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Here's what is really behind Ford Motor Co.'s decision to back off its promise that it would be able to manufacture 250,000 hybrids by 2010: Ford got sucked into the early hype for hybrids and misread the demand.
Ford CEO Bill Ford compounded that mistake by publicly committing the company to building too much capacity for a product unproven in the market.
Naturally, environmentalists cried foul about Ford's decision to back away from those unrealistic projections. But in reality, Bill Ford has recommitted the company to a variety of technologies it was already developing.
Doubts about Ford's ability to meet the hybrid goal emerged shortly after the plan was announced just nine months ago.
The flaw? Ford doesn't have a rear-wheel-drive hybrid transmission it could use in its truck-based SUVs, such as the Explorer and Expedition. Through May, Ford's mix of sales in North America were heavily weighted toward trucks, at 62 percent, against just 38 percent for cars.
Last week, Bill Ford wrote in a letter to employees that the company would not "wed itself to a single technology but manage a more flexible approach" to meeting its environmental goals. Ford Motor already was working on several technologies to boost fuel economy and lower emissions while developing its hybrids.
In that letter, Bill Ford said the company will invest in:
Clean diesels. This likely means a European-sourced diesel V-8 of 4.4 liters for the F-150 pickup and the Explorer, Expedition and Lincoln Navigator SUVs. This would give Ford fuel-efficient vehicles to compete with a new generation of GM hybrid trucks and SUVs.
Advanced gasoline engines and transmissions. Ford engineers are working on gasoline direct injection, turbochargers and other technologies that will boost the efficiency of its gasoline engines while lowering emissions.
E85 ethanol. Although it's expensive and hard to find, the home-grown biofuel has gained favor because it can reduce the nation's dependence on imported oil.
Advanced batteries. Ford and others want to bring highly efficient lithium-ion batteries to hybrids. These batteries could be ready by 2010. They have the potential to enable plug-in hybrids and to increase the range that hybrids can travel on battery power.
Bill Ford didn't mention it in the letter, but Volvo is likely to lead Ford's charge into North America with passenger-car diesel engines. The Swedish automaker hopes to be able to sell diesels in the United States in three years, Hans Folkesson, Volvo's senior vice president for r&d, told Automotive News last month.
Ford's immediate hybrid plans remain intact, said spokesman Said Deep. Ford will introduce the hybrid versions of the Mazda Tribute SUV and Ford Fusion and Mercury Milan on time next year, he said.
On Friday, June 30, Ford also said it will expand its hybrid technology to European vehicles, possibly Volvos with diesel engines.
Ford's second- and third-generation gasoline-electric powertrains have not been canceled, but some nameplates that would have been offered with a hybrid powertrain might now be in jeopardy.
In the 2008-2010 time frame, Ford said it would offer hybrid versions of the Ford Five Hundred, Mercury Montego, Ford Edge and Lincoln MKX.
In an interview with Automotive News in May, Nancy Gioia, Ford's director of sustainable mobility technology and hybrid vehicle programs, said the company had learned a lot about selling hybrids.
Hybrids won't sell themselves. They need consistent marketing, she said.
Also, a hybrid must look different. "People who drive hybrids want to make a statement that they are driving a hybrid," Gioia said.
Cost is probably another reason Ford is pulling back on hybrids. Each one it sells loses money, and there is almost no short-term hope of bringing costs down.
Consumers considering hybrids such as the Toyota Camry and Honda Accord have been weighing the costs and deciding that the vehicles are not worth the hefty premium, says Mike Jackson, director of North American vehicle forecasting for CSM Worldwide, a consulting business in suburban Detroit.
Hybrids also have lost traction because the pool of buyers is not as deep and wide as Ford expected, says Thad Malesh, an analyst who tracks alternative powertrains for the Automotive Technology Research Group in California.
Hybrid sales have been inconsistent. Hybrid sales in the United States rose 18.7 percent during the first five months of 2006 compared with the same period last year.
But most of that gain stemmed from newly introduced hybrids. Sales of hybrid models on the market over the five months this year and last have been stagnant.
Says Jackson: "Frankly, the market in and of itself continues to be a challenge."