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Ford's EcoBoost Gains Popularity

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Ford Motor Co.’s (F - Free Report) EcoBoost engine have caught the fancy of consumers, thus driving demand. As a result, the company recently announced crossing the milestone of manufacturing 2 million of these fuel-saving engines. The automaker presently produces over 100,000 engines per month on an average, a 54% surge from 65,000 produced in 2012.

Ford EcoBoost promises fuel efficiency, which perhaps is what most consumers look for. According to EPA’s fuel economy estimates, 2013 F-150 2WD with a 3.5-liter EcoBoost V6 engine will result in annual fuel expenditure of $3,000, whereas a 2009 Ford F-150 2WD with a 5.4-liter V8 engine requires a spending of $3,400 annually.

EcoBoost technology offers turbocharging, direct injection and variable valve timing. Ford EcoBoost engines, which are also smaller in size, offer 20% more fuel efficiency compared to the larger-displacement gasoline engines. The EcoBoost engine are now available in 1.0-liter three-cylinder; 1.5-liter, 1.6-liter and 2.0-liter four-cylinder; and 3.5-liter V6 versions.

Greater acceptance of EcoBoost technology will boost the demand of Ford’s EcoBoost-powered vehicles. The company recently started manufacturing the Ford Escape powered by EcoBoost – a 2.0-liter unit – at its Louisville, KY plant.

EcoBoost technology is broadly accepted in North America. Around 90% of Ford Escape features a 1.6-liter or 2.0-liter EcoBoost engine and 50% of customers buying Fusion select one of the three EcoBoost engines – 1.5-liter, 1.6-liter or 2.0-liter. Moreover, the company sold 42% of F-150 trucks equipped with the 3.5-liter EcoBoost.

Ford expects that 90% of its vehicle available in North America will be featuring EcoBoost technology in 2013 and it will go up to 95% in 2015. The automaker is also investing about $200 million to produce 2.0-liter EcoBoost engines at its Cleveland, Ohio plant.

The company will be launching the new 2014 Ford Fiesta later this year. It will be the first vehicle available in the U.S with the 1.0-liter engine, and is expected to be the most fuel-efficient non-hybrid car in the U.S.

Ford not only expanded its EcoBoost technology in North America but also enhanced its capacity and production in Europe and Asia Pacific. The automaker doubled its production capacity at its Cologne, Germany, engine plant to more than 1,000 engines per day to meet the rising demand for the 1.0-liter EcoBoost engine. It is expected that 11 car models will feature the 1.0-liter EcoBoost engine in Europe by 2014.

Sales of EcoBoost engine in Asia Pacific jumped 202% year over year in the first 8 months of 2013, driven by a 189% hike in sales in China. With this rising demand, Ford plans to launch EcoBoost engines in 20 vehicles in the region by 2015. The EcoBoost technology is driving the sales of Kuga and Edge in China.

Ford currently has a Zacks Rank #3 (Hold). Other major automobile stocks worth considering are Nissan Motor Co. Ltd. (NSANY - Free Report) , Volkswagen AG (VLKAY - Free Report) and Tesla Motors, Inc. (TSLA - Free Report) . Volkswagen carries a Zacks Rank #1 (Strong Buy), while Nissan and Tesla carry a Zacks Rank #2 (Buy).

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