Ford Motor Co. is diverting some financial resources from its hydrogen fuel-cell program toward alternative powertrain technologies that are more achievable in the short-term, such as electric vehicles, a top engineer says.

“We’ve clearly demonstrated the viability of (hydrogen fuel cells) as a propulsion system, but not as a business equation,” Scott Staley, chief engineer, hybrid- and fuel-cell technology development, tells Ward’s. “That’s a bit of a problem for the company, considering the (financial) situation it is in.”

Ford, which lost $14.8 billion in 2008, is attempting to avoid the need for government loans that cross-town rivals General Motors Corp. and Chrysler LLC are relying on to stay afloat amid the current economic downturn. However, the redistribution of hydrogen-fuel-cell funds does not mean the auto maker has pulled back entirely from its research, Staley says.

“We’re refocusing our fuel-cell research to concentrate on fundamental issues,” he says. Attention is moving away from product development and more on laboratories, where engineers and scientists are working on solving problems that continue to plague the technology. The most significant obstacle standing in the way of the commercialization of hydrogen fuel cells is cost.

“The stack, itself, operates on the physics of platinum,” Staley says. “We have to get the amount of platinum down significantly and simplify the rest of the propulsion system to reduce costs and complexity.”

Engineers also continue to have problems getting the fuel cells to operate in cold conditions, which Staley says is an inherent problem for a technology that combines hydrogen and oxygen to create electricity, with water being the only byproduct of the reaction.

Additionally, Ford needs more time to develop a way to effectively manufacture hydrogen cars, as its present method of hand-building demonstration models is time consuming and costly. The reallocation of hydrogen-research funds may mean a pull-back on such vehicles, which just two years ago Ford, along with other leading auto makers, was highly publicizing.

The auto maker currently has a hydrogen-fuel-cell test fleet that has accumulated more than 1 million miles (1.6 million km) in real-world conditions over the last four years of operation. Staley says Ford is considering extending the test period to study “end-of-life failure modes.”

“(The fleet vehicles) haven’t worn out yet, and it’s important to understand when they fail catastrophically what types (of failures) are there and how to produce counter measures,” he says.

The industry’s rapid acceleration of hybrid-electric and full-electric powertrains, as well as clean diesel technology, has persuaded Ford to relegate hydrogen-fuel-cell research to the background, as well.

The auto maker will offer an electric version of its Transit Connect commercial van next year and has just released the ’10 Ford Fusion and Mercury Milan hybrids. By 2012, plans call for a plug-in hybrid and next-generation hybrid.

Barb Samardzich, Ford vice president-powertrain product development, says concentrating more funds on other technologies is just a “natural outcome” due to the rate of progression of other programs.

“With electrification, the technology continues to progress at a pretty aggressive rate,” she tells Ward’s. Same with hybrids and, therefore, you start to spend more of our resources on those technologies. Hydrogen fuel cells haven’t progressed at a rate that someone would say, ‘Wow, I’m ready to put this into our cycle plan in the near term.’”