Ford CEO Alan Mulally

Alan Mulally, president and CEO of Ford, pledged yesterday to form an alliance with the Edison Electric Institute to work on plug-in cars. Speaking at EEI’s annual convention in San Francisco on Thursday, Mulallly outlined his company’s path toward high fuel-efficiency, which included—but by no means was limited to—electric vehicle technology.

Mulally said improving the current internal combustion engine through technologies such as turbocharging and direct injection—the core of the Ford “EcoBoost” program—is Ford’s top priority. Beyond that, Ford will pursue smaller vehicles, such as the upcoming Fiesta, as well as lightweight materials and transmission improvements. Mulally said that, contrary to conventional wisdom, “the US does appreciate smaller vehicles,” citing the success foreign automakers have had bringing in small, high-quality vehicles. Ford’s diminutive Ka, though popular in Europe, “might be too small for here, but we can have it here right away” if the market shifts.

Ford will utilize $5.9 billion in low-interest government loans, awarded earlier this week, to pursue its “improvement” strategies.

Moving down what Mulally called his “road map,” Ford will pursue alternative fuels and hybrids—exemplified by the E85-compatible plug-in hybrid Escape on display in San Francisco. “Our technology is such that we’re on our second, third, fourth generation of hybrid vehicles,” said Mulally. “Progress on battery technology is encouraging us that these technology advances will continue.”

Finally, Mulally said that the company is pursuing pure battery electric vehicles, which Ford will introduce starting with the Transit Connect small van next year, followed in 2011 by the Ford Focus EV. The Focus EV will be built in the same plant as the gas version, a facility converted from its former duty producing SUVs.

Hydrogen-powered fuel cell vehicles come further in the future, Mulally said. He reinforced his company’s ongoing commitment to hydrogen technology, despite the fact that US Secretary of Energy Steven Chu, who spoke right after Mulally, recently cut funding for fuel cell and hydrogen research. Mulally acknowledged that the “decreased federal investment pushes out the timeframe for commercialization” of fuel cell vehicles.

Mulally did not mention diesel technology in his list of technologies, but he was pressed on the subject in follow-up questions from the audience. He called new diesels “phenomenal” and said, “We will continue to improve them.” But he added that he doesn’t see sufficient market demand for them now.

Chu announced on Thursday $3.9 billion in federal funding for a “smart grid” to more efficiently distribute electricity—and to reduce peak loads while still supplying power for plug-in cars expected in the next few years. Funding for upgrading the grid will also be used to improve power lines and two-way transmission so plug-in cars can feed energy back into the grid. He commented that “nothing had been moving (in this area) at the Department of Energy” even though the money had been allocated for this purpose in 2007.

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The NPR report focused on the exorbitant markups that some dealers are charging for Ford Escape Hybrids. It’s not uncommon for dealers to charge a premium of $4,000 to $5,000 on an Escape Hybrid, while simultaneously offering thousands of dollars of discounts on the gas-only version of the vehicle. “Dealers across the country are jacking up the price of Escapes and other hybrid SUVS, the same way they put premiums on fancy sports cars,” reported Shogren. “Would-be hybrid buyers also tell stories of waiting months for cars they’ve ordered and giving up in frustration.”

Christian Fackrell, a manager at Jerry’s Ford in Annandale, Va., was interviewed for the story. He said, “If there was an abundance of them, I’m sure they would sell like hotcakes.” Said Deep, a Ford spokesman, told NPR that the company has no plans to increase production. Meanwhile, Nikkei News recently reported that Toyota Motor Corporation plans to increase the number of Priuses it builds by 60 percent for 2009. This translates to 450,000 vehicles, up from last year’s production number of 280,000. Ford builds approximately 20,000 Escape Hybrids every year.

Production and sales of hybrids from General Motors are even lower. The combined sales of the Saturn Vue Green Line and Saturn Aura Green Line by General Motors are commonly fewer than 30 units per month. GM’s Chevrolet division has not released sales numbers for the Chevy Tahoe hybrid since its introduction in late 2007. According to the NPR report, and stories that HybridCars.com has been tracking since last year, very few Saturn dealerships have any hybrids.

Michael Morrissey, a Saturn spokesman, pointed to lack of battery production. “That’s one of the growing pains of new technology,” he said. “There’s only so much manufacturing capacity of hybrid batteries in the world.” Lack of domestic hybrid battery production casts doubt on the U.S. companies’ ability to ramp up production to meet demand for hybrids that is expected to rise in coming years.

The lack of planning and/or commitment to produce more hybrids will not stop Ford’s and GM’s advertising campaigns. Mark Klausen (sp?), Chevrolet spokesperson, told NPR, “The fact that we’ve got such PR for the vehicle has lifted the image of the entire company.” But he admits that you won’t find Chevrolet Tahoe hybrids in most dealership regardless of the premium you might be willing to pay.

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