Ford converts SUV plant to produce its first electric car

In a highly symbolic move, auto giant Ford announced yesterday that it is to invest $550m (£365m) in converting a Michigan plant currently used to manufacture SUVs into a factory specialising in small, fuel-efficient cars that will also produce its first electric vehicle.

The company said that the plant would be refitted to manufacture a new version of its small Ford Focus from next year, and would then begin producing a battery-electric version of the Focus – Ford's first all-electric passenger car – in 2011.

The Michigan plant was one of the world's most profitable car factories during the late 90s when sales of large SUVs such as Ford's Lincoln Navigator boomed. However, it has suffered in recent years as the market for larger vehicles has collapsed.

Ford president and chief executive Alan Mulally said that the move "embodies the larger transformation" under way at the company that will see it significantly increase its focus on fuel-efficient and low-carbon vehicles.

"This is about investing in modern, efficient and flexible American manufacturing," he said. "It is about fuel economy and the electrification of vehicles. It is about enhancing our expertise and vehicle platforms around the world… to deliver best-in-class global small cars."

The move is part of a series of three Ford plant conversions designed to ensure the company meets its goal of delivering six small cars and four electric cars from 2012. Under the plans, a truck and SUV plant in Mexico is to begin building the new Fiesta subcompact from early next year, while a plant in Kentucky will also be converted to produce small vehicles from 2011.

"We are changing from a company focused mainly on trucks and SUVs to a company with a balanced product line-up that includes even more high-quality, fuel-efficient small cars, hybrids and all-electric vehicles," said Mark Fields, Ford's president of the Americas. "As customers move to more fuel-efficient vehicles, we’ll be there with more of the products they really want."

The company said the conversion of the Michigan plant would support 3,200 jobs and result in a "lean, green and flexible manufacturing complex". It added that the $550m investment would be supported by more than $160m in tax credits from the State of Michigan and local governments.