Ford Motor Co. (NYSE: F) management said it would spend $4.5 billion on creating electric cars and electric car technology between now and 2020. The money is on top of what Ford already spends on the initiatives. At $1.1 billion a year, the investment isn’t very much in a competitive market in which the demand for electric cars is still modest and may stay that way.
Management announced:
- Ford is investing an additional $4.5 billion in electrified vehicle solutions by 2020, including the new Focus Electric with all-new DC fast-charge capability, which delivers 80 percent charge in an estimated 30 minutes and projected 100-mile range
- The company is adding 13 new electrified vehicles to its product portfolio by 2020; more than 40 percent of Ford’s nameplates globally will be electrified by the decade’s end
- Ford also redefining how future vehicles are created, moving from a features-based product development to a customer-experience-led process, applying insights from social scientist
The range is very modest compared to electric cars that can travel twice as far on a charge. The charge time is slow, based on technology that has been advanced by Tesla Motors Inc. (NASDAQ: TSLA) and will be adopted by other manufacturers. And Tesla will be fortunate to sell 100,000 cars two years from now, despite a cult of buyers.
Every major car manufacturer has rushed into some level of electric car development. As gasoline prices fall, and they may stay low for decades, the mode of powering vehicles might not draw many customers. Even if gas prices rise, Consumer Reports shows that dealers do not want to sell them. Although hybrid sales have slowed, if fuel consumption becomes an important part of driving costs, the market is awash in vehicles led by Toyota Motor Corp.’s (NYSE: TM) Prius. While out of fashion, high gas prices will change that.
Ford has to invest in the electric car market. It is a gamble already taken by much of its competition. However, this means unless the market is huge in 2020, the electric car market will be saturated, and Ford will have spent an extra $4.5 billion to get little if any return.
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