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Mulally Shakes Up Hybrid Market with New Ford Fusion

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Ford's answer to the electric car dilemma -- the new Fusion -- feels as much at home on an interstate highway as on a narrow European street.

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MINYANVILLE ORIGINAL When Alan Mulally first took the reins of CEO at Ford (NYSE: F), some automotive industry pundits questioned whether someone who spent the bulk of his career at Boeing (NYSE: BA) had the mettle to make a great car.

The answer was on display yesterday in New York City's Times Square, when Mulally, joined by American Idol host Ryan Seacrest, unveiled the 2013 Ford Fusion. No product better exemplifies what the 67-year-old Mulally, reportedly discussing succession plans with his board of directors, has done for the American auto industry.

The new Fusion represents the bold thinking Mulally brought to Ford in 2006. Back then, it wasn't uncommon for a large American auto company to have separate engineering and design subsidiaries depending on where it did business. Ford of Europe, for example, designed and built cars for the continent, and only shared what it thought it needed to with its counterparts in Detroit and Asia.

But Mulally envisioned a Ford that created global products. Although the Fusion is sold under the Mondeo nameplate in Europe and China, it's pretty much the same car that someone in America will buy. The new Fusions on display at yesterday's Times Square event had crisp, clean lines with interiors that boasted easy-to-read instrument panels.

The most innovative feature of the dashboard is a full-color, liquid crystal display that "rewards" a driver's efficient habits (that is, not engaging in the annoying gas-brake-gas-brake style of driving) by growing a virtual vine with green leaves across the display. Steering and handling were developed under the one-car mantra; the Fusion feels as much at home on a Los Angeles highway as it does on a narrow German road.

The Fusion is Ford's answer to the electric car dilemma as well. For years, consumers interested in electric or hybrid-electric cars had to make the decision to give up styling in favor of making a statement that they were sensitive about the environment. Toyota's (NYSE: TM) popular Prius and GM's (NYSE: GM), well, not-so-popular EV1 come to mind. Ford decided to go the other way: It would electrify its mainstream cars. Nissan (PINK: NSANY) took this course as well with its Altima sedan.

"The Fusion is in keeping with our philosophy that you don't have to change your lifestyle to drive an electric car," Ford's chief engineer, Adrian Whittle, told Minyanville. "First you choose which car you like. Then you can decide if you want it to be gas-powered, a plug-in, or a hybrid."

For consumers who choose the hybrid option, they'll get a car with a lithium-ion battery pack that's 30% smaller and 50% lighter than the old model. The new Fusion's maximum speed under electric-only power increases to 62 mph from 47 mph.

The new model also incorporates Ford's auto start-stop technology. When the foot is on the brake, the engine stops. Release the brake, and the engine turns on. The $295 option is well worth it – the transition between stop and start is surprisingly smooth. Plus, the car has no emissions when it's stopped. So the average driver can recoup the $295 cost of the start-stop option in fuel savings over the course of 18 months.

For a seasoned executive who might be eyeing retirement in the next few years, Mulally shows no signs of slowing down. Nor is his company's marketing campaign around the Fusion. To tout the hybrid model's 47 mpg city, 47 mpg highway, and 47 mph combined rating, Ford launched a multimedia campaign that challenges consumers to record "random acts of fusion" within the next 47 days. Customers are already playing out the storyline on the company's website.

Ryan Seacrest is no doubt scoping out the submissions for the next season of American Idol.
No positions in stocks mentioned.
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