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The Globe and Mail

Ford Canada CEO says buyers won't go electric this decade

Ford's popular SUV, the Explorer, was redesigned as a crossover for 2011, becoming more fuel efficient for buyers concerned about rising fuel costs.


A paltry one or two per cent of drivers will make the switch to electric vehicles by the end of the next decade, while a vast majority of consumers will opt for traditional gas-powered cars and trucks, says the chief executive of Ford Canada.

In 2020 traditional internal combustion engines will make up about 75 per cent of global demand and hybrids around 20 to 25 per cent, leaving electric cars only slightly less rare than they are today, said David Mondragon.

"For battery-electric vehicle customers, there has to be a behaviour change," Mondragon told a business luncheon Thursday at a downtown Toronto hotel.

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"You have to charge every day and you have to think about how far you're going on each trip."

Drivers may opt for smaller, more fuel-efficient cars over gas guzzling trucks if gas prices rise, but there are some huge barriers to drive demand to the next level of fuel efficiency and toward electric vehicles, Mondragon said.

For one thing, Mondragon said, oil prices would have to climb back to a sustained US$120 to $140 a barrel from the current $70 range to push consumer demand toward electric vehicles.

Pure electric battery cars are also currently more expensive than those that run on gas and take an average of 10 to 15 years for consumers to see a worthwhile return on their investment, whereas hybrid customers see payback in about seven years.

Finally, he argued, electric vehicles will be a huge burden on electricity grids, citing studies that show electric vehicles can double the daily household use of electricity.

"Because of these challenges, we're still a long way from a gasoline-free transportation system," he said.

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Still, Ford has invested $1-billion in electric vehicles and plans to bring five electrified models, including hybrids, to market by 2012.

In the meantime, dealer incentives and comparatively low gas prices have led to fuel-sucking trucks actually outselling less energy-hungry cars, a trend that will likely continue into 2011 but is not sustainable over the longer term, Mondragon said.

"We know that artificially inflating demand with high consumer incentives is not the way to go. We know that we cannot afford to take a short-term view," he said.

In August, trucks made up 55 per cent of industry sales, a 10 per cent increase from the height of a recent oil crisis and recession in 2008, when car sales were in the majority.

During the recession and when fuel prices were high, many consumers opted for smaller, more fuel efficient models and that trend will return one day, Mondragon said.

"In the not too distant future, we predict oil prices to exceed $100 U.S. per barrel once again, shifting consumer behaviour to more fuel-efficient vehicles."

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In 2008, the car maker began to re-examine its lineup to deliver more cars and crossovers vehicles to meet increasing demand and by 2011, cars and crossovers are expected to represent 60 per cent of its lineup, Mondragon said.

The Canadian vehicle market has been very competitive in recent months with Ford and General Motors vying to regain the top sales spot and Toyota hoping to win back customers after a spate of recalls.

To compete, the auto makers are offering bigger and bigger incentives. For one, Ford is extending its employee pricing incentives until the end of September.

Ford Canada employs approximately 6,000 people at assembly plants in Oakville, Ont., and St. Thomas, two engine plants in Windsor and parts distribution centres in Brampton, Ont., and Edmonton.

However, nearly 400 employees will be laid off this fall when the company cuts one of the two shifts at its Windsor Engine Complex in southwestern Ontario.

It has also said it will close its St. Thomas, Ont., plant next year, leaving another 1,500 auto workers without jobs.

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