, forcing us to look at how best to use our manufacturing footprint. ... That meant we didn’t need to add a manufacturing site -- we had capacity we could use.”

Indeed, Ford confirmed that the new Focus, its small compact car, will be made at its existing Hermosillo, Mexico, plant. This, Thai-Tang explained, is “consistent with what we said throughout the election campaign” and is essential for keeping the Focus profitable.

However, the investment of $700 million in Ford’s Flat Rock plant is undoubtedly good news for American workers. And the new electrified and autonomous vehicles will be built there -- work the company “felt was important to do in our home country,” Thai-Tang said.

Image courtesy of Ford (press use only) 

Phil Covington headshot

Phil Covington holds an MBA in Sustainable Management from Presidio Graduate School. In the past, he spent 16 years in the freight transportation and logistics industry. Today, Phil's writing focuses on transportation, forestry, technology and matters of sustainability in business.

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