Giving up on cars, Ford banks on your short memory

When we get to the age of self-driving cars, will there still even be cars?

The price of gasoline is heading back to economic reality and we’re about to see the effect of Americans’ appetite for not learning lessons about trucks and SUVs. They’re really expensive to drive when the price of gasoline lives in economic reality.

So Ford’s announcement that it’s eliminating a line of cars in favor of trucks and SUVs seems like a typical case of bad timing by an American car company.

Ford built a reputation as a “green” car company, perhaps one of the reasons why it was the only auto company not to go bankrupt the last time a recession came calling. Since then, it’s lobbied to undo the government’s fuel economy standards, just nine years after accepting a handout from the Department of Energy to help develop more fuel efficient engines.

What changed? You. You’ll pay more for an SUV and truck even though it’s essentially the same vehicle as the more fuel efficient models, and even though it doesn’t cost Ford any more to build, Jamie Lincoln Kitman, a bureau chief for Automobile Magazine writes in today’s New York Times.

The unwillingness of Congress to tax gasoline more heavily did not help. Nor did the readiness of the Obama administration to accommodate so much of Detroit’s pro-S.U.V. agenda in its regulations. Though they did raise federal mileage standards, the rule makers rewarded companies that built bigger vehicles by setting standards matched to vehicle size, with large cars allowed to burn more gas and pollute more. And now the Trump administration is moving to reduce even those standards.

Even in times of robust, S.U.V.-fueled profit, carmakers have not seen their share prices rise much, especially compared with the tech companies that may, in the era of self-driving cars, become their competitors. Last October, Ford proclaimed it would cut its future spending by $14 billion. Its stock did nothing. Last week, it announced it would trim an additional $11 billion. “We’re going to feed the healthy parts of our business,” Ford’s chief executive, Jim Hackett, told analysts, “and deal decisively with the parts that destroy value.”

It’s a stunning moment: The head of a great American car company is calling the great American family sedan a value destroyer and walking away from 35 percent of the vehicle-buying population and hundreds of thousands of passenger car sales a year.

What’s more, the move effectively cedes the passenger car market in North America to competitors old (Japanese, Korean) and new (Chinese).

Ford doesn’t know what the future holds, he says. Self-driving cars could put it out of business. So it wants to make as much money as it can while it can.

Consumers don’t have a strategy for the future in mind, blindly making the same mistakes they’ve made before and — once the gasoline price returns to its higher level — asking someone else to fix their mistake.

  • MrE85

    Last year, some of us in the American Lung Association who work with cleaner fuels and vehicles met with Ford officials at their Detroit headquarters. Sounds like our message didn’t really get through.

    • Joseph

      It did get through at the time I’m sure. The problem is that money and short term profits speak a hell of a lot louder than any other advocacy group.

    • Jeff

      I’ll try to make it. I haven’t seen a Model 3 up close. Can I kick the tires?

      • MrE85

        You betcha. I won’t be there, but say “hey” to Lisa and Kennedy.

    • Veronica

      I wonder how much of the anti- EV movement aligns with the same forces that vehemently oppose any changes to road ways to support more bike usage. It’s a lot of machismo that lacks rationality.

    • Jerry

      To their credit, I believe I read that part of their reasoning for discontinuing small cars in America (besides the fact that we refuse to buy them) is that they want to transition resources to EVs, especially for the Chinese market. They have also tried hard to push more fuel efficient engines into their trucks and performance cars, which stands in contrast to FCA, which is trying to cram a 400 hp V8 into all of their vehicles.

      • jon

        So as I recall there were “fleet mpg” requirements.
        Most manufactures pulled down their fleet average by putting out some electric vehicles, or hybrids… ford just pushed the mpg up on the f-150…

        The down side of that is they are a bit behind in the electric race… only just now getting an electric vehicle out there… and it’s kind of pathetic compared to the competition in the same model year.

        But electric isn’t complicated… so we’ll see how quick they can catch up.

  • John O.

    Not that I’m a huge fan, but I wonder if that means Ford will also get out of NASCAR? If so, the only manufacturers left in stock cars would be Chevy and Toyota.

  • jon

    Gas prices have a solution already, it’s electricity… inflation adjusted electricity prices trend down, gasoline prices are terrible volatile (especially inflation adjusted) and generally trend flat in the US (averages just over an inflation adjusted ~$2.50 a gallon).

    Seems like the fuel choice of the future is obvious from an economic standpoint, made more obvious by the point that electric cars are already cheaper to own and operate (like by a factor of 2-3 times cheaper).

