Energy and Global Warming News for May 7th: Ford to spend $550 million to retool SUV/truck factory to make small cars, electric vehicles

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"Energy and Global Warming News for May 7th: Ford to spend $550 million to retool SUV/truck factory to make small cars, electric vehicles"

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It looks like Ford is finally entering the real world, one where global warming and, even sooner, peak oil, will drive consumer decisions about automotive purchases.  Indeed, as soon as the global economic recession is over, oil prices will quickly rise back above $100 a barrel.  They will almost certainly reach record levels in the next decade.  For gasoline to be significantly below $5 a gallon by 2020 would take a miracle “” or rather 6 miracles see “Science/IEA: World oil crunch looming? Not if we can find six Saudi Arabias!” and “IEA says oil will peak in 2020“).  See also “Merrill: Non-OPEC production has likely peaked, oil output could fall by 30 million bpd by 2015“).

The future belongs to car companies that make profitable, well-designed fuel-efficient cars, plug-in hybrid electric vehicles, and pure electrics, which seems to be a core element of Ford’s trategic plan for survival and revival (see “Whose bailout plan is best: Ford drops hydrogen while GM remains confused about ethanol“).  Today’s news is evidence that they are putting their plan into motion:

Ford Truck Plant to Build Electric Cars

The Ford Motor Company is investing $550 million to turn a factory that was dedicated to making large and fuel-hungry sport utility vehicles into a modern and scalable small-car plant that will eventually produce an all-electric version of the Focus.

The Michigan Assembly Plant, known as one of the world’s most profitable manufacturing sites during the S.U.V. boom of the 1990s, was once the hub for the Ford Expedition and Lincoln Navigator. The plant is expected to begin building the new Ford Focus next year, followed by production of the all-electric Focus in 2011.

The electric Focus will be Ford’s first all-electric passenger car for the mass market. In addition to the electric Focus, the company plans to sell an electric version of its Transit Connect commercial vehicle in 2010.

Ford has previously promised that they will deliver four new electric vehicles to the American market by 2012.

“The transformation of the Michigan Assembly Plant embodies the larger transformation under way at Ford,” said Ford’s president and chief executive, Alan Mulally, in a statement. “This is about investing in modern, efficient and flexible American manufacturing. It is about fuel economy and the electrification of vehicles.”

The electric Focus is part of a larger strategy announced by Ford in January to develop electric vehicles for North America quickly using its global reach and capability to keep the cars affordable.

In addition to the Michigan Assembly Plant, Ford is retooling two other factories to build new cars in the face of global market changes. The company’s Cuautitl¡n Assembly plant in Mexico is slated to begin building the new Fiesta subcompact early next year, and its Louisville Assembly plant in Kentucky is also expected to begin producing small vehicles based on the Focus platform beginning in 2011.

“We’re changing from a company focused mainly on trucks and SUVs to a company with a balanced product lineup that includes even more high-quality, fuel-efficient small cars, hybrids and all-electric vehicles,” said Mark Fields, Ford’s president of the Americas. “As customers move to more fuel-efficient vehicles, we’ll be there with more of the products they really want.”

If Ford can survive, the economic meltdown, it may ultimately remake itself into the strongest domestic car company.

Shell facing trial over alleged crimes against humanity

A group of Nigerians is suing Royal Dutch Shell PLC, alleging the company aided the government in attacking and killing activists who opposed the company’s operations in the Niger Delta.

Shell faces trial May 26 in Manhattan federal court in a lawsuit filed by three alleged victims of attacks and relatives of seven activists killed from 1990 to 1995, including the writer Ken Saro-Wiwa.

Shell denies any wrongdoing. The company did not encourage or advocate “any act of violence,” according to a statement.

Based on prior trials, the plaintiffs appear to face an uphill battle. An Alabama jury ruled in July that coal producer Drummond Ltd. was not liable for the deaths of union leaders at a company mine in Colombia. And a San Francisco jury in December cleared Chevron Corp. of responsibility for the 1998 deaths, shootings and torture of Nigerian protesters.

Waxman gets an earful after proposing detour

Rep. Henry Waxman (D-Calif.) tried to quell an uprising yesterday among some moderate Democrats concerned about his admission that a major global warming and energy bill likely will skip a subcommittee vote and go straight before the full Energy and Commerce Committee.

A handful of Democrats on the Energy and Environment Subcommittee questioned Waxman’s initial statement to reporters yesterday afternoon that time constraints likely will force him to bypass them in favor of a vote before the entire 59-member panel.

Senate panel rejects 20% funding limit for energy bank

The Senate Energy and Natural Resources Committee today rejected a proposal that would cap funding a new clean-energy bank that could give financing to any technology, up to 20 percent of project costs.

Sen. Bernie Sanders (I-Vt.) proposed the limit during a markup of a bipartisan bill, S. 949, to create a Clean Energy Deployment Administration within the Energy Department that is authorized to provide financing options for a variety of low-emission energy projects. The bill also proposes reforms and guidelines for a transition to the current DOE loan guarantee program. The amendment failed 5-18.

