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Ford Business Plan Accelerates Electric Vehicle Development

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Ford has announced aggressive hybrid & electric vehicle plans before (then failed to deliver the promised numbers), but their current business strategy presented to Congress (as part of a bail-out plea) may see the light of day:

DEARBORN, Mich., Dec. 2. 2008 - Ford Motor Company this morning submitted to Congress its comprehensive business plan, which details the company's plan to return to profitability and outlines a request for potential access to a temporary bridge loan in case the current economic crisis worsens or there is a bankruptcy of a major competitor.

In the plan, Ford said the transformation of its North American automotive business will continue to accelerate through aggressive restructuring actions and the introduction of more high-quality, safe and fuel-efficient vehicles - including a broader range of hybrid-electric vehicles and the introduction of advanced plug-in hybrids and full electric vehicles.

Ford is asking for access to up to $9 billion in bridge financing, but reiterated that it hopes to complete its transformation without accessing the loan should Congress agree to make the funds available.

Despite the serious global economic downturn, Ford said it does not anticipate a liquidity crisis in 2009 - barring a bankruptcy by one of its domestic competitors or a more severe economic downturn that would further cripple automotive sales and create additional cash challenges.

"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company," said Ford President and CEO Alan Mulally, who will testify before Congress this week.

In the plan submitted to Congress, Ford reiterated that its One Ford transformation plan remains fully in place, anchored by four key priorities:

Aggressively restructure to operate profitably at the current demand and changing model mix;
Accelerate development of new products our customers want and value;
Finance our plan and improve our balance sheet; and
Work together effectively as one team, leveraging our global assets.
"Ford is committed to building a sustainable future for the benefit of all Americans," Mulally said. "We believe Ford is on the right path to achieve this vision.

"We appreciate the valid concerns raised by Congress about the future viability of the industry," he added. "We hope that our submission today helps instill confidence in Ford's commitment to change, including our accountability and shared sacrifice during this difficult economic period."

Ford's submission to Congress included new details about Ford's future plans and forecasts, including:

Based on current business planning assumptions - including U.S. industry sales for 2009, 2010 and 2011 of 12.5 million units, 14.5 million units and 15.5 million units, respectively - Ford expects both its overall and its North American automotive business pre-tax results to be breakeven or profitable in 2011, excluding any special items.
As part of a continuing focus on building the Ford brand, the company said it is exploring strategic options for Volvo Car Corporation, including the possible sale of the Sweden-based premium automaker. The strategic review is in line with a broad range of actions Ford is taking to strengthen its balance sheet and ensure it has the resources to fund its plan. Since 2007, Ford has sold Aston Martin, Jaguar, Land Rover and the majority of its stake in Mazda.
Ford's plan calls for an investment of approximately $14 billion in the U.S. on advanced technologies and products to improve fuel efficiency during the next seven years.
Half of the Ford, Lincoln and Mercury light-duty nameplates by 2010 will qualify as "Advanced Technology Vehicles" under the U.S. Energy Independence and Security Act - increasing to 75 percent in 2011 and more than 90 percent in 2014. Ford said it has included these projects in its application to the Department of Energy for loans under that Act and hopes to receive $5 billion in direct loans by 2011 to support Ford's investment in advanced technologies and products.
From its largest light duty trucks to its smallest cars, Ford will improve the fuel economy of its fleet an average of 14 percent for 2009 models, 26 percent for 2012 models and 36 percent for 2015 models - compared with the fuel economy of its 2005 fleet. Overall, Ford expects to achieve cumulative gasoline fuel savings from advanced technology vehicles of 16 billion gallons from 2005 to 2015.
Next month at the North American International Auto Show in Detroit, Ford will discuss in detail the company's accelerated vehicle electrification plan, which includes bringing to market by 2012 a family of hybrids, plug-in hybrids and battery electric vehicles. The work will include partnering with battery and powertrain systems suppliers to deliver a full battery electric vehicle (BEV) in a van-type vehicle for commercial fleet use in 2010 and a BEV sedan in 2011. Ford said it will develop these vehicles in a manner that enables it to reduce costs and ultimately make BEVs more affordable for consumers.
The 2007 UAW-Ford negotiations resulted in significant progress being made in reducing the company's total labor cost. Given the present economic crisis and its impact upon the automotive industry, however, Ford is presently engaged in discussions with the UAW with the objective to further reduce its cost structure and eliminate the remaining labor cost gap that exists between Ford and the transplants.
As previously was announced, Ford plans two additional plant closures this quarter and four additional plant closures between 2009 and 2011. The company also has announced its intent to close or sell what will be four remaining ACH plants. The company said it will continue to aggressively match manufacturing capacity to real demand.
Ford will continue to work to reduce its dealer and supplier base to increase efficiency and promote mutual profitability. By year end, Ford estimates it will have 3,790 U.S. dealers, a reduction of 606 dealers overall - or 14 percent from year-end 2005 - including a reduction of 16 percent in large markets. In addition, Ford has been able to reduce the number of production suppliers eligible for major sourcing from 3,400 in 2004 to approximately 1,600 today, a reduction of 53 percent. Ford eventually plans to further reduce the number of suppliers eligible for major sourcing to 750.
Ford also confirmed today that it has decided to sell its five corporate aircraft. In addition, Ford CEO Mulally announced that, should Ford need to access funds from a potential government bridge loan, he would work for a salary of $1 a year - as a sign of his confidence in the company's transformation plan and future.
Ford also reiterated that it is canceling all bonuses to be paid in 2009 for all management employees worldwide and foregoing bonuses for all employees in North America. The company also will not pay merit increases for North America salaried employees in 2009.

