REPORT: Ford's Mark Fields implies company makes no money on hybrids
2009 Ford Escape Hybrid - Click above for high-res image gallery
Last week, our friends from Consumer Reports got the chance to sit down with Mark Fields, Ford's vice president of North American operations, and some interesting information was gleaned. For instance, CR says Fields "implied the company isn't making money on the hybrids it sells today, and it is looking at ways to 'enhance revenue' from them." Not surprising, really, but an interesting admission nonetheless.
There are a few ways Ford could try and recoup some of its hybrid powertrain R&D costs, most logically being to extend the technology across its line and into more expensive products – possibly from Lincoln, mimicking the strategy Toyota uses with its Lexus division. In addition to hybrid and electric cars, Fields says Ford is also interested in diesels but isn't currently planning to sell any oil burners in passenger cars. Instead, Ford's diesel efforts are likely to continue focused on pickups.
Speaking of which, Ford's light duty diesel engine for the F-150 is apparently still somewhat on the agenda. Earlier reports, says Fields, that said the program had been canceled aren't entirely accurate. Instead, the smaller diesel was merely "delayed," though we have no idea for how long.
[Source: Consumer Reports]
Reader Comments (Page 1 of 1)
gorr 9:00PM (9/04/2009)
I told you today that regular, old fashion, now on the way to the trash bin regular car manufacturers hates selling battery cars, is it clear or what ? They will never make money with batteries except for the corrupted managers accepting to sell the compagny to the 'new' subsidized internationnal better place battery folks( Big oil, goverments, Gm, wall streets traders, scientists, goverment agencies, regulations, etc, etc.)
I told you too 2 years ago, when toyota president said that he was ready to sell a hydrogen car and 1 day after he eats he's own words, then they must realize that it's been 2 years now that toyota lose money for the first time in their careers, LOL. consumers are asking for one green car put on sale for cash near where they live and toyota after voice it without actual intention, then consumers will stop buying from them, that's it. They even eat our money throu tax. Stop any car expenditure toward any single regular car manufacturers, they choosed the suffocating folks because the're more richs, that's all and they forget the consumers because they cash instant cash from the subsidies folks with secret banking accounts in fiscal paradises.
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Rick 12:51AM (9/05/2009)
yeah - they hate selling battery cars. I think you're right there. But that's just because they're nervous about the future bottom line. They just aren't sure it's going to work out so well - and the companies job is to grow and succeed - not to save the world.
wincros 2:41AM (9/05/2009)
If it took Toyota several years before they figured out how to make their hybrids profitable I am sure that Ford will too. They are just a little later to the game.
The reluctance to stuff their small European diesel into the Fiesta is disappointing though. It would end up being in the top 3 or 4 for fuel efficiency and would I think end up selling them in 30 or 40 percent of the Fiestas. The EPA figures might even sell a few of them to people who would have never considered a Ford.
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Laurens 8:10AM (9/05/2009)
It was proposed US emission law that forced the Japanese to go hybrid. Europe took a different route and further developed an inherently more efficient engine type, the diesel. With similar emissions as a petrol engine, for less money. It is doubtful whether it is beneficial from a global point of view to further reduce CO2 emissions by adding hybrid to the diesel. More efficient (non automotive) methods of CO2 reduction exist.
All imo.
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Sasparilla 12:10PM (9/05/2009)
This one is actually pretty simple - Ford doesn't spread its hybrid development costs across a big enough production volume to amortize the R&D.
Ford only produces 25,000 Ford Escape Hybrid's a year, even though that has been way below demand since they started producing it (until the downturn this year at least) - they previously stated that they made more money on the regular Escape's and since they came off the same line that's why they produced so few Hybrid's, they stated battery production issues were not the reason. They are doing the same with the Fusion Hybrid - 25,000 a year (probably off the same line as well).
To put this into perspective, Toyota will make close to 500,000 Prius's this year.
It looks like Ford sees this as a "Green" badge they can buy and its worth it to them. You would think they would want to drive the costs down and the volume up so they could make some money - but that's not what they're doing and haven't for years. At least the Fusion hybrid will allow them to "double" the hybrid production volume they spread their costs against (since many of the components are shared between the vehicles).
Since Ford (for the time being) has this market to themselves, they could also raise the price of the Escape Hybrid (which isn't cheap - add $10k to a Prius price) so that they make more money - until Honda or Toyota Hybridize a CR-V or RAV4 and at a lower price (which will happen at some point).
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Mike!!ekiM 2:19PM (9/05/2009)
First off, where did Ford "Research" go? Isn't this a Toyota transplant system? Secondly, component costs have fallen, yet, this price has not. So, while others will sell more hybrid's what is FORD hoping for here? To come in Last, in market share?
Or, is this just a "Green Wash", we'll build a couple of these machines to shut the "greens" up.
Here's the problem:
- BP just drilled it's Deepest Hole in the Gulf for Oil, therefore, it's also it's Most Expensive Hole.
- Chinese population increase, and consumption increase.
- Global Warming: 2 to 8 degree temperature increase across the US to Alaska.
No Body, and Nothing is going to WAIT for FORD to see the Future, and the Present.
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wincros 3:55PM (9/05/2009)
Actually the hybrid system is Ford's own. They share some patents with Toyota according to one article. While Ford uses some of Toyota's patented processes, Toyota uses some of Ford's patented processes. But who knows for sure?
The more I think about it, the more skeptical I am about the no profit statement. I think perhaps it is an old fashioned exaggeration. Compared to their trucks and SUVs their hybrids probably make no profit meaning it is not where they want it. They are not stupid enough to design a car without a profit margin. They might design a car no one wants to buy and lose money because the margin on the few cars sold is not enough to recover the development and tooling costs, but they are not going to build a car without a profit margin with a projected number of cars sold.
When you look a the additional cost of a hybrid system in similar cars that share a body with an ICE model in the line up, Ford's sales price for the hybrid option seems a little more than the Camry Hybrid or Civic Hybrid. Skeptical again. They have gotten excellent press for their hybrids even from Consumer Reports. Maybe they just need to work harder selling them. Too many salesmen in the showrooms pushing the trucks and SUVs.
Ray 6:21PM (9/05/2009)
@wincros.
Isn't that what GM, Toyota, Honda and Ford did in the late 90's. They sold the EV-1, Rav 4, Ranger and S10, all EV's and all no profit margins. They did it to get by regulations so they could make profits on their other cars, much like they continue today. They do it so they get those government hand outs for efficiency improvements. The last round of hand outs were just given out to the main manufactures and Tesla a little while ago. Cheap long term loans are a hand out, and if they go bankrupt the government may never be able to get there principle back.
Mike!!ekiM 2:21PM (9/05/2009)
Let me stress that. Ford has 3-5 year development life cycles. It had better have a viable plan for hybrids and electric, or it will go out of business.
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skierpage 9:11PM (9/05/2009)
The more interesting quote from CR is "Fields is big on the electrification of cars, citing great potential."
The Ford Fusion Hybrid is the most economical mid-size *sedan* (i.e. with a separate trunk) and the Ford Escape Hybrid is neck-and-neck with the Lexus RX 450h for the most economical AWD car. If they can't sell lots of them it may be because
1. Ford doesn't want to make-no-money.
2. Ford buyers won't pay the extra $$$ for the hybrid variant of the car (like wincros, I bet their salespeople are no good at selling them).
3. Many Americans who care about the environment realize they don't need an AWD SUV or a trunk, and skip those features to get the least-polluting car you can buy, which isn't a Ford.
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