    Automobiles are going to be a shrinking industry though… the longevity of electric cars means fewer cars sold, and fully automated vehicles is likely to mean similar.

    So if ford can make more money selling cars with a higher initial cost in the long run it will be better for them… but that means they need to start putting out electric drive trains… I know they have one BEV hitting the market for the 2019 model year, but it’s a 35 kwh battery with 100 mile range, my leaf has a 30kw battery and a 100 mile range, and it’s already been updated to the newer models with a 150 mile range…

    Time will tell if ford is making a brilliant move focusing on profitable areas, or if they are just trying to pull as much money from the market as they can before they collapse…

    • Ford has to know that electrics will be tremendous disruptors. New vehicles will have under 20 moving parts. 20! Think what that means for reliability, cost, and maintenance. No oil changes. No transmissions. Much cheaper to manufacture. Further, these new cars will include many self-driving features if not being self-driving completely. Car ownership will not be a necessity for many people. Sharing will be common.

    • One of the things I can’t yet figure out is how long does it take to charge a car?

      It takes me about 2 minutes to fill up the Subaru and that’s good for almost 600 miles of highway driving.

      What is the EV experience likely to be?

      • Mike Worcester

        When I was talking to a Chevy dealer about the Bolt (not the Volt) he indicated that a full charge — from the battery almost being empty — would be about seven hours presuming the owner had the right hookups, which many homes don’t have but are not difficult to install. For most users that would mean you charge it whilst you sleep. I did not ask about any fast-charging stations seen along highways and rest stops.

        I would imagine that time frame will improve as the vehicles themselves improve, including mile range on a full charge.

      • MrE85

        It all depends on how you charge it, Bob. Using the standard 120v house current you have in garage, it will take roughly 8-12 hours. If you upgrade to a 240v “Level 2” charger, about 4 hours. The new DC fast chargers can do the job in 30 minutes or less.

        How far you can go on a charge depends on the electric vehicle.

        • Mike Worcester

          Is that four hour time frame dependent on the vehicle or would that be pretty standard whether you have a Leaf or a Tesla?

          Side note — when the state got word of their share of the VW emissions scandal settlement, my first thought was “use that to set up fast charging stations at every rest stop in the state”. Too myopic?

          • MrE85

            No, it’s pretty much the same, regardless of make and model.

            The settlement that sent the cash to MN and other states specifically states that ONLY 15% can be dedicated to build EV infrastructure. That said, MPCA has decided to go for the full 15%. There is a separate VW initiative called “Electrify America” that works on its own plan. I have been trying to get them to work with others so we can “fill the gaps.”

          • Mike Worcester

            Thank you. Too bad Corridors of Commerce funding cannot be used for setting up charging stations. Every so often I see a vehicle using the one at Nelson’s in Clearwater and every time I do I think, we the [bleep] aren’t we trying harder?

          • MrE85

            Those proprietary chargers in Clearwater only work for Teslas. A lack of a universal charger format is still a challenge, but we are a lot closer to it now.

      • jon

        So there are different levels of charger…
        level 1 is a standard wall outlet, it will take my car ~24 hours to charge from 0% to 100% from a standard wall outlet (120v 12 amps)

        Level 2 is a 240v outlet or more of the chargers you see out in the community, this will take ~5 hours to charge my leaf from 0% to 100% though there is a range here, my leaf tops out at 6.6kws that it can pull at 240v, my charger at home can push 10kw but the car will only use 6.6 of them. Generally you are looking at 240v and ~30amps.

        level 3 is a dc fast charger, they are also out there, in the cities they are mostly at goodwills and car dealers. one of those will charge my car from 0% to 80% in about 20 minutes, the last 20% will take another 10-20 minutes (last 20% is a bit depending on temperatures and such.)

        As for how long it takes to fill up compared to gas… we don’t go out of our way to fill up the leaf, it charges in the garage, so the moment you hit the blinker to turn into the gas station that is on your route, to the moment you pull out of the gas station is the time you should be measuring… and given that gas pumps at 10 gallons per minute and your subaru likely has a 14-15 gallon tank (because the times for electric are from empty, it’s the time we’d need to measure on gas to actually compare) that means you are spending at least 1:30 filling the tank, not to mention parking stopping getting out of the car etc…) Normal apples to apples comparison I think you spend more time filling up than we do charging… the car might take longer, but we aren’t there waiting for it..

