Ford now plans a massive $11 billion investment to mass produce 40 hybrid and fully electric vehicles within the next five years, company executives said Sunday.
Executives ratcheted up the number from a previously announced target of $4.5 billion, which also includes the costs of developing infrastructure for electric vehicles. Ford’s engineering, research and development expenses were $7.3 billion in 2016, an increase of about $1 billion from 2015.
“We’re all in on this and we’re taking our mainstream vehicles, our most iconic vehicles, and we’re electrifying them,” chairman Bill Ford said during the Detroit auto show. “If we want to be successful with electrification, we have to do it with vehicles that are already popular.”
Sixteen of the 40 vehicles Ford plans to make will be fully electrified, while the remaining number will be plug-in hybrids, executives said. The plan sparks a full-throated effort from Ford to wiggle its way into an increasingly crowded electric automaker.
Volkswagen, GM and Tesla are already planning to expand the industry far beyond where it was 10 years ago.
VW plans on targeting 1 million electric car sales by 2025, company head Herbert Diess said at a press conference in May of last year. The company’s push to edge out Tesla in the electric auto market could be a play to recover from the 2015 dieselgate scandal.
While Tesla has a jump in the premium market, Diess said, VW can overcome that advantage through its ability to mass produce battery charged electric vehicles. The German automaker will have “leapfrogging cost advantages,” he added, thanks to a rollout of its “MQB” platform, which helps the 12 VW brands share parts, technology and assembly sequences.
Diess said VW would focus on cutting costs to increase profitability and enhance productivity by 25 percent over the next five years. The company would then start an effort at targeting the electric vehicle market by 2025.
Tesla, a relatively new electric car market, has the unique challenge of scaling its products up to VW’s level – Tesla’s problem is acute, as Ford and GM produced more than 1 million vehicles in 2016, while Tesla sold 80,000.
Still, Tesla has managed to increase its valuation to a level higher than GM. It raised its market capitalization last month to $51 billion, a number that is valued at about $1.7 billion more than GM. Tesla trails only VW in market value.
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