Sanders said his amendment was needed because the clean energy bank could lead to a situation in which one particular technology could end up with 40 percent or 50 percent of the funds, while others “with less political clout” would end up with less.

Obama’s Emissions Plan Needs Tweaking, E.U. Climate Chief Says

Stavros Dimas, the European Union commissioner for the environment, warned on Thursday that President Barack Obama’s goals to cut emissions over the next decade may not be ambitious enough to meet long term targets.

Under Mr. Obama’s plan, the United States would cut emissions by 1.5 percent each year until the end of the next decade.

But Mr. Dimas warned the United States that small annual reductions now would require much larger annual reductions “” as much as 5 percent a year “” after 2020, if Mr. Obama’s long term goal of reducing planet warming gases 80 percent by mid-century is to be reached.

Sea Salt Holds Clues To Climate Change

What is climate change doing to the saltiness, or salinity, of our oceans? This is an important question because big shifts in salinity could be a warning that more severe droughts and floods are on their way, or even that global warming is speeding up.

Compiled by Max Luken and Carlin Rosengarten

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15 Responses to Energy and Global Warming News for May 7th: Ford to spend $550 million to retool SUV/truck factory to make small cars, electric vehicles

  1. paulm says:

    Well done Ford. Did take them that long to choose the right path.

    Time to buy (more) Ford shares!

  2. Pat Richards says:

    I’ll believe it when I see the hundreds of thousands of 40 mpg cars and electric vehicles in the Ford showrooms carrying sticker prices that the average person can afford. Ford and GM have been promising that they were going to produce energy efficient and alternative power vehicles for 30 years now. Maybe this time they really will, but right now it sounds like another one of those “pilot plants” that the so-called Clean Coal Industry has been talking about for the same 30 years. It’s more likely a ploy to soak up a lot of those Federal economic development grants that are going to be coming along from Washington shortly.

    Bottom line: We can talk about the price of gasoline rising (and it surely will someday) but so long as it remains below $4.00 a gallon, the vast majority of U.S. consumers will continue to drive and buy the big, inefficient vehicles they have come to identify with a lifestyle that projects an image of “success” and “status”.

    I wonder… will Ford be running dozens of TV commercials in prime time every night that tout these new vehicles as the height of luxury or the the mark of living an American Dream lifestyle? Yeah, sure they will. Maybe if the government gives them the advertising dollars… otherwise they will conclude (as GM did with its limited production run of a few thousand electric vehicles in the 1990s) that such vehicles are “not economically viable in today’s market”.

    Because of this, I am overjoyed to see all the giant SUVs and monster trucks back on the road again now that gas has gone down to around $2 a gallon. Keep on truckin’, America. The more you burn now the quicker we’ll get to the price point where even you and the auto companies finally realize this can’t go on.

  3. Pangolin says:

    Maybe they can start stuffing batteries back into Rangers again. The electric Rangers sold some years ago are wearing out and replacements are needed. More likely is that all the kings horses and all the kings men will never get the auto industry off life support.

  4. Rick Covert says:

    Let’s not get overly excited about this news release. I read the article http://www.advertiser-tribune.com/page/content.detail/id/514644.html and on the face of it it looks exciting but upon further examination it appears to be no big deal. Ford is retooling the plant to build 2 million copies of the next generation Ford Focus and there will be electric versions built along side them. In otherwords most of those 2 million Focus vehicles will be powered by conventional gasoline. Will these vehicles then be sold to the public or just leased like the Ranger was and will it just be sold to fleet owners or both? Ford doesn’t really say. Its too bad because I could use an EV that gets 100 miles of electric range per charge and there’s no gasoline engine period so I can drive 100 guilt free (mostly) miles.

  5. ecostew says:

    An article from Science PEVs vs ICEs: http://news.mongabay.com/2009/0507-hance_bioelectric.html

  6. Did you ever see a 120 car coal train?

    Where did you think it was going?

    [JR: To a coal plant. That is what we are working to change.]

  7. Bob Wright says:

    There is a lively mileage competition between Ford and VW in Europe using minicars with diesel engines, and they are partnering with suppliers like Valeo and Siemens for seamless engine shutoffs at traffic lights, etc. The EU diesel Fiesta apparently gets well over 40 mpg, but Ford plans on gasoline engines for the US.

    Toyota cancelled its US hybrid plant as sales tanked, but the competition for mileage between Ford, Toyota, Honda and GM will be where the action is in the US. “Most models over 40 mpg!”

  8. ecostew says:

    Given the PEV vs ICE and the land based needed for biofuels, the current biofuel subsidies are a concern: http://blogs.wsj.com/environmentalcapital/2009/05/07/biofuels-bill-federal-subsidies-will-top-400-billion-enviros-say/

  9. Robert says:

    How do EVs help with climate change when they are powered from coal fired power stations?

    Fixing climate change requires a wholesale decommissioning of coal power stations and replacement with CSP. Then we can talk about EV’s.

    [JR: Uhh, because EVs are inherently more efficient than internal combustion engine cars and because under half of our electricity comes from coal — and the marginal power plant is definitely not coal.]

  10. I promised myself I wasn’t going to post at CP again so soon, but this is directly on point to something that has bothered me as a CPA for a long time.

