Higher Gas Prices May Lead To Hybrid Surge

Ford sells four hybrid models including this Mercury Milan Hybrid sedan.

You might think that gasoline was retailing for above four dollars a gallon the way that hybrid sales have been acting of late particularly for one automaker.

Ford Hybrid Demand Surges

On the strength of its release of the Ford Fusion Hybrid and Mercury Milan Hybrid this past spring, the Ford Motor Company is enjoying a 73% increase in hybrid sales for the year. Couple these midsize sedans with the automaker’s two compact crossover hybrids – the Ford Escape Hybrid and Mercury Mariner Hybrid – and you can see why hybrid sales are on the increase during a time when gas prices are flat and overall sales abysmal.

With oil moving above $75 a barrel and the world’s economy on the mend, demand for fuel will only accelerate, perhaps returning gas prices to levels last seen in Summer 2008. While this forecast bodes poorly for the typical driver, it will likely cause many car shoppers to to look for vehicles which offer outstanding fuel economy. And with an Environmental Protection Agency (EPA) mileage rating of 41 city/36 highway, the five passenger Ford sedans offer plenty of interior room for the fuel economy.

Conquest Sales Delight

Most telling about the way that the Fusion and Milan hybrid models are performing is just who is buying these cars. Ford reports that sixty percent of Fusion Hybrid sales are from non-Ford owners, with more than half of those from foreign makes. Toyota and Honda owners make up more than half of those conquest sales, a very good indicator of just how well these cars are being received.

Ford shocked the green world earlier this year when the EPA released its mileage estimates for the hybrid sedans which easily topped the industry standard-bearing Toyota Camry Hybrid whose own ratings are 33 city/34 highway. A quick survey of the market shows that around town the Fusion Hybrid beats mostly everyone including the diminutive Smart Fortwo, Volkswagen Jetta TDI and the Honda Civic Hybrid.

Fleet Uses Surge

Part of the reason why demand for Ford hybrids is surging has everything to do with government and taxi industry fleets welcoming these models.

In San Francisco, more than two hundred Ford Escape Hybrid taxis ply the streets of this hilly city by the bay. Fifteen of those models have pushed past 300,000 miles and are now being replaced, having first been put into service in 2005. That is a strong tribute to the durability of these hybrids and should dispel worries among buyers that the technology can’t function beyond 100-150,000 miles as originally thought by some.

The New York Taxi fleet is the largest in the world and with some 13,000 plus hybrid models in service it makes for a good indicator on how these vehicles perform in all kinds of conditions. As the saying goes, “if you can make it in New York, you can make it anywhere,” Ford’s contribution to the fleet is 2000 Ford Escape Hybrid models strong. Like San Francisco, a number of the earlier models have pushed past 300,000 miles and will soon be replaced by new Ford hybrids.

Ford Knocking On The Door

For Ford, the auspicious growth of its hybrid program puts its sales in the range of Honda, the number two retailer of hybrid vehicles in America. While Toyota remains far out front of the pack, Ford is proving that demand for its vehicles remain strong and that it can beat even the industry leader at its own game, taking sales away from its chief competitors and increasing overall manufacturer market share as well.

References

Ford Escape Hybrid taxis demonstrate durability on New York streets

San Francisco’s hybrid taxis prove their worth

Photo Credit: Ford Motor Company

Looking Beyond The Ford Fusion Hybrid

Ford Focus ST

Ford fans, especially those interested in hybrid and/or electric technology, know that the automaker is working diligently to move forward in this arena, pursuing a number of different avenues to reach their goal.

The Ford Fusion Hybrid and Mercury Milan Hybrid represent the second group of passenger vehicles that Ford has developed featuring hybrid technology (utilizing nickel-cadmium batteries), joining the Ford Escape Hybrid and Mercury Mariner Hybrid which recently celebrated their fifth anniversary of production.

Rolling Out Lithium-Ion Batteries

At some point, the Ford Fusion Hybrid and the three other Ford and Mercury branded vehicles currently utilizing nickel-cadmium (NiCad) batteries are expected to make the switch over to lithium-ion (li-ion) batteries. Li-ion batteries have a number of advantages including an improved energy density, twice that of NiCads. However, aging and other issues are some of the unknowns related to this technology which means that its long term usability still isn’t clear.

