Photographer: Jeff Kowalsky/Bloomberg

Ford to Invest $4.5 Billion in Electrified Vehicles by 2020

  • Automaker plans to add 13 electric, plug-in models in 5 years
  • Such vehicles to rise to 40% of lineup from 13% now, CEO says

Ford Motor Co. said it’s investing $4.5 billion in electrified vehicles, responding to regulatory pressure with a bet on technologies that have struggled to attract buyers in the U.S. as fuel prices stay low.

The automaker will add 13 electric cars and hybrids by 2020, rising to 40 percent of its lineup from 13 percent now, Chief Executive Officer Mark Fields said Thursday at a press conference in Dearborn, Michigan. The plans include a new Focus Electric car with fast-charge capability, Ford said.

“We’re going to see more and more companies invest in electrified vehicles because at the moment there’s some very stringent 2025 emission standards,” said Michelle Krebs, senior analyst at AutoTrader.com. “The way to get there is using electrification. It’s a significant investment, but it’s the way the industry is moving forward.”

Ford’s spending plan comes even as cheap gasoline prices crimp U.S. sales of such models. Deliveries this year through November of Ford’s C-Max, Fusion and Lincoln MKZ hybrid versions tumbled 25 percent to 59,301, according to Autodata Corp. Sales slid 12 percent for Toyota Motor Corp.’s Prius models, 23 percent for General Motors Co.’s Volt plug-in hybrid and 41 percent for Nissan Motor Co.’s battery-powered Leaf.

“Certainly, the gas prices that we’re seeing right now don’t help the electric-vehicle sales,” Raj Nair, the company’s product development chief, told reporters in Dearborn. “We’ve got a lot to do to inform and educate the customer about the advantages of not just the battery-electric vehicles, but plug-in hybrids in particular and hybrids.”

Fields said plug-in hybrids will be the fastest-growing type of electric vehicles.

“When you look at these investments, we know for sure hybridization is going to be a bigger proportion of our vehicles,” said Matt Stover, an analyst at Susquehanna Financial Group. He estimated that Ford’s total capital expenditures and research and development costs over the next five years will be about $70 billion.

Largest Ever

The planned outlays for electrified vehicles will be its largest ever in a five-year period, Ford said in a statement.

Nair said the carmaker expects to get the same return on investment in those models as it would from gasoline-powered vehicles.

“That’s our intention,” he said. “There’s a lot of variables in that. A lot will depend on both the regulatory as well as the fuel environment.”

Consumers still misunderstand the benefits of electrified autos, especially plug-in hybrids that are powered by both electric batteries and gasoline engines, Nair said.

"We still see feedback that people are concerned about the range of a plug-in hybrid, which really, to be honest, doesn’t make sense," Nair said. "Because in a plug-in hybrid, you’ve got a tremendous amount of range."

This year, Ford expanded its Electrified Powertrain Engineering program in Dearborn, hiring an additional 120 engineers, according to another statement Thursday. In October, the automaker, the University of Michigan and the Michigan Economic Development Corp. announced a $9 million lab at the school to help develop smaller, lighter and less expensive batteries.