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Ford’s Aggressive Efforts to Lower Hybrid Costs Are Paying Off

May 4, 2011 by 34 Comments
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Plenty of automakers are doing some exciting things these days—and it seems they’re all going in different directions to do it. GM’s new Chevy Volt is setting a new standard for hybrids, Mazda has developed a crazy new gasoline engine, and Nissan has brought us the first mass-market all-electric car.

Lest we forget, Ford is in on the festivities as well. In an all-out effort to lower the cost of their hybrid offerings Ford has in-sourced (is that a word?) nearly all of its hybrid technology. Ford designed its own hybrid battery, which will soon start production in Ford’s Rawsonville, Michigan plant, as well as its own hybrid transmission, to be produced in Detroit.

Software development for the hybrids has also been brought in-house. The results? Costs on Ford’s newest generation of hybrids dropped by a cool 30%, allowing Ford to offer its hybrid version of the Lincoln MKZ at the exact same price as its gasoline counterpart–$35,455.

Ladies and gents, the train is finally pulling into the station. Ford wrongly estimated that 15% of its Lincoln MKZ sales would be hybrids. In actuality 25% of customers have been springing for the MKZ hybrid, a statistic which is still way too low in this humble blogger’s opinion.

Not that the results are baffling to me, because I understand how consumer economics work, and how resistant consumers are to “newfangled” technology they don’t yet fully trust. But at my core I’m an ideological fellow, so here’s my argument:  I really can’t begrudge consumers for rejecting hybrids and EVs while they’re priced several thousand dollars higher than gasoline vehicles, but once the price is identical…well, there’s just no excuse, people. You’re still getting your gasoline engine, and you’re simultaneously saving some greenbacks on gasoline. It’s a win-win scenario.

Let’s not make the mistake of fearing the future. Nobody wants to be the “back in my day!” geezer everyone finds so insufferable.

As the late Hunter S. Thompson once said: “Buy the ticket. Take the ride.”

Source: Hybridcars

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  • http://Web cobra

    Being caution re. this issue is warranted.
    Let’s not forget that hard data about the battery reliability is still not available.
    When the battery costs 5k-7k to replace it is normal people think twice.

    • http://www.sublimeburnout.com Christopher DeMorro

      @ Cobra

      The Volt battery has an eight-year/100,000 mile warranty on it. That’s a nice long warranty. GM must be pretty confident in the battery to do that.

      • http://Web trevalyan

        I think it shows unwarranted optimism about GM itself, never mind the battery, to promise an 8-year warranty.

      • http://Web Carl Pham

        This is the same GM that was confident in its stock price? It’s ability to earn a profit, just before it crashed and burned and got taken over by government?

        But their confidence in their warranty is a totally different thing, right? You can take that to the bank.

        • http://www.sublimeburnout.com Christopher DeMorro

          @ Carl

          GM just reported a profit of $3.2 billion for the first quarter of 2011.

      • http://Web BAW

        Yes, but when people keep their cars for 100-150k+ miles, a $5,000 expense for batteries destroys whatever resale value they might have left. Until the price of batteries is less than a new transmission, or a rebuilt engine, than a rational actor would rather have only two of these items, not all three.

        • http://Web Steve Ducharme

          I’ve kept my last two vehicles way past 200K miles and WAY past the point that they were paid for. I generally (and so far successfully) bank on the extreme quality and reliability of today’s cars and drive them for “free” (Yes I know it’s just an expression) for years beyond their expiration date. So even a 100k mile battery warranty is not a selling point for me. It’s actually a very expensive weak link. I’m sure I’m not alone on this.

      • http://Web JoeYnot

        Yeah, GM’s pretty confident–pretty confident that no one’s going to buy a Volt.

        They may as well have made it an 80-year/10,000,000 mile warranty for all the chance that anyone will ever use it.

  • http://Web ziv

    A buddy bought the MKZ hybrid, that is a sweet car! It is mid-level luxury, mid-sized which seems huge to me, and he is getting 39 mpg with receipts to prove it! In a mid-sized semi-luxe car! It drives nicely though he didn’t let me push the car hard it handles nicely, the interior is pretty plush and the exterior is impressive, though not overly so.
    Cobra, it doesn’t look like batteries are going to be an issue on any of these vehicles. When 2020 rolls around, (the earliest an owner would have to pay out of pocket for a replacement battery pack) pack prices are going to be around half what they are now. The prices and the weight have been improving by around 6% a year, and now that they are being built in large numbers, it looks like the price may be improving faster than that. DB has annual studies on pack prices and each year their results are better than they predicted the year before.