        • MrE85

          Jon — who has firsthand information on these — beat me to it. Why not hop on the Green Line and come to the Capitol today? There will be other EV owners like Jon who will tell you the real story on these vehicles — warts and all.

      • Rob

        Ditto. Until charging stations are amply distributed along major interstates and other major highways, electric cars have no appeal. Also, electric cars would need to go 500 miles without needing to be recharged before I’d consider buying one. And I’d have to be able to fully recharge the car in a short amount of time. Price points would also have to be comparable to modestly priced gas-powered cars (such as Subarus).

        • MrE85

          Well then, how about plug-in hybrids, which run like EVs for short trips, then run like conventional vehicles for longer trips. All the range you want, but using a lot less fuel along they way. We have those right now.

          • Rob

            How’s the price point on plug-in hybrids compared to, say, a Subaru Outback?

          • MrE85

            There’s plenty of websites where you can compare. Keep in mind that the 4-wheel drive Subarus will never get the kind of MPG you can get with a decent hybrid, plug-in or otherwise.

          • Nobody buys a Subie for the gas mileage. I thought about getting an EV but quickly dismissed it because you’d need two cars to satisfy all the missions. In that vein, they’re still like buying a bicycle.

          • MrE85

            I have never felt the appeal of the Subie, but I love their dog-themed TV spots.

          • Jerry

            Subies with the CVT get rather impressive gas mileage for an AWD crossover. We have averaged over 30 on road trips.

          • 36 here. ‘cept in winter when it’s closer to 29. Still better than the ’03 Subie it replaced.

          • Jerry

            Suburu made a huge priority to fuel efficiency a couple of years ago. They must have realized that their primary market is lefties who camp. One thing you can say about suburu is that they are very aware of who their market is and catering to that. (See their efforts to appeal to the LGBT community.)

            That is one thing most car companies are horrible at. Honda with the Fit and Kia with the Soul have tried so hard to make the car seem cool to young people yet most drivers are middle aged (which might be because both cars are really practical and young people tend to not place much weight on practicality.)

          • jon

            How many cars does your household have right now?

            57% of american households have two cars right now. Replacing one with an electric car will save you money and time in the long run… but there is a capital investment…

          • Jerry

            The biggest problem with EVs is that you pretty much need to own a garage. If you park on the street you are SOL.

          • jon

            You need a place to plug in. It doesn’t have to be a garage, but you are correct if you don’t have a regular parking space you are pretty much out of luck for anything shy of a tesla…

            I’ve heard of tesla owners without access to a charger just dropping by a supercharger once a week to top off the battery…
            But a tesla can have 300+ miles of range, compared to my 100 on the leaf…

          • Two. And when I retire soon I want us to go down to one.

          • Rob

            I’m aware. But MPG has never been my primary criterion when buying a vehicle.

        • MrE85

          “Until charging stations are amply distributed along major interstates and other major highways..”

          I’m literally working on that right now. The road up to Lake Superior is EV ready right now. We’re working on 1-94 as our main focus now.

          By we, I mean my organization, utilities, private companies, the state DOT and the U.S. Dept. of Energy.

          • LieutenantLefse

            That’s great to hear. I’ll buy a BEV as soon as there’s a reasonable network of chargers along I-94 west of Monticello. Work faster 😉

          • MrE85

            A DC fast charger was just installed at the Alexandria Nissan dealership recently. Open to all EVs, and the cost of the charge is on Nissan.

          • How fast?

          • MrE85

            It’s one of those faster 20-30 minute machines. Tesla says they also plan to add their own brand of Superchargers to Alex. We’re not quite sure where VW plans to build theirs.

        • Brian Simon

          How often do you drive 500 miles in one sitting?

          • A couple times a year usually. My first refueling stop heading east is Grand Rapids, Mich. enroute to my overnight in London, Ontario. Stopping for a couple of hours to recharge basically the difference between needing motels for two nights instead of one. Figure $150 extra each way for that. I spend about $600 on gas a year for the car.

            One thing we may want to consider in the not too distant future is how the EV cars are going to pay their share of the cost of road maintenance. Or maybe someone has already figured that out.

          • Brian Simon

            I suspect that’s unusual; few people have the bladder capacity or attention span to drive that far without a break.

            On road use; yes, EVs will eventually need to contibute & pay their share for maintenance – particularly once heavier vehicles go electric. But at this point there really aren’t enough, i suspect, to significantly impact the budget.

