There is a new battle shaping up between General Motors (GM) and Ford (F) over engine superiority. And it's not the race for who can achieve the highest horsepower. With gas prices expected to stay above $3 per gallon and pressure on automakers to reduce carbon dioxide emissions, the new battle is over which companies can shrink their engines' sizes and displacements without compromising driving performance or leaving power-hungry customers behind.
What does this really mean? Gas-thirsty V-8 engines in passenger cars and crossover SUVs will soon be an endangered species. This fall, Ford will launch the first in a series of smaller engines it is calling gas turbocharged direct-injection engines, or GTDI engines. These engines, the first of which will appear in the 2009 Lincoln MKS sedan, will achieve a 15% improvement in fuel economy over Ford's current engines. Over the next five years, Ford expects to put 500,000 vehicles equipped with the new engines on the road worldwide, with faster growth after that.
Automakers, especially U.S. companies, have been locked in a mindset of "bigger and faster is always better" for decades. Indeed, horsepower wars have been seen as a close cousin to the trend of bigger, thirstier SUVs. The crescendo of this thinking was perhaps reached in 2003 when GM showed a concept car at the Detroit Auto Show, the Cadillac Sixteen, which achieved 1,000 hp. In a stark reversal, GM said this month that it is scuttling its plans to build a new V-8 engine for its passenger cars and will instead, like Ford, focus on high-performance V-6s. Pickup trucks and SUVs will continue to offer V-8s.
The MKS sedan will be introduced with what Ford may call, for marketing purposes, the "EcoBoost" 3.5-liter twin-turbo direct-injection V-6, expected to produce 340 hp. This same engine will migrate to other Ford models including the Taurus, Edge, and Lincoln MKX crossover SUVs in 2009. The boost in fuel economy compared with a V-8 engine is 2 mpg, or about 15%. Ford also plans to use the engine technology in four-cylinder engines as a way to match performance with larger 3.0-liter, six-cylinder engines while getting 5 mpg better fuel economy than the V-6s achieve. And there is a 7% to 15% reduction in CO2 emissions per vehicle with an EcoBoost engine.
The EcoBoost engines don't pack the "wow" factor of, say, hybrids, which beat competitors in some cases by 15 to 20 mpg, or the promise of plug-ins, which will be able to go up to 40 miles on an electric charge. But Ford global product development chief Derrick Kuzak says Ford's new gas engine strategy will deliver major savings of gasoline and carbon dioxide emissions because of the millions of vehicles Ford sells worldwide each year.
Kuzak, a soft-spoken man who is a contrast to many Detroit product executives who trumpet the latest horsepower boost, hydrogen car, or futuristic design, is hoping that Ford's engine strategy will appeal to customers who do their homework on the Internet. According to Kuzak, a customer's initial investment in EcoBoost technology, which will cost a little more than standard engines, will be regained through fuel savings—less trips to the pump—in just 2.5 years. "That compares with more than seven years to recoup the price of a clean diesel engine and more than 11 years to get back the investment in a hybrid."
Advocacy and Marketing
Part of the appeal of hybrids and diesels, though, up to now is "badge appeal." Buyers of Toyota's (TM) Prius and Volkswagen's (VLKAY) TDI diesel vehicles are not just consumers, they tend to be advocates. They not only want to be seen in their more fuel-efficient cars, they try to convert their friends.
Ford's new chief marketing officer, Jim Farley, who came to the automaker after a career at Toyota, says marketing of the new technology will be key to success. "People will have to feel they are doing something for the planet as well as for themselves, and we have to figure out the right name, badging, and advertising to convey that," says Farley.
Dumping V-8 engines in passenger cars, especially premium and luxury cars, is a marketing risk, but perhaps one whose time has come. For two decades, Honda's (HMC) premium division, Acura, has not offered a V-8 in its flagship sedan, the RL. Before that, the Acura Legend sedan only went as high as a V-6. American Honda chief Tom Elliott has said on more than one occasion that the U.S. management team for the Japanese automaker has repeatedly made the case, to no avail, to their Japanese parent for a V-8 for both the RL and the Honda Ridgeline pickup.
The RL sold an anemic 6,262 units in 2007, down 45% from 2006. The Lexus LS (BusinessWeek.com, 2/14/07), which only comes in a V-8, by contrast, sold 35,000 units, up 75% from the year before.
Many buyers just can't accept that smaller is better. Ford, for example, when it launches a redesigned F-Series pickup this year, will no longer offer a V-6 engine, which had such a low purchase rate that Ford couldn't justify stocking the engines at the factories.
A New Era
Oddly, though, GM is seeing signs that its Honda V-6 engine strategy is pointing the way to a new era. The new direct-injected V-6 in the 2008 Cadillac produces 305 hp, while its Northstar V-8 in the Cadillac DTS (BusinessWeek.com, 1/19/07) generates only 275. The fuel economy of the DTS, a slightly larger car, is 15 mpg city/23 highway, while the CTS (BusinessWeek.com, 10/22/07) is rated 17/26. The same high-performance V-6 could go into the DTS and improve fuel economy while boosting horsepower.
The Lexus LS sedan only comes in a V-8, generates 380 hp, and gets 16/24 mpg. Lexus clearly engineers its sedans for power and fuel economy in a smarter way than Detroit automakers.
Ford, which is launching gas-electric hybrid versions of the Ford Fusion and Mercury Milan later this year, is not making big promises of delivering more hybrids or plug-in cars at a certain date. But it is working on other improvements to whittle away at fuel economy. Kuzak says between 2012 and 2020, Ford figures to reduce the weight of vehicles between 250 lb. and 750 lb., depending on the vehicle, without compromising safety. Such savings can add a couple of miles to each gallon of gas. "No automaker can wait around for technology to arrive; we have to make the most of what we know and have now," says Kuzak.