  • http://Web douglas prince

    It’s great to see Ford making such headway in the hybrid arena while keeping the work, and jobs, here in America. I have a feeling their domestic market share is about to skyrocket.

    Hey, GM! Suck my balls!

  • http://Web Oscar

    I seriously doubt the late Hunter S. Thompson would dig hybrid cars. Too boring.

  • http://Web Travis

    There is one species that is more insufferable than a “back in the day geezer,” and that is a morally preening idealogue.

    • http://Web Steve Ducharme

      Amen

  • http://whoeversaysit.blogspot.com Yishai

    If Ford only anticipated 15% would got hybrids, that explains most of the spread – availability. In many situations you will be waiting longer to get your car delivered if you go with the hybrid, and many new car purchases are not about delaying pleasure for saving a few bucks on gas.

  • http://Web amen hammer

    Yeah, but what’s the 0-60 stat?

    • http://www.sublimeburnout.com Christopher DeMorro

      @Amen Hammer

      About 8.5 seconds for the Lincoln MKZ, which isn’t exactly quick, but not a slow-poke either. For comparison, a non-hybrid Ford Fusion does 0-60 in 7 seconds, while a Prius takes closer to 10 seconds.

  • http://Web Jerome

    “Nobody wants to be the self-important whiny liberal blogger everyone finds so insufferable.”

    There. Fixed that for you.

    • Tyler Massie

      Is green energy really a liberal/conservative issue?

  • http://Web Carl Pham

    As the late Hunter S. Thompson once said: “Buy the ticket. Take the ride.”

    Sure, and look how well that turned out for him!

    Or let’s try something else: Hey folks, dot-com stock is The Future. Everything will be sold online! Buy now, get in on the ground floor!

    After the KABOOM, we replace it with Hey folks, real estate always goes up. They’re not making any more land, ha ha. Buy now, before prices go up further.

    After that KABOOM, we could, I suppose, reconsider whether dismissing that funny feeling in your gut and plunking down your hard-earned cash because the fanboys and Win The Future salesmen cheer w00t! is a smart thing to do…

    Oh, to heck with that. Hybrids! High-speed rail! Green jobs! It slices, it dices! Call now, operators are standing by!

    • Tyler Massie

      To play devil’s advocate: where would we be if we’d never invested in other technology, like telephones? We’d still suing telegrams, right? What if we’d given up on computers back when they were the size of a small house?

      Bubbles and other failures are the price we sometimes pay for innovation. Not every idea pans out. Ultimately, though, it’s all worth it when we strike gold with some revolutionary new technology that changes the world (like the telephone or computer).

      Electric cars have that kind of potential. Be patient. The technology is still in its infancy. The concerns about it are valid. The price is still too high. But we’re getting there…

      • Tyler Massie

        *be using

  • http://Web Dave

    Just because the price is the same, it doesn’t mean everything else is the same. In particular, the gas-powered MKZ has 263 HP at 3,598 curb weight, while the hybrid is 156 HP at 3,752 curb weight. This is significant, and frankly I’d want to pay less for the hybrid, not the same, if I’m giving up over 100 HP while adding weight and losing storage.

    • http://www.sublimeburnout.com Christopher DeMorro

      @ Dave

      Actually, the Lincoln MKZ has a combined horsepower output of 191 horsepower, so you’re giving up about 70 horsepower over the V6 MKZ.
      The trade-off is much better fuel economy ratings. Even with 263 horsepower, the Lincoln MKZ isn’t exactly quick. Having taken an MKZ Hybrid for a spin, I was shocked at how responsive and torquey the heavy car felt.

    • http://Web John F.

      And the price isn’t really the same. The non-hybrid V6 has the same sticker price as the hybrid V4, but Ford gives you $1500 cash back for the former. No cash back on the latter.

      So in addition to the 70HP, you give up $1500 by choosing the hybrid.

      Pricing from Lincoln’s own web site:

      http://www.lincoln.com/cars/mkz/pricing/

      • http://Web John F.

        That said, at today’s gas prices ($4.30 here in Chicago), you would recoup the entire $1500 after only 10,000 miles of city driving, or 37,500 on the highway.

