How Ford Motor Company Will Take On Toyota's Prius

You'd know that shape anywhere, wouldn't you? That distinctive look has helped make Toyota's Prius the world's best-selling hybrid by far. Now, Ford is aiming to give it some serious competition. Source: Toyota 

Ford (NYSE: F  ) is finally planning a head-on challenge to the world's best-selling hybrid.

Trade publication Automotive News reported this past week that Ford will introduce an all-new line of hybrid cars. The new models are expected to arrive late in 2018. 

The new model will be Ford's first "dedicated" hybrid, a vehicle designed from the ground up -- like Toyota's (NYSE: TM  ) Prius -- as a gasoline-electric hybrid. 

But Ford already has hybrid versions of the Fusion and C-Max, and they sell fairly well. Developing an all-new dedicated hybrid model will mean a big investment for Ford.

It could cost a billion dollars or more to bring this new model to market. Why does Ford think it's worthwhile?

Why Ford is targeting the Prius
To understand that, let's start by taking a look at hybrid sales in the U.S.

Ford's hybrids sell pretty well, but the Prius sells a lot better. Over the last few years, Toyota has expanded the Prius into a family of three models, but the original Prius sedan is still the top seller.

Models marked with an asterisk (*) include sales of plug-in versions. Source: Toyota, Ford

Ford's C-Max holds its own against the big Prius V, which is its most direct competitor. And the Fusion hybrid has always posted solid sales numbers. 

But sales of both are dwarfed by those of the Prius sedan, which has been the world's best-selling hybrid by far for years now. 

Why? In part, it's because the Prius is simply a great product. It's not exciting to drive, but it's an affordable, friendly vehicle that does exactly what it claims -- delivers great mileage with Toyota reliability.  

But it's also because the Prius is unique: Inside and out, it looks like no other car. 

That's important. Here's why.

Why the Prius is the best-selling hybrid
At least in terms of its shape, the Prius sedan is an automotive version of the Birkenstock, the homely but-comfortable sandals that are popular among green-minded outdoorsy types. 

Through three generations, the Prius's styling has always been kind of endearingly homely, like Birkenstock's sandal. But -- also like the Birkenstock -- it's distinctive. And it makes a statement.

The side profile shape of the Prius practically shouts, "This is a hybrid!" (In fact, it's so distinctive that Honda (NYSE: HMC  ) practically copied it line-for-line with its own dedicated hybrid, the Insight.) 

Why is that important? Because lots of people choose vehicles that reflect their ideas about themselves.

Ford's Fusion Hybrid is a handsome sedan, but it doesn't shout "hybrid" like the Prius does. Source: Ford Motor Co.

Those people don't just buy hybrids, it turns out, because they want to save money on gas. They want to show that they're concerned about the environment, that they think reducing their gas consumption is important. 

Put another way, they want people to know they're driving a hybrid. 

The distinctive shape of the Prius accomplishes that in a way that a hybrid version of a mainstream model like the Fusion doesn't. (And inside, the Prius's futuristic dash and unique control layout help remind passengers -- and the driver -- that this isn't just another car.) 

How Ford will challenge the Prius
By developing a dedicated hybrid, Ford won't just gain the advantage of having a car designed from the ground up around a hybrid drivetrain. Ford will also be able to give the car its own unique look. 

It's a safe bet that this new Ford hybrid will be distinctive -- and Ford's marketing for the model will make it clear that it's special. (It's also a safe bet that, like the Prius, Ford will sell its new hybrid all over the world.) 

The Automotive News report noted that Ford may offer a family of several dedicated hybrid models, just as Toyota does with its Prius. And like the Prius (and like Ford's current hybrids), there are likely to be premium-priced plug-in versions that can be charged up to give a limited electric-only range.

Ford's C-Max Hybrid has done well against the big Prius V, but it hasn't come close to challenging the Prius family in overall sales. Source: Ford Motor Co.

It's an interesting move for Ford. While rivals like General Motors (NYSE: GM  ) and Nissan (NASDAQOTH: NSANY  ) seem to be moving more toward pure-electric cars, and Toyota, Honda, and Hyundai (NASDAQOTH: HYMTF  ) experiment with hydrogen fuel cell models, Ford seems to be placing its biggest green-car bets on conventional hybrids.

That may turn out to be a smart plan, at least in the near term. Well-executed electric cars like Tesla Motors'  (NASDAQ: TSLA  ) Model S and Nissan's Leaf have sold fairly well, but recharging stations are still few and far between -- and neither has come close to the sales numbers posted by the Prius. 

That's because the Prius combines a unique look (and an affordable price) with extremely simple functionality: You just fill it up at a gas station like any other car.

That formula has been a tremendous success for Toyota. And now, it looks like Ford is betting that it can use the same formula to find some success of its own.

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  • Report this Comment On August 26, 2014, at 7:00 PM, jdonalds2001 wrote:

    We have a 2008 Prius. Most people I know think it is an ugly car - not a car that makes a statement. My 20 year old son won't even drive it because he doesn't want to be seen in it. I don't know where you get the idea that it makes a statement.

    I sit in the car and care about driving it rather than looking at it. I generally don't care about the looks of my cars.

    But the Prius regularly gets 47mpg even with 132,000 miles on the car. It has been 100% reliable; not so much as a loose screw. We do regular maintenance. We still have the original brakes which don't wear much due to regenerative breaking.

    It's a decent car with lots of room for passengers, and decent trunk space too.

    There are things that bother me though. I do not like the dash board. I prefer a traditional dash with the gauges behind the steering wheel. This is a big deal for me and my drive me away from a Prius on my next purchase. I just don't understand Toyota's design where the gauges are pushed more toward the center of the dash. I also don't like the addition of the long console of the Generation III models. I hope Toyota designs that out in the Gen IV.

    I respect Ford and their reliability reputation is improving. But 2018 is a long way off. It would be great to have some head on competition for the Prius which so far hasn't happened.

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John Rosevear

John Rosevear is the Fool's Senior Auto Specialist. John has been writing about the auto business and investing for over 20 years, and for The Motley Fool since 2007.

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