Have Hybrids Reached a Tipping Point?

On Wednesday, Bill Ford, chairman of his eponymous car company, announced that gas-electric hybrid engines will be available in “more than half” of all Ford, Lincoln and Mercury vehicles by 2010. Ford says his company will produce 250,000 hybrid vehicles annually by 2010, an order of magnitude greater than the roughly 24,000 hybrids it now produces annually.

Meanwhile, Toyota, the current hybrid pacesetter, announced on Wednesday that it is launching a national campaign aimed at building awareness and understanding of its gasoline/electric Hybrid Synergy Drive system powering the Prius, Highlander and future hybrid vehicles.

Toyota’s announcement followed another one it made about 10 days earlier stating that it plans to boost annual output of motors for its gasoline-electric hybrid vehicles to meet strong demand, mainly in North America. The company said it plans to sell up to 250,000 hybrids in 2005, nearly double 2004 sales of 130,000 units.

Have hybrids reached a tipping point?

With all due respect to Toyota, Ford’s announcement is the more significant -- in part because of the commitment itself, but largely because it came from Ford. In addition to the growth in hybrid sales, Ford also said it would:

promote flexible fuel vehicles and help build an ethanol infrastructure in the Midwest;

develop a pilot program to offset any carbon emissions involved with the actual production of hybrid vehicles; and

conduct a pilot consumer education program to encourage consumers to reduce carbon emissions.

That is to say: Ford isn’t just greening its cars. It’s looking at ways to green its manufacturing operations as well as its marketing communications. It’s a bold move.

There’s no question that Ford was feeling the heat -- from competitors, from activists, and from its own shareholders. In a letter to her members, Betsy Taylor, founder of the nonprofit Center for a New American Dream, gave her organization at least part of the credit. “I have no doubt that New American Dream's efforts to strengthen consumer demand for advanced hybrid electric vehicles has played a role in this decision,” she wrote. “Clearly, the thousands of letters and emails that you sent to Chairman Ford are making a difference.”

But so have many other groups, including the Bluewater Network, Rainforest Action Network, and others. For years, these groups, as well as Sierra Club and Greenpeace, have been hammering Ford Motor Co. -- and Bill Ford personally -- on these issues.

And then there are Ford’s shareholders -- at least the large, activist, institutional ones. In April, as a result of a shareholder resolution filed with Ford, the automaker announced that it would issue a first-of-its-kind comprehensive report later this year that will examine the business implications of reducing greenhouse gas emissions from Ford vehicles -- as well as the facilities that produce them. The climate risk report will also examine impacts from possible policy and regulatory changes.

Ford, of course, isn’t off the hook. It has to deliver on its promise with quality vehicles that people will want and buy. But it’s a promising start.

Meanwhile, on the same day that Ford and Toyota made their announcements, a somewhat less historic, but still notable, development took place in the world of hybrids: Green Car Journal reports that a Toyota Prius became the first production hybrid to race across the Bonneville Salt Flats, setting a hybrid speed record of 130.794 mph.

It’s significant in a number of ways: After all these years, greener cars finally seem to be on a fast track to market.

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Comments

[Trevor Parker]

With all due respect, Ford has done this before. I am presently looking at a Ford print ad found in a 1992 issue of Family Circle. It shows a picture of Roberta Nichols, Ford Environmental Engineer. She is holding a plug from an electric car. The ad talks about Ford's responsibility for the environment and talks about how Ford will soon have a fleet of electric cars on the road.
We all know what Ford did to the THINK electric car. They claimed there was not a market for electric vehicles. They did virtually no marketing for the THINK line.
Again, this article was in a 1992 magazine. That is thirteen years ago.
Ford is in trouble. They have done very little to come to market with any kind of real competition for hybrids like the Prius. Toyota has taken the ball and run with it. Ford is so far behind that it will take a miracle for them to catch up.
They can start by putting hybrid technologies in vehicles other than SUV's and trucks.
Get real folks!

[xavier Figueroa]

This is another example of how energy affects markets. Ford went heavy on the SUVs and truck sector, when a the price for a barrel of oil was ~$20. With the cost of energy (in the US) negligible, why not buy a large, inefficient vehicle? There was little cost to the consumer and the market was not there for hybrids. But this demonstrates the lack of planning and imagination that exists in US manufacturing. What would happen if energy prices spiked or stayed high? Everyone assumed that the good times would keep on rolling and gas would stay cheap...except the Japanese. When you are costrained by resource limitations, you think ahead and put more emphasis on alternative scenarios. The US can catch-up, but it wont be easy and it will come at a cost to GM and Ford. Couple with their junk bond status on Moody's, the transition for these automakers will strongly affect the American economy for decades.