Ford Earmarks An Additional $850 Million To Build Fuel Efficient Cars

With car sales starting to inch higher and the threat of bankruptcy only faintly visible in the rear-view mirror, Ford is loosening its purse strings once again.

On Monday afternoon, the Dearborn, Michigan based company announced that it will invest another $850 million into the development of more fuel efficient cars and technology.

That cash, which is earmarked for 2011 to 2013, is still contingent on whether the Michigan Economic Development Council approves a robust package of incentives (due for consideration later this week). According to reports— if the package gets the greenlight— Ford will benefit from roughly $400 million in state incentives.

Upon passage, Ford plans to create as many as 1,200 jobs across the state concentrating that growth in several key plants, including Van Dyke Transmission, Livonia Transmission, Sterling Axle and its Dearborn Truck Plant.

Overall, the goal is to renovate facilities, beef up the workforce and invest in technology that will lead to the production of more fuel efficient cars. In its statement, the automaker says a significant portion of this investment will go towards the production of six-speed transmissions, with the hope that in three years Ford’s entire fleet will feature the new technology.

The company has been trying to make the six-speed transmission more standard, recently making it available in its entire line of full-size pickup trucks. While many cars on the road feature four-speed automatic transmissions, the six-speed is superior when it comes to fuel economy because the extra overdrive gears keeps the engine speed low.

For those keeping score, the $850 million investment is in addition to the $950 million Ford has already committed for the overhaul of its Wayne, Michigan Assembly Plant, which will be tasked with churning out many of the company’s electric and hybrid models in 2012.

Although Ford’s road to recovery has been far from easy (and there’s still a way to go with consumer remaining fragile), it’s fared better than its domestic peers. Just last week, Secretary of Energy Steven Chu singled out Ford for recently passing Toyota’s rating in initial owner defects and its growing traction among consumers (citing a NYTimes article).

The automaker, which reports on Tuesday, is expected to showcase encouraging numbers with analysts looking for record (yes, record) third quarter profits of $1.37 billion (versus $997 million for the year ago period). Another quarter in the black will mean a string of six profitable quarters for Ford.