Ford Motor Co. took a big step on the road to producing an all-electric Ford Focus by 2011, pledging to invest $550 million to re-tool an SUV and truck factory for the new Focus and other small-platform cars in Wayne, Mich.
But Ford and Magna International, the Canadian auto parts giant hired to develop the battery, powertrain and other components for the model, face an uphill climb to put an affordable electric vehicle (EV) in showrooms within two years.
The idea behind the Ford-Magna deal - and behind Magna's plug-and-play electric platform, unveiled in prototype earlier this year - is that by contracting an outside supplier to develop the bulk of this new technology, Ford can trim its research and development expenses, reduce risk and move faster than it would if it did all of the work in-house.
Since the rights aren't exclusive - Magna can market the system to other automakers - the development costs will theoretically be covered not just by Ford, but also by future partners.
Startup Tesla Motors has taken a similar approach with its Roadster as Ford is taking with the electric Focus, developing the powertrain in-house but sourcing the battery cells, chassis, transmission and other components from outside suppliers.
It ran into trouble with its transmission, which caused major production delays, and obliged the company to retrofit early models with a new and simpler single-speed transmission, and landed the company in court with the second company hired for the job - none other than Magna Powertrain, a subsidiary of Magna International.
Ultimately, Tesla decided to develop another transmission in-house, having learned, in the words of then-vice-president of Marketing Darryl Siry, that, "We need to have more control over our fate and manage the process in-house." That's what GM has decided to do with much of the Chevy Volt, assembling a battery pack with software and controls developed within the company, along with LG Chem's lithium-ion cells.
"We're relying more on a battery developer," Ford's director of sustainable business strategies, John Viera, said in an interview last week, noting that while there is a "relatively small supplier base" for EV batteries, that base is "very capable".
Tesla's rocky road to production of its first electric vehicle may offer another key lesson for Ford, one that emerged early this year, when sports car maker Lotus - which makes the Roadster bodies - announced plans to build an extended-range electric vehicle: Watch out for suppliers and contractors launching out on their own.