Ford said it is moving fully ahead with plans it announced this summer to leverage the company's global product strengths and bring more smaller, fuel-efficient vehicles to the U.S. The plan includes delivering best-in-class or among the best fuel economy with every new vehicle introduced. Ford also is introducing industry-leading, fuel-saving EcoBoost engines and doubling the number and volume of hybrid vehicles.

This product acceleration will result in a balanced product portfolio with a complete family of small, medium and large cars, utilities and trucks. Ford said it is increasing its investment in cars and crossovers from approximately 60 percent in 2007 to 80 percent of its total product investment in 2010.

"Ford has a comprehensive transformation plan that will ensure our future viability - as evidenced by our profitability in the first quarter of 2008," Mulally said. "While we clearly still have much more work to do, I am more convinced than ever that we have the right plan that will create a viable Ford going forward and position us for profitable growth."

To read Ford's submission to the U.S. Congress and for more information about Ford's plan, please visit
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And a report on the Big 3's return to Congress, this time driving hybrid vehicles (and yep, Ford CEO Alan Mulally used an Escape Hybrid):

Detroit's Symbolic Ride to Congress, in a Hybrid
Lawmakers blasted the CEOs of the Big Three automakers last month for bringing their tin cups to Washington in corporate jets. This time around, they seem to have learned a lesson in the value of political symbolism (oh, around $25 billion). So for this trip to Capitol Hill, the Ford and GM CEOs traveled in hybrid cars, no doubt with their tin cups safely nestled in the cupholders too.

So what are we taxpayers (and car buyers) to make of this? Clearly, in not rejecting a bailout immediately, Congress is telling us that they'll help Detroit if the Motor City helps them too. Their voters want environmentally friendly cars; they want to see innovation and forward planning. In exchange, maybe Detroit gets access to federal funding.

But lawmakers would be well advised to examine the symbolism of the specific vehicle models chosen by the CEOs for their journey.

Alan Mulally Rides a Ford Escape Hybrid
Mulally, Ford's top executive, made the trip in a Ford Escape Hybrid-introduced in 2004 as the first hybrid gas-electric vehicle made by an American car company. With city fuel economy of 34 mpg, the Ford Escape remains the most fuel-efficient SUV available today. When Mulally steps out of the greenest SUV available today- a vehicle that offers flexibility, sure-footedness, segment-leading fuel efficiency, and the best in advanced hybrid technology-lawmakers should see a CEO ready to lead his company and the American auto industry in a better direction.

Rick Wagoner Takes a Chevy Malibu Hybrid
Wagoner, GM's CEO, traveled in a Chevrolet Malibu Hybrid. GM has sold fewer than 3,000 Chevy Malibu Hybrids since the model's introduction in January 2008. The low production numbers-and the fact that the 2008 Malibu Hybrid ekes out a negligible fuel economy improvement compared to the conventional Malibu-symbolizes GM's half-hearted attempts at making hybrids under Wagoner's watch. Now, as the company makes big promises to Congress, and moves on to its next green pet-project-the Chevrolet Volt plug-in hybrid, which is not yet available-lawmakers should wonder if GM's U-turn away from supersized vehicles and toward green technology is more show than substance.

Robert Nardelli's Ride: Canceled Hemi-Hybrid
Nardelli, chief executive of Chrysler, was last to announce his wheels to DC. Chrysler also has hybrids-the Dodge Durango Hybrid and Chrysler Aspen Hybrid, a pair of Hemi-engine V8 hybrids that don't quite manage an average of 20 mpg. These monster hybrids were put into production this fall, but will go out of production this month when Chrysler shutters its Newark, Del., assembly plant. That's right. Chrysler's only hybrids will arrive in showrooms for the first time only weeks before they die for good. Chrysler is holding on by a thread, and seeks taxpayer money to stabilize the company until it can be merged with or sold to another automaker. The fact that Nardelli might not have a viable Chrysler hybrid to drive speaks volumes about the company's ability to make good on federal support.
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