Ford's ready-made electric car
Ford saved big money by partnering with parts supplier Magna to develop its competitor to the Chevy Volt.
NEW YORK (CNNMoney.com) -- Ford is preparing to sell an electric car developed almost entirely by an outside supplier. While that may cut down on bragging rights - General Motors created the Chevy Volt in-house - Ford says it also cut down on costs and risk.
In other words, why invent the electric wheel when somebody else can do it for you?
Meanwhile, Ford's partner, auto supplier Magna International, is offering to do for other carmakers what it's done for Ford, and possibly more. If you're a carmaker and you want to sell an electric car, Magna says it's ready to design it and build it for you.
The electric Ford Focus, due out in early 2011, is largely the product of Canada-based auto parts and assembly supplier Magna International (MGA). Magna developed the car mostly on its own, building it inside a Ford Focus body for demonstration purposes.
Unlike the Volt, Ford's electric Focus will not be a "range extended car." In other words, it won't have an on-board gasoline-powered generator to pump out more electricity for longer drives.
The Focus will not burn gasoline and will go about 100 miles on a charge. Before hitting the road again, drivers will have to wait to recharge.
Meanwhile, the Volt will only go 40 miles before needing to burn gasoline - still farther than most people drive in a typical day, GM says - but it will have a 300 mile total range.
In August, 2008, Magna presented its electric car to Ford engineers and executives.
"We took a look at that execution and said, 'Hey, together we can really make this a proposition," said Nancy Gioia, Ford's Director of Sustainable Mobility.
Ford had been discussing electric vehicle requirements, in general, with Magna for more than two years, Gioia said, but that was the first time anyone outside of Magna had seen the car.
It was after the August meeting that Ford became seriously involved in the project, providing details and feedback to help make the car feasible for production and to make sure it was the sort of car Ford wanted to sell.
Magna, a wide-ranging auto industry supplier - it even has a European subsidiary, Magna Steyr, that builds vehicles for BMW, Mercedes-Benz, GM and Chrysler in an Austrian factory - has expressed interest before in designing, engineering and building an entire car.
In this case, Magna founder and chairman Frank Stronach asked his engineers to develop an electric car that could be sold under any brand by any carmaker, said Ted Robertson, Magna's chief technical officer for the Americas.
"It's a generic system we were designing so it could be put into anybody's vehicle," Robertson said.
The Focus wasn't chosen because Magna wanted Ford as a customer, Robertson insisted. It was chosen simply because it was the right size, it was light and its design - particularly the suspension design - allowed engineers to experiment with different layouts for the car's electric drive systems.
"We needed to develop the parts not only in the computer, but we needed to build a vehicle to do a proof of concept," he said.
The car drives just like a gasoline-powered Focus, said Bill Pochiluk, an industry analyst with Automotive Compass. The electric Focus's 100-mile range will do just fine most of the time.
"This vehicles makes you wonder: why do we need the Volt?" said Pochiluk.
Ford could have developed an electric car on their own, but Magna's work allowed the carmaker to bypass a lot of expensive engineering and development work, Pochiluk said.
"This certainly leapfrogged a lot of what Ford had been thinking," he said.
Ford, in fact, would have developed some sort of an electric car on its own had Magna not come forward, Gioia said.
The electric Focus will go on sale in early 2011 and it will be based on the next-generation Ford Focus small car. By then, it should be Ford's second electric vehicle. The first will be a small electric work van that's scheduled to go on sale next year. Ford also partnered with an outside supplier, Britain's Smith Electric vehicles, to make the van.
Magna's agreement with Ford isn't exclusive. Magna plans to sell the system to other carmakers besides Ford and, said Gioia, Ford has no problem with that.
"In fact, we encourage it," she said. "We want Magna to be successful."
For Ford, the strategy is similar to the approach taken with the carmakers' popular Sync in-car entertainment system. That system, which Ford credits with boosting sales of its current Focus compact car, was developed in partnership with Microsoft and the software giant retains the right to sell it to other automakers.
If Ford had insisted on exclusive rights to use these systems, Microsoft and Magna would have had to charge much higher fees to cover their costs. That would have erased the financial benefit of having an outside company develop the systems.
In this case, Magna is even developing its own car body in case a a customer doesn't have one to use. And Magna can even produce the car in its factory, if a carmaker wants, said Robertson.