Ford Implements Strategies to Lower Cost of Hybrids

During the early days of hybrids, potential buyers worried about performance problems or the reliability of the battery pack. Those days are long gone, and hybrids have a proven track record of safety and reliability. Now, for Sherif Marakby, Ford’s director of electrification programs and engineering, it’s all about bringing down the cost.

Fortunately, with each new generation of Ford’s hybrid system, the costs are dropping. According to Automotive News, the cost of the hybrid system in next year’s new C-Max Hybrid will be 30 percent less than the previous-generation hybrid technology in the 2010 Ford Fusion Hybrid. And by the time the following generation hybrid is ready in a couple of years, Marakby believes he will have knocked it down by another 30 percent.

How is Ford achieving those cost reductions?

  • Ford developed its own in-house battery system that will be manufactured at the automaker’s Rawsonville, Mich., plant next year. Ford developed everything for the system, from the tooling to the wiring, sensors and controls. All the components are assembled by Ford in its facility. (Battery cells come from Compact Power.)
  • Ford developed its own hybrid transmission, which will be manufactured at a suburban Detroit plant.
  • Ford also brought system integration and software development in-house. The software can control battery and motors, as well as the total system, to achieve maximum efficiency.
  • All the parts used for hybrids and other electric-drive vehicles are made common, and software and control systems are re-used as much as possible.

These efforts are already starting to bear fruit. When Ford priced the Lincoln MKZ Hybrid at the exact same amount as the gas version—$35,455, including shipping—the company expected about 15 percent of buyers to go for the hybrid version. Instead, nearly 25 percent are driving off the lot with the hybrid.

This sales performance gives Ford greater confidence in achieving its estimate that as many as 25 percent of all its sales will be a hybrid, plug-in hybrid or electric vehicle by 2020.


  • Yegor

    Yes, Ford has to lower the cost of its Hybrids if it wants not to go bankrupt. Gas prices are $4 in the middle of the huge global recession with no light at the end of the tunnel yet. Image what will the gas price will be when economy start to improve? $5? $6? $7? or $8?
    People are moving to smaller cars right now. Soon Toyota Prius may be a large size car because of high gas prices. Ford has to bring the prices of its Hybrids dramatically down if it wants to compete with Toyota Prius and Honda Insight.

  • car

    nice post.

  • Charles

    If Ford brings out a hybrid Focus hatchback, and it is priced between the Insight and Prius with MPGs in the same range we will know that Ford means to mainstream hybrids. Until then it looks like Ford is still only dabbling.

    With that said, I bet my next car is a C-Max hybrid or Prius V.

  • Nelson Lu

    Yegor, why does a Ford hybrid have to be priced the way that Toyota and Honda do when Ford produces larger, more efficient (relative to size), and more powerful hybrids than those two manufacturers?

  • FamilyGuy

    I’m still disappointed that the C-Max is “Coming in the Future”. While the C-Max Hybrid and C-Max Energi are coming out Fall 2012, they still only seat 5, not 6 or 7 like the conventional C-Max.

    On one hand, in one car, I can get the versatile seating that I’d like. On the other hand, in the other cars, I’m bound to get better mileage.

    In either case, neither are ready today and there’s not a lot of information out on them. For example, price and EPA MPG values.

    For people looking for a different Ford hybrid, I wouldn’t hold your breath for the near future. The C-Max and family of cars were first advertised back in early January 2011. I can’t see Ford producing something different before these cars come to the market.

    Choices are good. I just don’t know if they will be ready when my next car choice needs to be made.

  • David

    It’d be nicer still if those engines in those hybrids were diesel.

  • Anonymous

    “[W]hy does a Ford hybrid have to be priced the way that Toyota and Honda do when Ford produces larger, more efficient (relative to size), and more powerful hybrids than those two manufacturers?”

