Ford last week announced a $4.5 billion investment into electrified vehicles by 2020, and with it the introduction of 13 new hybrids, plug-in hybrid vehicles (PHEVs), and battery-electric vehicles (BEVs). A total 40 percent of the automaker’s lineup will be composed of electrified vehicles by the same year.
With this announcement coming along amidst some of the lowest gas prices seen in the last decade, we have to wonder: is Ford’s money being well-spent?
We think it is. For one thing, Ford CEO Mark Fields sees long-term consumer demand shifting more toward electrified vehicles over the coming years. This might be motivated by a combination of different factors, from an increase in ecological awareness, to a rebound in fuel prices later on down the line.
In an interview last week, Mr. Fields told Automotive News that “in this business, you have to project where you see consumer demand going forward. Our view ongoing is still that the price of a barrel of oil is going to go up over time, so it’s really important for us to anticipate that. Secondly, we have the regulations that are out there – the one national standard. And we have to meet that.”
The “one national standard” to which Mr. Fields is referring is the Corporate Average Fuel Economy (CAFE) target set put forth by the Obama administration in 2011, which calls for an average of 54.5 miles-per-gallon for all automakers, across all passenger vehicles, by 2025. Though Ford’s EcoBoost engines have made a lot of ground for improving the automaker’s fleet-wide fuel economy, it’s difficult to imagine a scenario in which they alone could result in a high enough average mpg.
In all, 40 percent of Ford’s passenger vehicle lineup will be made up of electrified vehicles by 2020, up from 13 percent – or just six models – today. We anticipate that the mix of new electrified vehicles will mostly comprise hybrids and PHEVs, rather than full-electric vehicles.