          • I can’t base my car buying decisions on how others drive. I think EVs are very appealing (although I have grave questions about battery disposal) ; but I’m gonna have to wait for them to be a little more practical for my needs.

          • MrE85

            It’s the same for all alternative fuels and technologies. There is no one single answer for everyone’s needs. Say you really NEED a big pickup truck for your work. Fine, you can fuel it with E85 or biodiesel. Compressed natural gas not for you? It works in trash trucks just fine. Don’t want to give up your trunk space for a propane tank? Okay, we’ll use that fuel in rural school buses instead. There’s a solution for almost every need, if you look close enough.

          • MrE85

            In Minnesota, EV owners already pay an annual $75 fee in lieu of gas taxes. Since EVs tend to cost more than gasoline vehicles, the state gets more in sales taxes and licence fees, so there is no reason to worry about them not paying their fair share just yet.

      • Battery swaps have been talked about, but already the lack of standardization and the rapid evolution of the technology are making that less likely. I think there will be a period when a household may have an EV for virtually all local trips and a gas buggy for long hauls, but that will give way to better EVs eventually, coupled with other longer distance travel options.

      • Stacy N

        We just bought a Bolt EV (Chevy) in October. It’s our only car. It’s got a big enough range, we just trickle charge at home in our garage. Plenty of range for driving around town and even to my parent’s farm 2 hours away in SE Minn or family vacation up in lake country. Longer drives (like to North Shore), we time charging to eating lunch/dinner. Stop and have a nice break for lunch while car charges. Really long runs where there just isn’t the infrastructure yet, we use all the money we’ve saved not buying gas (which is a lot!) to just rent a car. More than pays for it. Did this to drive to Omaha this winter. Charging at home is so easy and over 95% of what we do. Seems silly to buy a car based on a maybe once a year drive. I think longer range cars like the Bolt really change things for places like MN. Because of our weekend trips to State Parks and what not, previous shorter range vehicles wouldn’t have cut it for us. And I expect range and infrastructure to just keep improving.

        • Jeff C.

          “we use all the money we’ve saved not buying gas (which is a lot!) to just rent a car”

          I think that is a key mindset that a lot of people (myself included) need to get over. If don’t spend all the money you saved, you are still saving money, along with doing something that helps our Earth.

  • One lesson to be learned from Ford’s change of heart about efficiency standards is that business accurately reflects our basic behaviors. It is an all too human failing to seek immediate gratification, and we see over and over how corporations can choose immediate profit over long term stability and responsibility.

    • I don’t know. Maybe. It’s a good question but since auto marketing is reflected in sales it’s difficult to know whether the marketing influences the behavior or whether the behavior influences the marketing.

      • I’m guessing marketing is designed to push behavior that already exists and the two feed each other.

  • Gary F

    I guess that means I’ll be buying my last Taurus or Fusion this fall.

    • Joseph

      I looked at buying a Fusion two years ago, and discovered that they have a major issue with Christmas-treeing (when every single warning light possible on the dash lights up) out of the blue for no reason, and sometimes being disabled. Might want to check if that’s still a problem. They both look like beautiful cars, and my neighbor loves his Taurus SHO.

      • John O.

        FWIW, a friend of mine just had that happen with his Mitsubishi Outlander last week. The dash lit up like a Vegas slot machine all at once. Pulled in to the Mitsubishi dealer, they changed the differential fluid(!), took my friend’s $160 and *poof* the car was back to normal.

    • Stacy N

      I’m wondering how many people will even do that. Doesn’t it seem like a bad idea to buy a new car when you know they are planning to not make it anymore? Doesn’t that mean parts/service/support for it will inevitably decline and become more expensive too? I don’t know. I think the optics of this move are, at the very least, terrible. Seems to scream ‘we know we’re a dying company, let’s just make as much money as we can before we die.’ Doesn’t really inspire confidence and in the quality and longevity of the brand…

      • Gary F

        Ford won’t be drastically changing the Taurus or fusion if they know they are getting rid of it so parts shouldn’t be an issue. The after market parts industry would cover the rest.

        It may also be the incentive to get that Expedition I’ve wanted.

  • Mike Worcester

    Ford’s loss will be the gain of the Toyotas and Hondas of the world. They have shown a commitment to building affordable and economical vehicles and show no signs of stopping. And truthfully, if I was not in the middle of paying for a vehicle at the moment, I’d be on my way to buying an EV or plug-in hybrid. The $$ just make sense for my work/personal traveling habits.

