Ford Motor Co. Is Prepared For Gas Prices To Rise

Fuel-efficient vehicles sold well last month compared to figures from a year ago. William Clay Ford, Jr., the executive chairman of the board of directors of Ford Motor Co., tells Renee Montagne that Ford expects greater demand for the vehicles as gas prices rise.

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RENEE MONTAGNE, host:

Auto sales shot up more than 25 percent last month, compared to February of last year. Sales of SUVs and pickup trucks led the way, but smaller, more fuel-efficient vehicles also sold well, and automakers expect demand for them to rise now that gas prices are up again.

Bill Ford says his company is ready. Ford is executive chairman and chairman of the board of Ford Motor Company. He joined us from the big Technology, Entertainment and Design Conference in Long Beach, California.

Mr. BILL FORD (Executive Chairman, Ford Motor Company): You know, we took a point of view a few years ago at Ford that we wanted to be the fuel economy leader in each segment that we participated in. And so we invested heavily in fuel-saving technologies, and that's sort of across the board. And those vehicles are here now, and I'm really glad we did that.

MONTAGNE: Well, I'd like to talk to you about the electric vehicle that you're coming out with.

Mr. FORD: Sure.

MONTAGNE: But just before we get there, one of the goals of the administration is to try and shift the country away from dependence on oil - foreign oil, in particular.

Mr. FORD: Right.

MONTAGNE: One way to do that would be tougher standards for fuel efficiency. Would you back that?

Mr. FORD: Well, one of the things that's really important is that we align customer's pocketbook interests with society's goals. You know, we had a funny disconnect, really, over the last, you know, X number of years as the fuel economy standards were rising, and yet the price of gasoline was cheaper than bottled water for many years. And so customers were saying, you know, give me the biggest engine you've got. Meanwhile, fuel economy standards were rising. So we were in this kind of odd position of having to try and force fuel economy into a marketplace that didn't want one.

That's one of the reasons that I, for years, advocated a gas tax, because I thought that that was a way to increase not only the price of gasoline, but also inject some certainty into the marketplace. And it never happened. I think we are now in a period of higher gasoline prices, and I think customers are going to move fuel economy to the top of their list. And we're building our business on the proposition that fuel prices will go up over time.

MONTAGNE: Let's talk about that all-electric vehicle that Ford is coming out with. It's called the Focus.

Mr. FORD: Yup.

MONTAGNE: Given that Nissan is well on the way to establishing its car, the Leaf, as the main brand in the electric vehicle market, how do you at Ford plan to compete?

Mr. FORD: Well, I love our strategy, because what we've done which is different than anybody else is we've taken our mainstream product, called the Focus, which we sell millions of around the world, and we've electrified the Focus platform. It means that if the demand for the all-electric Focus is higher than we had planned for, we can flex that up. But if it's less than we planned for, we can actually send down the same line very fuel-efficient gasoline Focuses.

The other thing we've done is we've not just electrified the Focus, but we've electrified the family of Focuses. And what I mean by that is from that same focus platform, we have a plug in hybrid call the C-Max, and we have a conventional hybrid, also off the C-Max platform. So off the Focus, we'll have a plug-in, a conventional hybrid and a pure electric. We think that really is very different from what our competitors are doing, because it gives our customers the most choice.

MONTAGNE: What has to happen in terms of the development of electric and hybrid vehicles for Ford and other companies to make money and, at the same time, reduce emissions?

Mr. FORD: Well, I think a couple things have to happen before you see really widespread adoption. First thing that has to happen is we've got to build out the electric infrastructure across the country. We have to have ubiquity of plugging, and we have to have shorter charging times.

MONTAGNE: Now, I mean, basically, what have been gas stations for the last many decades is now going to have electric stations.

Mr. FORD: Well, you probably won't plug in at a conventional gas station, but you will plug in at home. You'll plug in at work, and you'll plug in, you know, at the big shopping centers. But that requires, you know, a big infrastructure tear-up to the country. In addition, we have to build up the smart grid so that utilities can actually transfer power from one utility to another. So that's a big deal.

MONTAGNE: You have said that a big challenge in the future is something you call global gridlock, and that is basically too many cars on the road around the world, meaning an actual loss of mobility. Tell us what that is.

Mr. FORD: Well, it just to put it in perspective, there are about 800 million vehicles on the road today worldwide. And within our lifetime, that'll be three to four billion. And where are they going to go? And how are they going to drive? And you - already, if you look at places like Beijing, where the average commute's five hours a day, and you probably saw this past summer, they had an 11-day traffic jam in China.

MONTAGNE: Right.

Mr. FORD: You know, and that's only going to get worse, unless we change the paradigm of mobility. And there's some very early things that are happening that I think will help, certainly. Their vehicles will be able to talk to each other. So if you're ahead of me in traffic, you know, by five miles, your vehicle will tell my vehicle than an accident just happened and you want to reroute yourself. And it will and my vehicle will then figure out how to do that.

Reserving a parking space before you actually leave for your trip, because today, in major urban areas, the majority of fuel is spent by people looking for parking places. And so if you could have a pre-reserved parking place and also real-time information in terms of availability of parking places, that will help.

But that's just the tip of the iceberg. We need more solutions. Just think in terms of green energy and how much time, money, brain power and policy action has started to pour into green energy, and I think that's wonderful. We're going to need that same kind of effort towards global gridlock if we're going to keep the individual mobility that we all take for granted today.

MONTAGNE: Bill Ford is executive chairman and chairman of the board of directors of Ford Motor Company. Thank you for joining us.

Mr. FORD: Thank you so much.

MONTAGNE: And we reached Bill Ford at the Technology, Entertainment and Design Conference in Long Beach, California.

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