Ford delivered a jolt to the burgeoning electrified vehicle market yesterday by saying that it would invest $11 billion and put 40 EVs on the road by 2022 as the North American International Auto Show got rolling in the Cobo Center in Detroit.
“Ford expects fuel economy and pollution standards to get tougher, ‘and rightfully so,’ said Raj Nair, head of Ford’s North American operations,” Keith Naughton, Ryan Beene and Gabrielle Coppola write for Bloomberg. “‘We believe man-made CO2 is contributing to climate change and we’ve got our part to play.’”
Previously, Ford was planning to invest $4.5 billion up to 2020. The “commitment comes at a time when gasoline or diesel engines powered nearly all of the 90 million vehicles sold globally in 2017,” Mike Colias reports for the Wall Street Journal.
“Of the 40 electrified models planned, 16 will be battery-only vehicles. The company identified just one model by name coming in 2020, called the Mach 1, that will be a performance battery-electric SUV,” according to the Bloomberg report.
“This $11 billion you’re seeing, that means we’re all-in now,” executive chairman Bill Ford said. “The only question is will the customers be there with us, and we think they will.”
Not that other companies aren’t also moving in a similar direction, even if they more coy about how much they’re spending.
“Few other auto makers are breaking out specific investment numbers related to electric vehicles. Volkswagen AG , looking to recover following a diesel-emissions scandal in the U.S., has committed to spend $40 billion on electrified vehicles over the next five years,” the WSJ’s Colias writes.
General Motors “said last year it would add 20 new battery electric and fuel cell vehicles to its global line-up by 2023, financed by robust profits from traditional internal combustion engine vehicles in the U.S. and China. GM’s chief, Mary Barra, has promised investors the Detroit automaker will make money selling electric cars by 2021,” Reuters’s Nick Carey and Joseph White report.
“Toyota is racing to commercialize a breakthrough battery technology during the first half of the 2020s with the potential to cut the cost of making electric cars,” they continue.
Meanwhile, “the industry will be watching closely to see how Ford moves forward with its plan to produce a hybrid variant of its popular F-150,” Edmonds senior analyst Jessica Caldwell tells the Detroit Free Press’s Phoebe Wall Howard.
“Ford is making it clear it intends to be the leader in fuel-efficient trucks. However, the real question is if truck shoppers are willing to trade the utility they need just to be a little bit more green. Truck buyers are a demanding group, and it’s probably a good thing that Ford has until 2020 to find a way to give them the best of both worlds,” Caldwell tells Wall Howard.
Earlier in the week, new Ford CEO Jim Hackett gave a keynote address at the Consumer Electronics Show in Las Vegas that led Fortune’s Adam Lashinsky to reflect: “I’ve attended innumerable keynote addresses by top executives at technology conferences, but never a talk quite like the one Hackett gave Tuesday morning.” As he “cut an avuncular figure in a cardigan sweater vest, [Hackett] shared his vision of the future of transportation.
“That vision is bold if incredibly risky. It acknowledges that for all the genius of Henry Ford, whose groundbreaking business processes gave the world the freedom of the open road, his cars also brought parking lots, congestion, pollution, decrepit town centers and worse,” Lashinsky writes. “‘By enabling one kind of freedom we restricted another,’ said Hackett, sounding very much like the corporate intellectual he is but also a bold radical, willing to speak truth to the power of his own adopted industry.”
You can teach a 114-year old company new tricks. Whether there is an audience for them in the near future may remain to be seen. But “China, India, France and the U.K. have all announced plans to phase out vehicles powered by combustion engines and fossil fuels between 2030 and 2040,” as Reuters’ Carey and White point out. Long term, there doesn’t seem to be a viable alternative to developing alternative fuel systems.