Nevertheless, a number of automotive manufacturers are pursuing li-ion technology, racing to become the first manufacturer to mass produce a vehicle with these types of batteries. Right now, the limited production Tesla Roadster uses li-ion batteries as will the upcoming Fisker Karma sport sedan.

What Ford Has Planned

Ford will embrace the new technology and has ambitious plans to take a leadership role by offering the following:

All Electric Transit Connect — Imported from Europe, the Transit Connect will do to the entry level commercial van market what the Ford E Class did for big vans. Moreover, Ford is working with a British battery supplier to produce a limited number of pure electric Transit Connects beginning next year. Yes, the Transit Connect EV will likely beat Nissan’s own electric sedan to the market in 2010, by at least a few months.

Ford Focus EV — In keeping with its plans to bring the European Focus (pictured) to the United States, Ford is converting an assembly plant in Wayne, MI to produce its global compact car.  Ford just announced that beginning in 2011, an electric Focus will also be produced, becoming the first pure electric passenger vehicle from the automaker.

Next Generation Hybrid — Although fairly mum on this point, Ford says that its next generation hybrid vehicle will roll out in 2012. I believe that this means that the current Fusion/Milan will switch from NiCad to li-ion batteries, particularly if the earlier Transit Connect and Ford Focus models prove to be a success.

First Ever PHEV — Ford is currently testing its plug-in hybrid Escape or Escape PHEV, a vehicle with an extended electric range. Ford says it is possible for drivers to get around 100 mpg with its PHEV; I believe this means that the technology will find its way into the next generation Escape/Mariner.

The New Face Of Ford

When all is said and done, the Ford line up will look vastly different than it does now as the automaker shifts from producing big trucks and sport/utility vehicles to smaller, lighter and much more environmentally friendly vehicles.

You’ll still be able to buy your F-150 or Taurus, but the bulk of Ford, Mercury and Lincoln sales will be those involving vehicles currently sold in Europe and those featuring hybrid, plug-in hybrid (PHEV) and pure electric engineering technology.

Photo courtesy of the Ford Motor Company.

Carlos Ghosn Bullish On Vehicle Electrification

It took approximately ten years to sell one million hybrid vehicles in the US, a number that is probably far below what advocates envisioned when the technology began to be mass marketed in the late 1990s. Back then, Honda and Toyota had the market to themselves, with few competitors on the horizon. Even today the two automakers sell far more hybrid models then their competitors, but that may soon change.

The Advancement of Hybrid Technology

Hybrid technology has been picked up by Ford who five years ago introduced its Ford Escape Hybrid and has since expanded to include a Ford Fusion Hybrid in the mix. GM and Chrysler have each jumped in while Volkswagen is leaning on its clean diesel technology to provide an alternative to gas powered vehicles.

Carlos Ghosn who is chairman and chief executive officer for both Renault and Nissan aims to be the first automaker to mass produce electric cars. While at least one Chinese automaker, BYD, is already producing electric vehicles as is Tesla Motors and soon, Fisker Automotive, Nissan says that it plans to put its first electric model on the market next year.

Not A Chevy Volt: Cheaper

According to the International Business Times, Nissan will roll out a model in 2010, at a price that makes ‘sense’ to the consumer. Ghosn pointed out that the GM Volt (Chevrolet Volt) will cost about $40,000 which is too high given that consumers can purchase an oil powered car for $15-20,000.

Quoting Mr. Ghosn: “Somebody’s got to invest massively and bring to the market zero emission cars, and we think we can do it,” Ghosn told CNBC in an interview from Tokyo. “We have the batteries and we are at the point where within 2010, cars that we will be putting in the U.S. market will be totally attractive to the consumers.”

Consolidation Underway in the Auto Industry

Ghosn also noted that the global auto industry is in a position to consolidate, pointing out that Fiat and Chrysler are in talks while other automakers are collaborating on technology. For example, last year BMW and Mercedes agreed to share some components, a step that some suggest will lead to the German arch-rivals eventually merging. Though that move could be many years off it could be pushed forward if economic forces create a sense of urgency.

With the world embroiled in a deep recession, further moves to join companies together could be on the horizon.

See Also — Nissan Poised to Eliminate Jobs, Transfer Production