Ford Thinks Hybrids Will Beat Electric Cars

A lot of investors love the idea of electric cars. Witness the excitement around Tesla Motors (NAS: TSLA) , which just rolled out its battery-powered Model S sedan to much enthusiasm -- and which has thousands of orders for the new model already in hand.

Electric cars are clean and high-tech and seem like they should be the future, many say. But while visionaries and gadget-geeks alike clamor for more automotive electrification, the big global auto manufacturers continue to hedge their bets, with Ford (NYS: F) the latest to join the chorus of concern.

Why hybrids are a safer bet
Ford's John Viera, who has the mouthful-title "global director of sustainability and vehicle environmental matters," gave an interview to Bloomberg recently in which he shared the Blue Oval's view of the near-term future of greener cars.

Viera said Ford sees "electrics" comprising as much as a quarter of its total sales by the end of the decade -- but like the chief engineer at green archrival Toyota (NYS: TM) , Ford expects nearly all -- 90% or more -- of its "electrics" to be hybrids, not purely electric cars.

Hybrids, of course, combine a conventional gasoline engine with an electric motor powered by a battery that recharges on the fly. From the perspective of an automaker selling to the mass market, hybrids have two huge advantages over pure electrics, at least today:

  • They cost less. Electric-car batteries are still very expensive, something that's not likely to change for at least a few years. (Why does Tesla's sedan have better range than most other electric cars? Look at the price tag.) Hybrids need only a small battery, which together with the electric motor and other systems adds just a modest premium to the price of a purely gasoline-powered car.
  • They're just like "normal" cars from a driver's perspective. Hybrids can be refueled at any gas station, just like conventional cars. They have plenty of range -- in fact, a Toyota Prius or Ford Fusion Hybrid has more range than conventional counterparts do. Contrast with electrics: Tesla's expensive rides aside, most have ranges well below 100 miles -- and "refueling" away from home involves finding a special charging station (few and far between right now) or waiting hours while the car recharges on conventional 110-volt current. That's why General Motors' (NYS: GM) Chevy Volt includes an onboard generator that's powered by -- you guessed it -- gasoline.

Both of these factors make hybrids (including "plug-in" hybrids, which have a limited all-electric range) a much safer bet as a mainstream product than purely electric cars, at least within the next decade. But as Viera pointed out, Ford is hedging its bets: If demand for pure electric cars happens to take off, the Blue Oval will be ready.

Ford's strategy: Keep options open
Viera says Ford, like Toyota, GM, Honda (NYS: HMC) , and other major automakers, is exploring other alternatives to gasoline, including compressed natural gas, fuel cells, and hydrogen power. But like Toyota, Ford thinks technologies like hydrogen fuel are unlikely to make it to the mainstream any time soon.

Meanwhile, Ford's caution about changing technologies is inherent in its electric-car designs. Rather than designing dedicated all-electric (or even hybrid) models like some other automakers, Ford creates hybrid or electric variants of its existing models -- like the Focus Electric, or the hybrid versions of the Fusion sedan.

These vehicles can be built right on existing assembly lines, alongside the conventional gas-powered cars they're derived from. That means that Ford can quickly increase or reduce production of the electrics or hybrids in response to market demand -- without retooling or setting up new assembly lines, which can take months and cost hundreds of millions of dollars. It also means costs are kept down, as cars like the Focus Electric are adapted from existing mainstream designs and have many parts in common.

That seems like the most sensible approach in a world where the future of electric cars is still very much an open question. Do you agree? Scroll down to leave a comment and share your thoughts.

Ford's stock has been under pressure lately, with its stock dropping below $10 a share. But the company is still performing very well at home and is investing heavily for growth abroad. Have these short-term pressures created an incredible buying opportunity, or are there hidden risks with the stock that investors need to know about? To answer that, one of our top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Get instant access to this premium report.

