Ford Focuses on Hybrid Vehicles - Analyst Blog

By Zacks Equity Research,

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Ford Motor Co. ( F ) announced its plan to invest $135 million to develop key components, including advanced battery systems, for its next-generation hybrid-electric vehicles.

The automaker is looking forward to double its battery-testing capabilities to 160 individual battery-test channels by 2013. It aims to boost development of hybrid-electric vehicles by at least 25%.

The company will utilize its 285,000-square-foot research and development lab, Ford Advanced Electrification Center, in Dearborn, Michigan to focus almost entirely on hybrids and electric vehicles. Presently, 1,000 engineers are working on hybrid and electrification programs at the facility, formerly known as Advanced Engineering Center.

Ford aims to reduce cost of its current hybrid system by 30% compared with its previous-generation system. The company plans to launch five fuel-efficient hybrid-electric vehicles this year including Focus Electric, C-MAX Hybrid, C-MAX Energi plug-in hybrid, new Fusion Hybrid and Fusion Energi plug-in hybrid. It also plans to triple production capacity of electrified vehicles by 2013.

Ford's focus on hybrid vehicles and fuel-efficiency played a pivotal role in its revival since late 2006. Last year, the company had signed a memorandum of understanding with Toyota Motor Corp. ( TM ) on the equal product development collaboration in order to develop a gas-electric hybrid engine for pickup trucks and sport utility vehicles (SUVs). However, both the automakers had decided to retain the uniqueness in their products.

The automakers had decided to sign a definitive agreement this year that would lay out timelines to develop the technology. They expect to market the product by the end of this decade.

The development of electric hybrid engines would help both the companies meet stringent fuel economy and pollution standards in the U.S. and elsewhere in the near future. The U.S. fuel economy standards require vehicles to deliver 56.5 miles per gallon (mpg) by 2025.

Ford, a Zacks #4 Rank (Sell) stock, posted a 39% fall in profits of $1.20 billion or 30 cents per share in the second quarter of the year from $1.98 billion or 49 cents in the corresponding quarter of 2011 due to lower operating results in all the regions except North America. However, the company's profits were higher than the Zacks Consensus Estimate of 28 cents per share.

Revenues in the quarter dipped 6% to $33.3 billion, due to the same factors mentioned above. However, it exceeded the Zacks Consensus Estimate of $32.0 billion. In the first half of the year, Ford's U.S. total market share was 15.4% in the U.S. and 8.1% in Europe.

For 2012, Ford anticipates market share in the U.S. and Europe to be lower than 16.5% and 8.3%, respectively, in 2011. It also expects the overall pre-tax operating profit to be lower than 2011 compared with the prior guidance of tallying. Operating margin in the Automotive segment is anticipated to be equal or lower rather than the prior guidance of improve over 5.4% in 2011.

FORD MOTOR CO (F): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: F , TM

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