Written by David Gow
A fifth of new cars on UK roads could be hybrids by the end of this decade through continuing government incentives for low-emission vehicles, the chairman of Ford of Britain says.
Joe Greenwell takes issue, however, with suggestions that 20% of cars could be electric vehicles (EVs) by 2020, arguing that consumer demand is simply not there. But he sees a growing market for all-electric commercial vans.
“Hybrids will become increasingly important as a transitional technology towards full electrics,” he said in an interview. “Hybrid technology continues to present a challenge from an affordability perspective but there are fewer compromises technically and functionally for the consumer. Economies of scale and further technological development will help to reduce the cost.”
He added: “You will see a greater number of people buying hybrids between now and the early 2020s but, regarding full electric vehicles, you have to make an assumption that there’s a major breakthrough in terms of (battery) storage, range, affordability and de-carbonisation of the Grid.”
Ford plans to launch five variants of hybrids and/or EVs onto British roads within the next two to three years, including the Transit Connect electric van this year and the electric Focus in 2012. In addition, it has pledged to cut emissions from its global fleet by 30% on 2006 levels by 2020.
The company, deeply in the red only two or three years ago, made a net $2.6bn profit in the first quarter, with Ford of Europe contributing $300m of that. Greenwell confirms that the goal is to further pare down debt so as to straddle the last two notches to investment grade rating.
Ford has opted for advanced, green technology as a core strategy. It invested £1bn in the UK in 2006 and last year confirmed it would invest a further £1.5bn – partly after securing £450m in loans from the European Investment Bank backed by a £360m loan guarantee from the (Labour) government. The coalition has reaffirmed that guarantee.
That investment will support various Ford UK facilities including its two engine plants– in Dagenham (diesel) and Bridgend (petrol) – that together produce 2m units each year or as many as one in three power trains for Ford vehicles worldwide. These offer significant – 20% – savings in CO2 emissions.
The company is also investing in its Dunton technical centre in Essex, the largest of its kind in Britain and home to 3500 skilled engineers and designers. Their primary role is to develop the next-generation, low-emission power trains – such as for the Transit Connect and the new Focus ECOnetic.
Greenwell says: “The reason why the UK attracts this investment is because it is a global centre of expertise in this field.” EU policy dictates that, after cutting emissions to 130g per km in 2015, Europe’s auto industry will achieve a target of 95g by 2020. The recent EU Commission Transport White Paper goes much further and targets zero emissions by 2030 for city vehicles.
These exacting challenges, Greenwell adds, will require incentives to overcome technical and commercial issues, not least the lack of affordability and de-carbonisation of the Grid. “That’s why there’s no point in putting all your eggs in one basket…Our strategy has always been multiple path.”
So Ford is investing in hybrids, plug-in hybrids and variants of EVs. “We believe that the internal combustion engine and improvements we make to it over time will continue to bring CO2 emissions down…on the pathway to full electrification. But now the consumer is not prepared to make great compromises in terms of functionality or convenience.” Few, if any, are ready to pay up to two or three times the price of a conventional model for a “niche purchase”, he adds.
But the commercial vehicle market, in his view, is likely to be in the vanguard of the move towards full EVs. Initially, this might take place, say, within the M25 area – or a defined space that enables operators to know what their margins will be and have a central re-charging facility.
A leading member of the government-backed Automotive Council, Greenwell acknowledges that ministers have no money to provide lavish incentives for both industry and consumers. But, he says, the “scrappage” or “cash-for-clunkers” scheme adopted during the aftermath of the 2007-08 financial crisis saved plants and jobs and proved to be more than self-financing.
He says cash-strapped governments can: be supportive of engineering and manufacturing as a whole and help re-balance the economy (in which manufacturing’s share of GDP has shrunk to 11.5%). That’s certainly what Alan Mulally, Ford’s president and chief executive, found to be the case during his talks in Downing Street last year.
Greenwell is optimistic that manufacturing can play a bigger role in Britain’s economy and its recovery will continue. A key test for the Automotive Council is whether it can achieve its goal of repatriating Tier 1 suppliers which “went east” in recent years and encouraging inward investment.
“You don’t need to have all the money in the world to encourage partnerships,” he says. “Business will invest if the environment is seen to be stable and supportive.”