Editorial: Ford Death Watch 46: Fauxcus
While its Detroit rivals unravel with publicly-funded gusto, Ford continues to enjoy nearly unanimous praise from the media and industry commentators. And why not? Free from the public funding, bankruptcy, dealer slashing and attendant bad publicity plaguing its competitors, Ford is clearly the healthiest of America’s automakers. But it’s impossible to forget that Ford’s buoyancy is but one of the final boons of the pre-collapse credit markets. Mortgaged to the hilt, Ford finds itself facing new CAFE and emissions standards without a certain deep-pocketed uncle standing by to pay its way into the new, green automotive paradigm. As a result, Ford seems to be trading long-term opportunities for short-term survival.
It’s no coincidence that, in the lead up to their bailout bonanza, Chrysler and GM embarked on ambitious (to put it kindly) alt-energy vehicle programs. The more we learn about newly-proposed CAFE/emissions standards, the more Chrysler’s ENVI vapor and GM’s Volt moonshot seem like winning propositions. Yes, really. Gaping loopholes in the proposed legislation point to a credit-trading scheme that seems to have been designed to create a Potemkin auto industry.
Bankable, tradable carbon/efficiency credits (and, especially, so-called “super credits”) create massive government incentives for Detroit’s automakers to build electric and alt-fuel vehicles regardless of their viability in the free market. Since these credits offset (and in the case of super credits, multiply) the efficiency ratings of an OEM’s fleet, tomorrow’s mass-market offerings must be subsidized by EVs with inflated mpg ratings.
Chrysler and GM are perfectly positioned to capitalize on the auto industry’s political New Deal. As the projects of an independent automaker, the ENVI and Volt projects amount to shocking hubris; as dependents of the state however, these “advanced technology” projects are the only incentive for ongoing government subsidies. With the public investment in GM and Chrysler expected to crest $100 billion and with nothing promising a short-term reversal of fortune for these firms, the government has no choice but to continue to invest in the politically-expedient in hopes that it someday becomes financially viable.
Assuming electric vehicles will someday become a workable business model, this puts Ford at a massive disadvantage. By carefully and strategically spending its $23 billion privately-funded do-over fund (acquired in early 2007), Ford has survived without resorting to a government bailout. And though this helps the media in glossing over the uncomfortable details on the way to crowning Ford the winner of “Survivor: Detroit,” it doesn’t change the underlying reality: Ford doesn’t have the capacity to position itself for the post-bailout market.
The curse-blessing of Ford’s survival is perfectly illustrated in the contrast between the media coverage and the reality of Ford’s Focus EV program. Ford has wisely kept its PR field day rolling by announcing that its Michigan Truck Plant will be the new home of the Focus, including future EV and hybrid versions. Dazzled by the vision of electric cars replacing reviled Explorers and Expeditions in a Michigan factory, the media has dutifully repeated and amplified Ford’s message of transformative change.
In reality though, the “Ford-ness” of the Focus EV is highly suspect. Rather than develop an electric car of its own, Ford is licensing a vehicle built by supplier giant Magna with a Focus shell on top. In fact, Magna showed up in Dearborn with a Focus EV prototype based on its modular EV platform, the mila ev.
Ford spins the cost-savings and “innovation” of the supplier-led development as a positive, but the move speaks only of desperation. Ford is mortgaging its future (again) by outsourcing its EV development because the project does nothing to improve Dearborn’s in-house capabilities. Furthermore, it’s outsourcing on the cheap. Ford did not insist on an exclusive contract for Magna’s technology in order to avoid paying for the platform’s entire development.
This means that not only has the Focus EV failed to prepare Ford for the electric future, it has also helped finance a platform that other OEMs can now use to compete with the Focus EV. By buying into Magna’s “any OEM, any car” platform, Ford dooms its Focus EV to competition with identical (save for the body shell) vehicles at even the hint of success. Think cross-OEM brand engineering.
Ultimately, Ford had no choice but to develop an EV on the cheap. Although it enjoys short-term sales prospects that its rivals can only dream of, it’s highly unlikely that Ford will see profits soon enough to spend any more on long-term development. Its limited (if honorably come-by) cash pile is already forcing Ford to punt on EV development, while its cross-town competitors are gearing up to spend billions of taxpayer dollars developing future vehicles with little apparent concern for their short-term oblivion. Recent automotive history (aka the Prius) proves the value of developing long-term capabilities. Ford could well be winning the battle but losing the war.
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- Dusterdude The suppliers can ask for concessions, but I wouldn’t hold my breath . With the UAW they are ultimately bound to negotiate with them. However, with suppliers , they could always find another supplier ( which in some cases would be difficult, but not impossible)
- AMcA Phoenix. Awful. The roads are huge and wide, with dedicated lanes for turning, always. Requires no attention to what you're doing. The roads are idiot proofed, so all the idiots drive - they have no choice, because everything is so spread out.
- Leonard Ostrander Pet peeve: Drivers who swerve to the left to make a right turn and vice versa. They take up as much space as possible for as long as possible as though they're driving trailer trucks or school busses. It's a Kia people, not a Kenworth! Oh, and use your turn signals if you ever figure out where you're going.
- Master Baiter This is horrible. Delaying this ban will raise the Earth's temperature by 0.00000001°C in the year 2100.
- Alan Buy a Skoda Superb.