Unlike Toyota, Ford is Bullish on Plug-In Hybrids

(MoneyWatch)  Ford, the only one of the Big Three not to declare bankruptcy, is nonetheless still in a fairly big hole. For all of 2008, Ford's sales were down 21 percent. There's a slight hint of a turnaround in the reports from May: although sales were still way down (24.2 percent) compared to the previous year, the month's 155,954 was up 20 percent from April. Good news is where you find it.

Nonetheless, Ford is going ahead with its product plans, including controversial plug-in hybrids. I say they're controversial because Toyota--which is launching a fleet of 500 of them--has lately been saying they don't actually make a whole lot of sense for many buyers. If you need a refresher, these cars add a larger battery pack and plug-in capability to the familiar hybrid mix. One issue for Toyota is its launch of the 50-mpg 2010 Prius--it doesn't want people to think that standard hybrids are obsolete (as San Francisco Mayor Gavin Newsom recently opined).

In an interview, Nancy Lee Gioia, Ford's director of Sustainable Mobility Technologies and Hybrid Vehicle Programs, said Ford will have 21 plug-in hybrids in utility fleets by the end of the year, mostly in the U.S. but also in Canada. Hydro-Quebec is the latest partner in the three-year program, joining Detroit Edison, Con Edison, the New York Power Authority, Southern California Edison and others.

"One of the key things from our perspective with any vehicle that plugs in is to know what the value proposition is," Gioia said. "With the utility program, we're trying to create a learning environment so we can carry plug-in hybrids forward."

The utilities are testing "mules" based on the current Escape, using a 10-kilowatt-hour battery pack and offering about 30 miles of electric range. But Ford plans to bring a plug-in hybrid to market in 2012 as part of a electrification strategy that also includes a battery-powered Transit Connect van next year (based on a conventional Euro-sourced van Ford will start selling later this year) and a battery car based on the next generation of the Focus in 2011. "We want to see valid customer need for all three of these technologies," Gioia said.

Ford is bullish on its "blended" plug-in hybrids, which act like battery cars until the 30 miles of electric range is exhausted, then regular hybrids afterwards. "Our initial tests showed they could achieve up to 120 mpg, and now we're seeing data well in excess of that," Gioia said. "We're very excited about these results meeting the needs of the 60 percent of our customers who drive less than 30 miles a day."

Gioia called 30 miles of electric range "a good, sweet spot. We're always trying to keep the battery system as small as possible, and with that range we can achieve that goal. The car has to be fun to drive, versatile, and do all the things that make a good car a good car."

Ford will build 5,000 of its plug-in hybrids in 2012 and then, as Gioia puts it, "grow the market." After the early adopters buy it, there has to be appeal to consumers "who understand how it fits into their usage." Ford is prepared to scale up production, but "affordability is the key." She's right about that. As companies prepare to launch $30,000 to $40,000 limited-range battery electric cars, it's unclear how consumers will respond--even with $7,500 federal tax credits.