Saturday, April 3, 2010

Less Subsidation = More Innovation

It is interesting to note that many countries in Europe have
very fuel efficient cars without the use of expensive and
environmentally intensive hybrid technologies or other strange
and expensive implementations. One example is the new Ford
ECOnetic models deployed in much of Europe since 2008. I find
this to be a great example of the energy efficient innovation
that can come out of increased energy prices and demand for
efficiency. The newest Ford Fiesta ECOnetic model on sale now
in Europe gets an estimated 76.4 MPG on the highway. This car
has no hybrid electric motors, electric batteries, or extreme
aerodynamic design to achieve this MPG. It’s also very
interesting that the car will not be available for sale in the
United States, especially since it is a very fuel efficient
vehicle and is made by an American company. You would think
that with the new higher vehicle efficiency standards,
government bailouts of auto companies, and the overall
movement of the Obama Administration towards fuel efficiency
and mass transportation that this type of car would fit the
demand of the day. However, Ford disagrees. The company issued
a statement saying they would not be able to sell the car in
the US for “business reasons”. I was really wondering if
“business reasons” may include serious lobbying against the
sale by the American Petroleum Institute or another oil
lobbying agency. The car is a turbo diesel, which isn’t common
in the US, but sounds like a regular gasoline engine. The
engines are also a little bit more expensive to produce and
Ford says it would have $354 million to update its Mexico
plant (Mexico??) to make the ECOnetic modifications. However,
76.4 MPG seems too efficient to matter. The newest model went
on sale in Europe for 11,645 pounds sterling ($17,700 US) with
Bluetooth cell phone-to-speaker connection and MP3 and USB
connections standard. Why can’t Ford justify selling this car
in the U.S.?


  1. This is crazy! I think Americans need to get over the "bigger=better" mentality and put practicality over aesthetic pleasure. I think that people get too caught up with politics of efficient vehicles and “green” progress to make level headed decisions about goods they purchase. It is unfair that Ford will not release the fuel efficient car. It also goes against what capitalism in this country is which that companies need to give the consumer the right to choose.

  2. That's some information that definitely leaves you thinking...I was thinking the same thing, that oil companies are the reason behind Ford not selling the car in the US. I think one of the main problems trying to move to more earth friendly and efficient energy sources is the power and wealth of the oil companies, that unfortunately are able to have a large amount of say in what goes down.

  3. This reminds me a lot of the corn subsidies in our nation...

  4. This is a great topic! While we often hear how much major auto/petroleum conglomerations block alternatives to "regular vehicles" ( think of rail travel/buy-up of hybrid technologies) we don't often hear about them blocking an alternative that would still meet the needs of their basic business model. Vehicles that use less seem like a much more viable change or stepping stone than hybrids, with their high overhead costs.

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  6. It seems that Ford's main justification for these 'business costs,' resulting in not selling the vehicle in U.S., is the lack of diesel availability and use in the states. With diesel fueling only 3% of the vehicles on the road in the continental U.S., fuel-efficient technology utilizing diesel is largely being ignored here. Ford is not the only company with these highly-efficient diesel vehicles, as this is a widely popular fuel source in Europe. It seems worth considering the expansion of diesel in the U.S. to take advantage of these promising vehicles.

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  8. If there are only 3% of U.S. cars fueled with diesel, that still means that there are 7.1 million diesel fueled cars in the States. That is still a very large number, and free market economics would welcome more competition for car fuels, as it should result in a favorable market outcome. I do not understand the business reasons for not releasing this car in America. This a an intriguing and thought provoking blog post.

    Interesting article. I am wondering if US vehicle safety standards have anything to do with the lack of the Ford ECOnotic car? Especially with regard to speed or perhaps emission standards? Is it possible to buy the car in Europe and bring it here to the States? This tactic seems like a perfect situation for an entrepreneur if the only problem is that Ford does not want to build a new plant…

  10. Currently gas companies have been slightly encouraging increased fuel efficiency in cars due to the threat of a tax on fuel. They prefer that the automotive companies (which can more readily improve their technology) bear the grunt of any policy regarding fuel consumption;a tax would decrease use of their product (gas), whereas improved fuel economy is an incentive for people to buy the car. Also, marketing is an important part of the picture. Since the 1980s cars have gotten bigger and faster while the marketing for such cars simultaneously focused particularly on the idea that people want bigger and faster cars. The car companies today should focus marketing on the truth that people want more fuel efficient cars.

  11. Perhaps the popularity of the ECOnetic in foreign nations will encourage Ford to bring this model to US. Even if this particular car does not come to the US, I think that more vehicles like the ECOnetic will become more popular among all car companies, and similar models will become available in the US.

  12. I feel like these 'business reasons' could pertain to Ford's image. Ford is known for their F-150, F-250, F-350, etc, and the bigger the truck you get, the more of a man you are. Or at least that's the idea. I don't think all of these 'real american men' in the country would support some soft company that actually cares about the environment...


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