Ford's (F - Get Report) pledge last week to invest $4.5 billion through 2020 to greatly increase electrification of its vehicle model lineup will face serious hurdles as it seeks to overcome broad consumer indifference and resistance to such vehicles.
Like other automakers, Ford is struggling to meet stricter government regulations that its vehicles reduce fuel consumption as well as cut tailpipe emissions to nearly zero and, in some locations, entirely. Consumers have remained wary of battery-powered models that require recharging, sticking instead to the longer range and lower prices of conventional vehicles fueled with a full tank of gas.
Toyota (TM - Get Report) scored a triumph with its Prius gas-electric hybrid, though sales of that model have declined lately as well, in the face of the lowest retail gasoline prices since the global financial crisis. For the longer term, Toyota has decided to pursue hydrogen fuel cells rather than batteries as its preferred technology for meeting global clean air and energy regulations.
Ford executives acknowledged that their goal of developing 40% of their models to run on battery electric, hybrid gas-electric or plug-in hybrid from the current proportion of 13% is aggressive and doesn't guarantee a positive reception from buyers.
"The challenge going forward isn't who provides the most technology in a vehicle but who best organizes that technology in a way that most excites and delights people," said Raj Nair, Ford's executive vice president of product development.
Ford shares have fallen 4.6% over the past five days, compared with a 2.7% fall in the Dow Jones Industrial Average.
Beyond indifference, Nair asserted that many consumers are ignorant or poorly informed of the characteristics of electrification technologies such as plug-in and other hybrids, which don't require recharging to operate and aren't subject to range limitations.
Ford was among 13 signers by automotive suppliers and manufacturers to a letter sponsored by the World Economic Forum stating a commitment to "decarbonize" personal transportation by developing cleaner vehicles that emit less carbon dioxide. But the letter acknowledged development and creation of infrastruture would necessitate assistance from governments and others outside the industry.
The auto industry's move away from fossil fuels to alternatives like electrification is driven mainly by governments responding to climate scientists that have warned about the possibly disastrous effects of carbon dioxide production on the environment.
Though many auto executives privately express pessimism at the benchmarks and timetables for ambitious alternative-fuel technology mandated by governments, no one dares to say so publicly. Standards such as the 54.5 mile-per-gallon fleet average for the U.S. by 2025 have been written into law. Automakers insist they will find a way to comply, though the means aren't yet clear.