    Hybrid sales leapt higher in March, growing by nearly 50 percent compared to February and compared to last March:

    Toyota prius +58% y/y
    Honda Insight +68%
    Ford fusion hybrid -12%

    from “March 2011 Dashboard” – I guess the numbers speak themselves.

  • Yegor

    Nelson Lu ,

    I did not mean Ford Fusion and Ford Escape. I meant that Ford is unable to produce a smaller Hybrid like Toyota Prius and Honda Insight at a comparative price. Ford does not have any.

    It is much more difficult to produce a smaller size hybrid at a comparative price (like Toyota Prius at $23,000 and Honda Insight at $18,200) than a mid size Hybrid Ford Fusion at $28,400. That is why up to now Ford does not have any.

    But as gas prices climb small cars will take the most of the market share because few people will be able to afford larger cars. If Ford does not produce small size Hybrid or Plug-in car at a comparative price it is going to have big problems.

  • Somerset Subaru

    That’s really nice to hear from Ford Manufacturer’s that they are making low cost Hybrid cars in order to promote the technology across its consumers. If they achieve what they are working on that would be really awesome.

  • Anonymous

    “According to Automotive News, the cost of the hybrid system in next year’s new C-Max Hybrid will be 30 percent less than the previous-generation hybrid technology in the 2010 Ford Fusion Hybrid.”

    So, we can now expect the C-Max hybrid to have a similar 30 percent decrease of the $8,000 ‘hybrid premium’ Ford charges on Fusion hybrid? Thanks but no thanks, Ford.

  • Charles

    The ‘hybrid premium’ Ford charges on the Fusion Hybrid is $4,325. That is the difference between the Fusion Hybrid with leather seating and the Fusion V6 SEL with reverse sensing. Those two models are very close to each other as far as equipment goes.

    It is not fair to compare a Fusion Hybrid to the cheapest Fusion. Just as it is not fair to compare a Prius to a Yaris as some fool did.

  • Anonymous

    May be Ford should take a look at the market, Prius starts from 23,000, Honda Insight starts from 18,200 (and their sales jumped almost 60% and 70n% respectively last month), its direct competitors Camry hybrid starts below 27,000 and Sonata hybrid starts from less than 26,000. No wonder sales of Fusion hybrid is so dismal.

    Ford should either get serious or get out of the market.

  • Charles

    Anonymous, if the Fusion Hybrid sales are dismal, what can you say about all other hybrids except the Prius and Insight? The Fusion Hybrid consistently out sells its direct competitors (Camry and Altima). It is too early to tell how sales will compare to the Sonata.

    Toyota has sold 76,821 Camrys through March of this year to Ford’s 65,023 Fusions. But Fusion Hybrids out sold Camry Hybrids 3,814 to 3,290. So the Fusions Hybrid’s take rate is 5.87% and the Carmy’s only 4.28%. Looks like the public thinks the Fusion Hybrid is a better than the Camry Hybrid and is willing to pay for that difference.

    I do hope that Ford does a hybrid Focus hatchback and that it is priced between the Insight and Prius. That will not happen until Ford has more control over its hybrid parts. Ford is building battery and transmission plants in Michigan. When these plants are on line we will then see how serious Ford is about hybrids.

    Total car sales data is from the WSJ, hybrid sales data is from this web site.

  • xzim

    the ford fusion hybrid may be out selling toyota, by alittle, but i’ve spent the morning reading a comparison or the two. the camry is faster, and exceeded its epa estimates without trying, while the ford fusion was way under.(wish i could remember the site) Americans only buy american made cars because they think they are helping our economy. most american cars are made in mexico, and most foreign cars are made in america. i also think the epa over estimates domestic cars fuel economy. every domestic car i have ever driven, i’ve had to baby it to get close to what the sticker says. All my hondas i own now, out do the epa rating with out even trying. my 05′ civic hybrid was doing 64.9 mpg on my way home from work, the other day at highway speeds 65-70 depending on the state i was driving thru. my honda fit rated at 33, has never done under 38-40 mpg.

    i’m not 100% sure but doesnt ford use toyota’s synergy drive? how american of ford to buy their technology from toyota, then turn around and proclaim how much more inferior their product is on their commercials. when they should be thankful, they could even get the opportunity to stick their foot in the door, of a segment they would have never had a chance at in the first place.

