Ford’s Climate Strategy
by John Laumer, Philadelphia on 07.20.06
According to a recent AutoCar Magazine article: “Ford's chief in Europe and head of its Premier Automotive Group, Lewis Booth…envisions that 'in the next 10 or 15 years' consumers will become as aware of their annual carbon output as they are of their bank balance today”.
“He [Booth] called some countries’ favorable tax treatment of hybrid vehicles that still emit high levels of CO2 'completely cuckoo'…” “Roelant de Waard, head of Ford in the UK, clearly agreed - he called for the London congestion charge to be scrapped for biofuel-powered Focuses, as they emit less than 100g/km of Co2 - less than all the hybrid models…”
Could someone be resentful that that Toyota is stealing market share with hybrid designs? Not mentioned in the cited executive rant is that Prius, the largest selling, tax benefiting-most hybrid on the market, dramatically cuts non-C02 emissions and holds the promise of external recharging.
Getting back to the strategy thing, Mr. Booth also said: “Using a range of developments to improve environmental performance across Ford's car range would deliver far more substantial results than the 'tiny' numbers of hybrids sold...” “Forthcoming developments include gear-shift indicators to encourage economical driving, second-generation biofuels which offer an 80-90 per cent reduction in CO2 emissions…”
So, the short term strategy seems to be that Ford, like GM, is going for the ethanol flex fuel, and incremental efficiency improvements in current models, while advocating (we speculate) against more radically efficient designs getting tax breaks, which in turn will steer customers back to Ford.
Pictured is the Ford Focus.
The global car business is not in trouble, other companies are doing well. Why are Ford and GM in so much trouble? Is it just the Unions and health care? Well, that's part of it. Their competitors are all in countries where there is national health care; the expense is not borne by business (when it is) as in the U.S. These companies also lack innovation and risk taking. GM kills the electric car; and Ford cuts back on it's hybrid production (http://msnbc.msn.com/id/13619036/). At least Chrysler had the wherewithal to go out and sell itself to a foreign company. I think they did it to find better management and bigger risk takers. (Germany is not a country known for being full of risk takers.)
As a shareholder/bond holder I wish Ford would make a bigger commitment to making more hybrids. By sticking to a failing strategy of big gas guzzling vehicles they are potentially ruining the value of my stock.
For disclosures as to my peronsonal holdings in Ford and GM see my blog entry on this topic.
http://davidneubert.com/2006/07/14/ford.aspx
Ford are making huge efforts to revamp their image. In the US they have teamed with TerraPass to develop a CO2 emission offset programme for Ford customers. Car manufacturers are beginning to realise the damage that they are doing to our environment and using alternative fuels to provide a better solution.
Read my blog to find out more about Ford and their partnership with TerraPass at
http://www.fuelture.com/fueltureblog
My wife and I were seriously considering the Escape Hybrid, even though we don't really need a new car (which is kind of wasteful in a way) and I just couldn't get the idea out of my head that 3 or 4 years from now, I would be somewhere with a dead hybrid powerplant that I couldn't get help to fix. (Although to Ford's credit, the powerplant had I think an 8 year warranty, whereas the rest of the car had the standard 3 years.) About 3 weeks after we decided not to buy one, Ford said "we were just kidding about hybrids, we are going for the truck/SUV/ethanol plan instead." I wanted to cry.
If you haven't already, go read "The Innovator's Dilemma". It discusses how technology sometimes makes such great leaps that companies still doing standard business get left in the dust. (e.g. Ford hangs on with both hands to trucks and SUVs while Toyota/Honda embrace and advance fuel-efficiency.) It's a great book which is relevant to the changing landscape of hybrids/diesel/electric cars. I wish Bill Ford would read it. Many of my neighbors who work for Ford wish he would read it too.
Well, I think he has a point that a bio diesel Focus ought to have the same excemtions as a hybrid no?
=== author's response follows ===
The point of restricting autos from city centers is based primarily upon air quality degradation. Overcrowding is secondary. In city traffic hybrids emit far less and hence were exempted to try to push market interest that way. In some cities exemptions are given for multi-passenger vehicles of any type. If a biodiesel powered car had comparable emissions I suppose common sense would dictate that it too ge granted exemption. But to do it just because a car is "different" makes no sense.
Why is new carbon better then old carbon???
=== author's response ====
Many feel that because human limits are more visible when depending directly upon the lithosphere, that it is somehow better to recycle carbon directly. This is pragmatic, of course, only when earth's cumulative uptake of carbon from the atmosphere is greater than or equal to the sum of all carbon releases, as a long term average. Now watch me get hollered at.
I bet Ford will come strong on their alternative fuel strategies. Their Focus FFV which promise to achieve more than 70 mpg, while emitting less than 161 grams/mile of carbon dioxide will sure be a huge success.
It's good to hear BP & GM talk about alternative fuels, but 50 years to implement is too long.
http://money.cnn.com/2008/03/05/news/companies/bigoil_hydrogen/index.htm
Perhaps this link will spark more attention:
http://www.chevrolet.com/electriccar/
It is GM's electric concept car the Chevy Volt. If more people begin to demand alternative fuel cars, we should be able to speed the rate at which the technology is developed.
We have started an Investor Forum where Investors can meet and discuss topics like this:
http://investor-forum.thesubway.com/