At the time this article was published Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of General Motors, Ford, and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Pellon Auto Centre

hi i think what you say is correct in my opinion where are all the charging points going to go .if all the motorists with EV cars in Manchester decided to go shopping at the Arndale centre how on earth would they cope ??
eric roberts

July 21 2012 at 12:19 PM Report abuse rate up rate down Reply

I have a volt since most of my trips are about 40 miles which means I use maybe a tankful a year of gas

I purchased the new model s from tesla because it gives me a 300 mile range- I would not purchase an all electric car with less than a 250 mile range but I would purchase a suv if it has the volt concept
thank you
arthur seeman

July 19 2012 at 10:41 AM Report abuse rate up rate down Reply

I understand Ford's point and reason for doing so, but just changing an existing ICE car to an EV platform just makes the EV a compromise instead of selling the performance aspects that EV cars can be. For instance because Tesla's batteries are so low, the CG of the Model S is lower then the Ford GT without using valuable trunk space. Compromised EV's have battery packs that are higher and tend to consume a lot of the usable cabin space.

Hybrids are expensive because not only do you have to pay for the ICE components, but all the electrical systems to work together. If battery prices come down (significantly) and level 3 charging becomes the norm electric's will rule. There will be no need for ICE's at all and that future is coming soon. The question remaining is how long will that be and if companies like Ford ignore the sector long enough for niche players like Tesla to get a foothold

July 16 2012 at 8:35 PM Report abuse rate up rate down Reply
Jim Stack

gas cars make deadly pollution, carbon monoxide to name one. gas cars are only 14% efficient and wear out brakes. Gas OIL is subsidiesed,just look at Europe to see the real $8-10 a gallon cost.

Electrics run on USA made power, even solar on your home. Electrics make 4 times less pollution even if it ran on 100% COAL and the US only has 47%COAL.

Electrics don't need a transmissions since AC electric motors run high rpm just as efficient as low rpm, they don't wear out brakes since they use regenerative braking adding power back into the car. The Tesla and LEAF are USA made !

The US imports $1 Billion a day in OIL. Air pollution is real, global warming is happening. Yet OIL companies make Billions in profits passing on any higher cost to you!

July 16 2012 at 5:58 PM Report abuse rate up rate down Reply

Does anyone remember how the first year Prius only sold 7,000 or so? Now, it's the most popular car in America. The news media has a long and illustrious history of writing our automotive history before it has happened. The first year Prius had electrical problems just like FOX News raised Cain over the Volt's coolant leaks with fires occurring one week after crash testing--it's a safety feature versus any gas vehicle. I predict hybrids will remain popular because of range anxiety, but first-ring suburban consumers who lack bus service will switch to EVs and extended range EVs as they figure out the economics of their commute.

July 16 2012 at 5:38 PM Report abuse rate up rate down Reply

Hybrids are the biggest joke perpetuated on the public and every engineer worth his/her salt knows this. Sure, they are better than pure rechargeable EVs, They will handle just abo ut as well as a pure ICE on high speed highways are are much more dependable than ANY pure rechargeable EV. The only reason the hybrid exist is to keep the government and the enviromentalists off their backs. The ONLY thing it accomplishes is moving the polution from one part of town to another (and maybe using the public to test the propulsion plants in anticipatation of the Fuel Cell car they are all developing behind the scenes).

July 14 2012 at 10:32 PM Report abuse rate up rate down Reply

Does anyone build a small effient gasoline, deisel, or bottle gas engine front wheel drive hybrid vehicle good for low milage in town and highway cruising with a simple rear wheel electric power to kick in with extra power for acceleration, ramp and hill climbing, and off road 4 wheel driving? I could become interested in buying 0ne.

July 14 2012 at 4:54 PM Report abuse rate up rate down Reply

While investors are busy discussing the idea of electric cars I have enjoyed the actual driving part for years.

July 14 2012 at 3:00 PM Report abuse rate up rate down Reply

Get off of gas already. SIgh.

July 14 2012 at 2:25 PM Report abuse rate up rate down Reply

carbuyers who still gun for gas guzzlers really distract all carmakers from efforts to improve efficiency. Should we really continue to grant those types of people the liberty to do that ?? Liberty is so dear to us ... and to have those people acting so selfish really put the true meaning of America to test!!

July 14 2012 at 2:06 PM Report abuse rate up rate down Reply