Ford: 4 years Is Sweet Spot for Recouping Cost of Fuel Efficient Powertrains
Blue Oval research shows that consumers will pay more upfront if they are rewarded within 48 months.
Fuel-efficient powertrains -- especially ultraefficient ones that use electric or plug-in hybrid technologies -- often come with drawbacks that turn off the average consumer. They can be difficult to refuel, both in terms of time spent and available infrastructure; they may offer limited range; and they typically cost more. While manufacturers are looking to push battery technology forward to reduce the impact of the first two problems, Ford has also been delving into the cost issue and thinks it has found the sweet spot in terms of what customers will pay upfront versus the time it takes to recoup that investment.
According to research by the Blue Oval, about one in four customers would be willing to pay more for a fuel-efficient vehicle if that upfront expense pays off within four years, Automotive News reports. That is a far shorter timeline than for many advanced-powertrain vehicles, such as EVs, which can take up to a decade or more for the fuel savings to justify the high initial cost. However, for some gas-powered engines, such as Ford's small-displacement EcoBoost mills that offer turbochargers and direct fuel injection, it is a more realistic option.
Speaking at the Center for Automotive Research's 2012 Management Briefing Seminars, Joe Bakaj, Ford's vice president of powertrain engineering, noted that 43 percent of Ford F-series buyers decided on the 3.5-liter EcoBoost engine, which costs more than the company's V8 mill. In fact, Ford charges between $800 and $1,200 more for a fuel-efficient EcoBoost engine.
Bakaj also said that any vehicles that have adequate range and ease of refueling and can hit that four-year mark to recoup initial costs is a candidate for volume selling. However, for those vehicles that don't qualify, Ford has another trick up its sleeve for reducing costs: produce the vehicle with multiple powertrain options on the same assembly line. The Blue Oval's upcoming C-Max Energi plug-in hybrid will be produced on the same line as gas-powered versions, meaning that production of fuel-efficient-powertrain vehicles can be tailored to demand. In fact, all of Ford's mainstream vehicles, such as the Focus, are being designed to also include a hybrid option.
[Source: Automotive News (subscription required)]
With battery technology continues to change (hopefully for the better) this equation fluctuates. So after 4 years, its paid for itself. Now how many years before the battery stops proving an advantage in a hybrid?
With many consumers hanging on to their cars for longer, (some blame the economy, but its also more convenient and green) does the consumer want not only a early break-even point, but a car that can go 10 years if needed..... No one knows what the future will bring with the economy, nationally or personally.
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