Hoping to win a relaxation of California’s 1998 zero-emission vehicle mandate, Ford Motor Co. will offer to put electric demonstration fleets on the road and sell partially built cars to electric-car conversion companies, the auto maker said Friday.
The proposal will be made to the California Air Resources Board on May 12, when the agency begins a two-day review of its zero-emissions regulation.
The hearing is considered crucial because auto makers must make production plans this year for the 1998 model year. Unless the ARB rolls back its requirement, 2% of the vehicles offered for sale in California by major auto makers will have to be non-polluting that year. Only electric vehicles now meet that requirement.
Separately, Ford reported first-quarter earnings Friday of $904 million, or $1.66 a share--its best three-month profit in nearly five years--as sales surged at home and a recovery began in Europe. A year ago in the first quarter, the company earned $572 million, or $1.02 a share.
Reiterating the big car makers’ stance, Peter Pestillo, executive vice president of corporate affairs, said Ford does not believe that affordable electric vehicles with an adequate traveling range can be produced in volume by the state’s 1998 deadline.
“We are not opposed to electric vehicles,” Pestillo said in an interview Friday. “We want to find a way to do them intelligently and not chill the idea with an inferior product.”
By setting up demonstration projects, Ford said, it hopes to put a large number of fleet vehicles on the road from which it can gather important data for the retail market. It said it is discussing such projects with several electric utilities, United Parcel Service, Federal Express and the U.S. Postal Service.
Ford said it is also willing to sell “gliders” to conversion companies. Gliders are cars missing the powertrain and fuel system. Their availability would make conversion easier and cheaper, since converters now must buy vehicles in the retail market, remove the internal combustion engine and replace it with an electric powertrain.
However, Pestillo said significant warranty issues would have to be resolved before gliders could be sold. One concern is safety, because putting a different powertrain in a chassis changes its crashworthiness.
Ford is hoping its offer will provide a political solution to a sticky issue. The resource board, for instance, could uphold the mandate but reduce the number of electric vehicles auto makers must build by 1998. That could be accomplished by providing extra credits for building demonstration fleets or selling gliders.
ARB spokesman Bill Sessa declined to comment on the Ford proposal. But he said auto makers can already gain emissions credits through production agreements with converters and others.
The biggest concern for the auto makers is batteries; viable ones, they argue, won’t be available until at least 2000. The ARB staff, however, believes better batteries will be available by 1998.
Ford’s 58% increase in net profit came despite a $440-million charge related to the sale of First Nationwide Bank. The troubled San Francisco-based thrift was sold two weeks ago to First Madison Bank for $1.1 billion.
The company’s first-quarter earnings tracked close to those of its U.S. competitors. Chrysler Corp. earned $938 million and General Motors Co. netted $854 million. The Big Three’s collective $2.8-billion profit is the most since the second quarter of 1989.
The earnings results were in line with Wall Street expectations. Ford shares gained 87.5 cents Friday to close at $58.375 on the New York Stock Exchange.
Ford Treasurer David McCammon said profits have been driven by a sales wave, itself powered by pent-up demand and growing confidence in the economy. He projected that sales will continue to grow in both the United States and Europe.
“In baseball terms, we are in the first inning of European growth and in the third or fourth inning of U.S. growth,” McCammon said.