        If you’re in the market for a Linclon MKZ, seems like a no-brainer to me.

  • http://Web Mastro

    What is the average age of a Lincoln buyer? I think its gone down some- but I imagine its still at the level where people bemoan MP3′s and long for their vinyl (and NOT because its easier to mix jams with).

    Point is- that age bracket wants a big V8- probably not anything newfangled.

    • http://www.sublimeburnout.com Christopher DeMorro

      @ Mastro

      So what you’re implying is the older crowd wants big V8 engines. I don’t disagree, though I would argue that if that is the case, Ford needs to keep moving AWAY from bigger engines and continue trying to attract a younger, hipper crowd if they want Lincoln sales rise, rather than fall.

      • http://Web drew

        They could just make the V8 an option. You would be surprised how efficient today’s V8′s are. Even the pushrod Chevy LSx series of motors are pretty good on gas. Ford’s new 5.0 is no slouch either. With all the new stuff that they have going on in that motor it wouldn’t surprise me if it is running much leaner stoichiometrics than the engines of old.

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  • http://reformedtrombonist.blogspot.com Reformed Trombonist

    > well, there’s just no excuse, people. You’re still getting your gasoline engine, and you’re simultaneously saving some greenbacks on gasoline. It’s a win-win scenario.

    While I am sympathetic to your conclusion, that people should pony up for a hybrid because it is no more expensive to buy and saves gas to boot, it is by no means a foregone one.

    In developing the Prius, Toyota went well over and above the call of duty in designing and building a car that was technological cutting edge, yet built to be reliable. I have heard from a reliable industry analyst that there are Priuses used in fleets with 300,000+ miles on them; their reliability is golden.

    But, due to their complexity, even Priuses are expensive to fix when they do need fixing. And not every manufacturer is going to be as considerate of the consumer as Toyota.

    Over the years, Detroit has taught us well: beware of new-fangled technology. At least the new-fangled stuff they have built. Over and over again since at least the Seventies, Detroit auto makers were willing to use their customer base as beta-testers for untested and unproven technological “upgrades”. Personally, I am a victim of the Cadillac “NorthStar”, a wonderfully-smooth and powerful engine (really — it was nice) that was burning oil like crazy after only 100,000 miles, and leaked like a sieve. GM also gave us, in no particular order: the aluminum engines in the Corvair and Vega; the Olds Diesel V8; problematic plastic manifolds on Buicks starting about 1997; the “Throttle-Body Fuel Injection”, essentially a modified carburetor that combined the worst of both worlds (the complexity of a real fuel-injection plus the poor performance and reliability of carburetors); the 4.1-liter Cadillac V8 in the late 1980s that melted cam shafts. These are just off the top of my head.

    Are things different now? Have they seen the light? Maybe. But I’ll let somebody else take the risk, and read about it in Consumer Reports.

    Seems to me there is a far lower-hanging fruit to be had that nobody is biting on. The Prius’s hybrid apparatus only buys you in-town mileage; on the highway, it is the aerodynamic shape and slightly underpowered (but competent) 4-banger engine that earns the high mpgs. So, why aren’t more manufacturers trying to make a non-hybrid car shaped like the Prius, giving (say) a respectable 28 or 30 mpgs in town, but yielding 50 mpgs on the highway? It’s a relatively low-tech solution and should be easier to maintain (i.e., minus the complexity in the engine compartment).

    • http://Web Drew

      Most sports cars actually get really good highway mileage in real conditions because of their streamlined shape. The Prius is an odd duck because it is a 4 door fastback which is why it gets such good mileage. They could have used more of TRD’s experience to make it better, but it would have raised the price tag and service costs as well.

      Stuff like an undertray to completely smooth out the bottom of the car, magnesium or MAT aluminum wheels, two piece brake rotors (actually more green too) and all the tricks that salt flat guys use on production cars to run out in Bonneville.

  • http://Web Bohemond

    The only “new standard” the Volt is setting is a standard for crappiness: GM has invented the Yugo hybrid.

    • http://Web ziv

      LOL! You obviously haven’t driven one! The Volt is an engineering triumph that is a blast to drive. Motor Trend COTY isn’t enough for you?? The only problem with the Volt is the price, and it will be coming down.
      Small minds find change difficult…

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