  • Anonymous

    I think it’s better to take a look of longer time span. Since Camry hybrid was first available in the U.S., it sold 31,341, 54,477, 46,272, 22887, 14,587 between 2006 and 2010. (from Wikipedia: Hybrid electric vehicles in the U.S.)

    It’s understandable that the economy played a big role. Sales of most vehicles suffered a drop-off since the recession, I guess. But there are other factors at work, the current Prius, which gets a little bigger and improved fuel economy, debuted in 2009 and may draw away some customers, Camry is getting a bit long in the tooth – most customers who are interested in it may have got one, it is five years old – which historically is when it is replaced by a new model and there are rumours/speculations that a new model may arrive by the end of the year/early next year. In view of that, I’m not surprised if sales of Camry hybrid is depressed at the moment.

  • hybridmann

    Charles

    If you think back several years back when gas prices first hit $4 a gallon, Ford immediately raised its price of its hybrid Escape $5K. Ford never lowered the MSRP and has maintained the price at that level. One year later, they quietly removed rear disc brakes and replaced it with drum brakes. Is this improving the vehicle? (No, it’s saving money for them and cheaping out the public who buys it)

    Every car manufacture has stated at one point or another that the price of hybrids would be the same or nearly the same, not at a premium. It has not happened yet and hybrids have been here for ten years now.

    As others have commented, Ford and other American manufactures need to be more serious about making a comparable car with a matching price point. Not a car that’s larger and more expensive. Example is GM’s hybrid SUV; the Tahoe only gets two more miles per gallon than the normal gas version. Get serious!

    They are only fooling themselves

  • Anonymous2

    XZIM, I can’t believe anyone is still propagating the lies that Ford bought the technology from Toyota. The fact is, Ford independently developed a similar system to Toyota (which, BTW was originally conceived in the 70′s by I believe TRW). As a result, there was some licensing exchanges between the two companies.

    Hybridmann, Two mpg improvement may not seem like much, but replacing a 18 mpg vehicle with a 20 mpg vehicle will save more fuel than replacing a 40 mpg vehicle with a 51 mpg vehicle. At some point, it is better to put effort into improving large vehicle fuel economy.

  • Charles

    Anonymous, thanks for pointing me to the Wikipedia sales numbers. As you may expect I see something different in the numbers. When the Camry Hybrid was the only mid size sedan available in America it had great sales numbers. As soon as the Fusion Hybrid came on the market, the Camry’s sales plummeted. So I am going with the simple explanation that the Fusion and Milan took sales away from the Camry.

  • tapra1

    the company expected about 15 percent of buyers to go for the hybrid version. Instead, nearly 25 percent are driving off the lot with the hybrid.Best Reseller Hosting

  • Chrysler 300

    A series- or serial-hybrid vehicle has also been referred to as an Extended Range Electric Vehicle or Range-Extended Electric Vehicle (EREV/REEV); however, range extension can be accomplished with either series or parallel hybrid layouts.

    Series-hybrid vehicles are driven by the electric motor with no mechanical connection to the engine. Instead there is an engine tuned for running a generator when the battery pack energy supply isn’t sufficient for demands.

    This arrangement is not new, being common in diesel-electric locomotives and ships. Ferdinand Porsche used this setup in the early 20th century in racing cars, effectively inventing the series-hybrid arrangement. Porsche named the arrangement “System Mixt”. A wheel hub motor arrangement, with a motor in each of the two front wheels was used, setting speed records. This arrangement was sometimes referred to as an electric transmission, as the electric generator and driving motor replaced a mechanical transmission. The vehicle could not move unless the internal combustion engine was running.