    • Erik Petersen

      In truth, I think Ford has to abandon sedans because Honda / Toyota / Nissan / Mazda has already completely captured the market segment with superior product / value.

    • Barton

      so it’ll be just like the late 70s/80s: the American behemoth automobile gave way to more fuel efficient Asian autos (and German, to an extent)…..

      • Mike Worcester

        And they got smart for a short time, when my folks bought one of the early Ford Tempo models. Then the 90s hit and, well, they cycle reversed….

  • To be fair, Ford will still be offering the Mustang and the compact Focus crossover for non-truck options.

    /I’ll stick with my Audis.

  • MrE85

    My organization is co-sponsoring a ride and drive event today showcasing some of the “vehicles of the future” this post alludes to. Tellingly, none of the vehicles are Fords.

    It’s at the state Capitol from 10 a.m. to 1 p.m., if anyone is interested. http://www.driveelectricmn.org/event/electric-vehicle-ride-and-drive-at-the-capitol/

    • Barton

      why do all the cool things at the Capitol happen when I have to be at work?

      Hope its a good turn out for you!

    • But how will men in the suburbs overcompensate in this utopian world you describe?

      • MrE85

        We all must find our own response to our shortcomings.

  • Our household is participating in the Met Council travel survey this week. It will be interesting to see what comes of all the new data.

  • Rob

    Maybe Ford will start offering four-cylinder and electric Mustangs. Steve McQueen would be turning over in his grave.

    • Jerry

      Steve McQueen’s Mustang would be absolutely destroyed off the stoplight by most modern four cylinders, to say nothing of Teslas.

      • johnepeacock

        In addition to the fact that there was a 4 cyl Stang in the 80’s, and it was terrible. But yeah, your run of the mill 4-cyl with a turbo will smoke a McQueen era Mustang.

  • AL287

    Asian and European nations learned long ago about high gasoline prices. They have also kept their rail lines intact and Britain and France built the Channel Tunnel (Eurotunnel) to allow easy access to mainland Europe for the British Isles. It saves on rental cars and emissions and the cost of jet travel.

    I’ve never owned any vehicle that was not a compact or subcompact vehicle and I make my trips count so I’m not wasting fuel on short jaunts.

    Fossil fuels are a finite resource and since most of the electricity in the US is generated using fossil fuels, buying an all electric vehicle is like robbing Peter to pay Paul. It will be some years before the US electrical grid is powered mostly by solar and wind energy. As quickly as tighter emission rules are enacted, the current Congress acts just as quickly to revoke them, all in the name of profits for their wealthy political donors including the power companies.

    The best thing we can do is carpool and use mass transportation wherever it is available.

    If apartments rents were reasonable in St. Paul, I would move there in a heartbeat and give up my gasoline-powered vehicle but unfortunately they are not. Even out in the far Northern suburbs they are building luxury apartments that average wage and low wage earners/seniors can’t afford.

    I would gladly buy a townhouse or small house but the only ones affordable for me on a retirement salary are in the northern tier counties, lovely places to live but far from healthcare services and mass transportation.

    So my car stays parked in the summer except for prescription and grocery purchases or trips to see my son and his family once or twice a summer.

    The short sighted plans by Ford have plagued the US environmental policy for generations and I don’t see that changing anytime soon.

    The what’s-in-it-for-me attitude should be the slogan for the 21st century Republican Party.

    If the shoe fits….

  • Brian Simon

    I’m open to leads on a four door short box…

  • AmiSchwab

    on my last minn. visit i rented a ford fiesta. huge trunk, drove great, about 50mpg on the freeway at 65mph. i think i paid less than 100 dollars on gas over 4 weeks. when i got back to germany it cost me 70 dollars for one fill-up. try to refresh your memories people.

    • Pretty sure there has been a study or two that shows Prius, for example, owners tended to drive more often because of the MPG. Sometimes we get windfalls and just spend them.

      • Jeff C.

        That just shows that some Prius owners are as dumb as the general population, including the people who buy a gas guzzler today because gas is cheap today.

  • MrE85

    Any fuel that produces fewer air pollutants and greenhouse gases when used in a vehicle. We have five cleaner fuels available in Minnesota: ethanol, biodiesel, compressed natural gas, propane, and electricity.

  • Rechal Fredrick

    Yes, the Prius C makes a kind of whining noise when in EV mode. The primary purpose is safety in this case. A site-impaired person needs to hear the car approaching so they know whether they can step off the sidewalk.
    Redards;
    Stephny
    http://www.autotransportcity.com