    As a practicing CPA I see what vehicles Congress is still forcing businesses to buy. Ford can produce these new fuel efficient vehicles but the U.S. government is still promoting the purchase of heavy trucks and SUV’s through the Tax Code.

    If you are a business (not just big business, but just about every carpenter, plumber, realtor, appraiser, you name it), Congress gives you special tax breaks if your business buys a vehicle over 6,000 lbs Gross Vehicle Weight. That’s right, it really is determined by one thing — weight!

    Heavy trucks and vans can be immediately expensed the same year purchased, or at the option of the business, written off in full — no matter what they cost — over their normal life.

    However, if the business buys a lighter (read – more fuel efficient) vehicle it is automatically considered by the Internal Revenue Code to be a “Luxury Automobile” subject to ridiculously low limits that prevent the business from writing off its full cost. No immediate expensing is allowed, and even over 5 years, you can’t get it done. These dollar limits have not kept up with what cars actually cost these days. I can’t even buy a $20,000 new car and write if off — yet a $70,000 Hummer is NOT considered a “Luxury” vehicle and CAN be written off in full, for one reason only — it is heavy!

    Every business owner I know buys heavy trucks and SUV’s — whether they need them or not — because of these tax rules. This has a social effect since if all the vehicles at the work site are heavy trucks, just try showing up in a Prius, or even a light pickup. Everyone knows those lightweights are for sissies, right?

    If we are really serious about changing what vehicles Americans buy, we should let businesses buy lighter vehicles and use the same tax rules that now apply to heavy vehicles. (Forget taking away tax write-offs for heavy trucks — just make it the SAME rules for lighter vehicles. )

    No one in the energy and climate field seems to be doing anything about this. Until businesses can buy a fuel efficient vehicle and NOT be penalized for doing so, you can expect America to continue to be more “trucked up” than it needs to be.

    Details at:
    http://energyeconomyonline.com/She_s_So_HEAVYYYYYY_.html

  11. Robert says:

    “[JR: Uhh, because EVs are inherently more efficient than internal combustion engine cars and because under half of our electricity comes from coal — and the marginal power plant is definitely not coal.]”

    Nevertheless, the vast majority of electricity (approaching 90%) comes from fossil-fuel and nuclear powered heat engines. As I pointed out some while ago (and you repeated in a recent post) at least 2/3 of this heat energy is lost in generation and transmission.

    http://www.eia.doe.gov/cneaf/electricity/epa/epat1p1.html

    Just switching to EVs is not enough. In fact it would make the situation worse because it would overload the strained US electricity network and give producers a golden excuse to whack up new gas and coal powered stations double-quick.

    In my view the goal has to be to build CSP on a scale that makes electricity the natural economic choice for all sorts of applications that currently use fossil fuel. Not just cars, but ground source heating and many other things. Even commercial vehicles…

    Joe – there are a couple of hot items you rarely mention: aviation and the internet. Both a energy hogs, particularly in the US. What are your views on reducing their CO2 footprint?

  12. Robert says:

    Long, fact-filled discussion on the subject, including a discussion of the problems with EVs:

    http://www.inference.phy.cam.ac.uk/withouthotair/c20/page_131.shtml

    [JR: Uhh, this guy seems to be an EV fan.]

  13. Leland Palmer says:

    Very good news, IMO.

    Hopefully it’s not just more promises and stalling, with the EVs cut later on due to “lack of demand”.

    American car companies already make hybrids, of course.

    Last I heard, to get an American hybrid, your name goes on a waiting list, you pay up front, and then wait for maybe two years to maybe get one. So, while Toyota cranks out the Prius like potato chips, sales of American Hybrids are “slow”.

    It would be typical of American big business to do the same with EVs – pretend to cooperate, but make it very difficult to buy these EVs, and then cancel production due to “lack of demand”.

    Also, last I heard, rights for Stanford Ovshinski’s nickel metal hydride batteries had been sold by GM to Texaco, and are now controlled by Chevron.

    Which may be why its hard to get large format American made nickel metal hydride batteries.

  14. Robert says:

    [JR: Uhh, this guy seems to be an EV fan.]

    He is trying hard not to be a big fan of anything. He grudgingly admits that IF we insist on personal transport then the EV gives you something similar to a Polo (about 100g/km CO2) if powered from conventional electricity. But there are big concerns over the cost, availability of materials and embodied energy in the batteries, and the level of austerity is likely to be similar to the Polo, which is not what people want. If people expect an EV version of the “urban tractor” then it will make as much sense as the Lexus 400 hybrid – none. As things stand, EV’s in the US will get you off foreign oil and on to domestic coal and natural gas. That will be popular to some but won’t help emissions.

    You should read the whole book (available free online). It has some brilliant insights and is very objective and fact-based. It is a stroke of genius to normalise both consumption and supply of energy to KWh/day per person.

    The correlation between GDP and energy consumption is worrying:

    http://www.inference.phy.cam.ac.uk/withouthotair/c30/page_231.shtml

    Combine this with the relentless growth in GDP and population and the whole world will be shifting upwards and right on this graph – all straining to achieve a US goal of 250KWh/d/p!