Will Ford find the Goldilocks of electric vehicles? – MarketWatch

Posted: Monday, December 14, 2015

Near-term sales may be flagging, but auto makers are betting big on electric vehicles.

Ford Motor Company

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made a $4.5 billion investment in electric vehicles, the company said last week, outlining a plan to add 13 electrified vehicles to its product line by 2020. The auto maker joins Volkswagen’s

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Audi brand, Porsche and Volvo

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in its vocal commitment to developing more electrified fleets.

The announcement follows a dismal November where electric vehicles saw their worst market share since 2011, and with falling gas prices and the rising popularity of SUVs, there is little hope for a turnaround in the near future. However, the 2025 model year deadline for renewed Environmental Protection Agency standards — which require an average fleet fuel efficiency of 54.5 miles per gallon — is pushing auto makers to invest more in alternative fuel development.

Of the various technologies being tested, from hydrogen fuel cells to biodiesel, electrified vehicles have proven to be one of the more viable options for long-term development. “Five to 10 years ago, there was some question as to what the big alternative fuel would be,” says Akshay Anand, an analyst for auto site Kelley Blue Book. “Now electric vehicles should play a bigger part in people’s lives as consumers have become more OK with the idea of electric vehicles.”

Ford’s decision to invest so heavily in electric vehicle technology was centered on the strong infrastructure already in place for battery development, says Ford spokesman John Cangany. “It’s an interesting opportunity for Ford to invest where costs are getting more manageable for these vehicles,” he says.

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The focus of the coming vehicles is to create a “democratization” of the electric vehicle market, he adds. Current selection is limited, from the luxury Tesla

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 Model S with a range of 240 miles per charge retailing at $75,000 before tax credits and incentives, to the smaller Nissan

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Leaf with a range of 107 miles per charge and a manufacturer’s suggested retail price of $29,010.

The company is targeting the $30,000 price point while developing a longer battery range, Cangany says. Ford currently has one all-electric vehicle on the market, with a battery range of 110 miles per charge and an MSRP of $29,170.

KBB’s Anand says improvement in battery range would help attract more consumers interested in electric vehicles as their primary vehicle: “80 miles isn’t enough for battery range, 100 miles isn’t enough,” he says. “Figuring out that whole logistic is going to kick-start the market.”

Depending on the final design and features of Ford’s planned lineup, it could challenge Tesla’s economy Model 3, due to start production in 2017, or prompt Tesla to raise the car’s sticker price. “They may make it extremely interesting and a little more expensive than promised,” says Jessica Caldwell, director of industry analysis at automotive research site Edmunds.com. Tesla didn’t respond to a request for comment, however Elon Musk, the company’s chief executive, wrote in a tweet in September that the vehicle will cost $35,000. While few details on the Model 3 have been released, Tesla’s upcoming Model X will include features such as falcon doors and sonar and radar detection to help avoid collisions.

Electric crossovers or SUVs may also become more prevalent in the next decade. Though Ford declined to comment on future product details, Anand says such vehicles may become a necessity. “Crossovers are where all the growth is,” he says, “Everyone needs to figure out how to get crossover EVs on the market.”

Even if electric SUVs aren’t developed, increased innovation in the market can be expected as the 2025 EPA deadline closes in, even if low sales aren’t a big motivator in the short term. “Sales are a short-term game,” Caldwell says. “In the long-term, cars are going to become electrified.”


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