“Shares of automaker Ford up 6% today after announcing it will join the electric vehicle party. What will it mean for the U.S. automaker? Could it be the final nail in GM’s coffin? Phil Lebeau, CNBC’s auto reporter is out in the new Ford plant in Wayne, Michigan.

Melissa, we’re actually at the plant right next to the one that’s being retooled, but this is a major commitment from Ford. This is a company that is going to make sure that 3,200 jobs stay here in the Detroit area. They’re investing more than $500 million…

… SUVs, where they used to make $3.5 billion a year in profit off those SUVs, Ford hoping they will now be profitable churning out fuel-efficient cars: the new next generation Focus as well as an electric vehicle that Ford plans to start selling in 2011. This is an ambitious bet. There are more than a few people skeptical that Ford can make money on small cars built here but when we talked to Alan Mulally he said we’ll have lower costs because of the reworked UAW contract, we’ll have economies of scale because all the tooling, all the parts will be the same on the new Ford Focus, the one built here will look like the one built in Europe, which will look like the one built in Asia. That’s the blueprint. Ford make a profit on the Focus remember, they’ve yet to make a dime on the focus. Yet they believe that they can at this plant.”CNBC’s Fast Money 5/6/2009

Ford(F) shares finished the day up 7% on their announcement that they are making the commitment to build electric cars. There is no doubt that Ford is taking a major risk withOckhamthis move as they are spending millions of dollars to retool existing facilities on the assumption that Americans will buy their new electric products. As theFast Moneygang discussed, the SUVs and trucks have been only cash cow for American automakers, and particularly Ford. CEO Mulally is confident that with the new labor contracts in place and using parts that are already on the Ford Focus they will be able to turn a profit on these vehicles. However, the biggest risk is do enough Americans want to scale down to the electric cars?

Critics of the U.S. automakers have been demanding more innovation and flexibility out of the big three and this is a step in the right direction. Under the leadership of Mulally,Fordhas consistently been the leader in each step of this auto-crisis and this is just par for the course for them. We will be very interested to see if this gamble works out, and Ford will have the added benefit of seeing the market’s acceptance of the Chevy (GM) Volt which will be available a year before the Ford electric car is scheduled to be. Obviously, consumer preferences will play a major role in the success of these two vehicles, but the price of gas will also be a factor. As for right now, with gas prices still relatively cheap it seems that SUVs and trucks will remain the choice for most Americans, but that preference can change very quickly. We have already seen what can happen as gas prices surged last summer.


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