Ford Plans both Electric Vehicles and Plug-in Hybrids

By John Addison (8/24/09). Ford (F) is now taking orders for electric vehicles. By 2011, the Ford Motor Company will start taking orders for the new Ford Focus EV. Beyond 2011, Ford will offer the popular Focus in a variety of affordable options including hybrid-electric (HEV), plug-in hybrid (PHEV), and battery electric-vehicle (EV).

Although Nissan (NSANY) will take an early lead with EVs, and GM will beat Ford to market with a plug-in hybrid Chevy Volt, Ford will be fighting for market leadership with both electric vehicles and plug-in hybrids.

The Ford EV roadmap in this article is based on my interviews with Susan Cischke, Ford Group Vice President, Mike Tinskey, Plug-in 2009 Conference presentations, and my discussions with some of Ford’s utility partners.

2010 orders are likely to come from municipalities and other government agencies that will use the new Transit Connect light-duty van in a variety of applications from city maintenance to on-demand transit. Deliveries of these electric vehicles, made for Ford by Smith Electric Vehicles (TAN.L), will start in 2010. Transit Connect may also do well with small businesses and local delivery fleets.

It is the Ford Focus EV that captures the imagination of mainstream Americans eager to secure a zero-emission vehicle that they can take on freeways and travel up to 100 miles between charges. The new Ford Focus EV will be a 4-door sedan that seats five.

The Focus EV will be made in America. The lithium battery maker and specs are to be announced. Ford has expressed a preference for a battery whose cells that are made in America. Ford’s final battery decision may be influenced by federal funding.

Ford’s additional PHEV Plans in Clean Fleet Report.

Ford is investing $550 million to transform its Michigan Assembly Plant into a lean, green and flexible manufacturing complex that will build Ford’s next-generation Focus global small car along with a new battery-electric version of the Focus for the North American market. Both will be based on a new global C platform. The EV is being developed in partnership with Magna International (MGA).

Ford has been actively testing the plug-in hybrid Ford Escape with a number of utilities and partners. These tests have helped establish the standards necessary for electric vehicle success, such as the J1772 electrical connection that will be standard on Ford EVs.

Thanks to a new DOE award of $30 million, 50/50 matched, a total of $60 million will go into expanded deployment of Ford plug-in hybrids, electric vehicles, and infrastructure. Early pilots of the Ford Focus EV are likely to be part of this.

The new electric vehicles are smart EVs. Customers will be provided with charging options to save money. Drivers will be connected with traffic and location services and assisted with electronics that make driving safer. Passengers will have more information and entertainment options than ever. Like the new smartphones from Apple, Blackberry, Palm and others, the value of a full value of a smart car is in the networks. Just as smartphones can be purchased at a discount with network subscriptions, we may see similar offerings from car makers and their partners.

Subscription models are being explored where vehicles like the Ford Focus EV could be purchased, with the lithium battery and charging being offered as a subscription. Ford, Nissan, and other automakers are discussing such possibilities with electric utilities, financial institutions and others. Should a utility or JV own the batteries, then it would be easier to repurpose lithium batteries into less demanding stationary power back-up applications after the batteries decline in charge after several years of use.

Possibilities include 50/50 joint ventures and long-term secure financing. Because utilities are regulated, public utility commissions will be involved in approving new business models. If everyone gets there act together, which is certainly an “if,” the customer could be a big winner with an affordable EV and subscription offerings that cost less than monthly gasoline costs.

Under the leadership of CEO Alan Mulally, Ford has shown a new flexibility in partnering with suppliers, vehicle integrators, battery JV, electric utilities, financial institutions, and even information technology firms like Microsoft (MSFT). With global platforms, smarter cars, richer partnerships, and greater speed to market, customers will see some interesting new offerings in the next two years.

By John Addison. John Addison publishes the Clean Fleet Report and speaks at conferences. He is the author of the new book – Save Gas, Save the Planet – now selling at Amazon and other booksellers.

Microsoft buying Yahoo? The Yahoo shareholder’s dilemma

Last fall Cleantech Blog did an article on asking whether Microsoft Vista could be considered the best selling cleantech product in the world. And we have long admired the portal, so while maybe a stretch for Cleantech Blog, I couldn’t help but weigh in on the recent Microsoft (NASDAQ:MSFT) offer to acquire Yahoo (NASDAQ:YHOO).

One of my friends who formerly worked at Yahoo still holds some shares there. He knows I have liked Microsoft as a stock, and asked me to write him a quick note on the Microsoft bid for Yahoo. As a Yahoo shareholder, how does he decide whether to sell or hold? What’s the analysis?

The first part of the answer depends on some simple numbers around the tax basis and impact. If he sells now, he pays his 20% in taxes on the gain (depending on whether it’s long term or short term). If he holds and it does go through, it should go through at a roughly 10% higher price ($31 vs. $28), and he can possibly roll his tax basis (check this with your tax advisor, as the proposed deal is half cash and/or half stock – but I believe it is intended to be tax free at least for the stock portion). If he holds and it doesn’t go through, Yahoo could well give back the 50% it has traded up.

There is a reasonable likelihood of failure of the deal, as these discussions between Microsoft and Yahoo are not new. But perhaps the risk of failure is no worse than 50/50. The market has basically said it believes there is a greater than 70% likelihood on the deal going through, or Microsoft getting beat out by someone else, i.e., a $31 offer price, $19-20/share previous price, and a Yahoo price that traded up immediately to $28 today. I can’t see anyone else easily outbidding Microsoft at this scale (though Microsoft may well have to sweeten the deal), as Google would have antitrust issues, and while that’s always a possibility, too, probably not too likely.

So we are left with perhaps a 10-20% upside versus a 50%+ downside, and our market estimate of a 70%-75% likelihood of the upside. This analysis would argue possibly for a sell rather than a hold, but not by much.

But I still think from a product perspective a Microsoft / Yahoo combination could be a formidable challenge to Google and deliver long term growth to Microsoft – in which case holding gets him Microsoft stock at up to a 20% discount from where it is today – 10% from Yahoo’s current trading price discount to the $31 offer, and depending on the tax analysis and your basis likely another 10%+ on the tax deferral. Think about it – a Yahoo portal, instant messenger, search, advertising, groups, and all bundled directly to my desktop – and tied long term into my corporate back office. Very intriguing.

I am personally into Microsoft at around $24/share, and like it as a buy probably up to $35 or so. I have never owned Yahoo. But if I were a Yahoo shareholder, I think I’d like this deal. Yahoo’s PE has been trading in the 30s, and is currently at 50+ on the back of this announcement, while Microsoft’s has been in the mid-teens. So, if you are Yahoo shareholder and hold through a deal, you also get a much cheaper stock in the bargain.

No real answers here, just the analysis.

Neal Dikeman is a founding partner at Jane Capital Partners LLC, a boutique merchant bank advising strategic investors and startups in cleantech. He is founding contributor of Cleantech Blog and a Contributing Editor to Alt Energy Stocks, and a blogger for CNET’s Green tech blog.