Ford Expects Up to 25% of Electric Sales by 2020

Source: Ford Motor Company via Bloomberg

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Source: Ford Motor Company via Bloomberg

Improving fuel economy in every segment of its business is the biggest thing Ford Motor Co. can do to be sustainable and profitable, said John Viera, global director of sustainability and vehicle environmental matters.

Ford hopes to meet this need, in one way, with its EcoBoost technology, which uses turbocharging and direct fuel injection to boost the power of gasoline engines, improving the vehicle’s efficiency by 10-20 percent. The company estimates that about 90 percent of its 2013 Ford Escape will be fitted with EcoBoost engines. Viera tells Bloomberg New Energy Finance's Clean Energy and Carbon Brief that by 2020, 10-25 percent of its fleet will be electric – with three quarters of that traditional hybrids.

Q: What is the focus of Ford’s environmental sustainability strategy?
A: The biggest thing we can do from a sustainability strategy standpoint is to improve fuel economy. Our focus is mainly on our vehicles because our biggest environmental footprint comes from our vehicles. We are also looking to use more environmentally friendly materials in our vehicles, moving away from petroleum-based to renewable contents. Examples are using the oil from a soy plant to produce the foam in our seats, and using more recycled content – the equivalent of 33 water bottles – in the seat fabric of our battery electric Focus.

Q: How do you improve fuel economy without affecting affordability?
A: That’s the key challenge. Because fuel prices were so low in the not-so-distant past, fuel economy wasn’t in the top 10 list of our customers’ considerations. Now, they’re willing to pay a premium for more fuel-efficient vehicles to pay less for the gas pump. We recognize that if we can be a leader in fuel economy in every segment, then we’ll get more consideration and that means more profits. We have a strategy that every new or refreshed vehicle will either have leadership or be tied with the leaders, in terms of fuel economy.

Q: What do you mean by leadership?
A: It’s what we’re doing to our engines. Our biggest technology driver is Ecoboost for our engines. The Ecoboost technology gives the performance of an eight cylinder while getting the fuel economy of a six cylinder. That’s the cornerstone of our fuel economy strategy. There’s also what we call “1 percent improvement factor” – aerodynamic improvement or using electric power steering. We are hugely focused on weight reduction. Less energy to move a vehicle means more fuel-efficiency.

Q: What are your predictions for sales of alternative fuel vehicles by 2020?
A: Alternative cars include hybrid electric, battery electric and plug-in hybrids. We’re projecting that about 10-25 percent of our fleet will be electrified by 2020. Of those, 75 percent of vehicles will be traditional hybrids, 20-25 percent plug-in hybrids and 5-10 percent, battery electrics. Traditional hybrids are going to dominate electric vehicles. A smaller percentage will be plug-in hybrids and a relatively small number pure battery electric. Affordability dominates and hybrids will be the most affordable purchase price vehicles.

Q: Are there other alternative fuels that Ford is exploring?
A: We are exploring many types – compressed natural gas, liquified petroleum gas, clean diesel, fuel cells and even hydrogen. While we’re working on hydrogen in our research labs, we don’t think hydrogen-powered vehicles are going to hit the market in the near-term like our electrified vehicles have.

Q: How is Ford’s electric vehicle strategy different from its competitors?
A: Over time, we’ll have more electrified vehicles. That’s a given, to meet fuel economy and carbon reduction requirements. The biggest issue is affordability. Our approach has been to put our electrified vehicles not on unique platforms – like our competitors – but on a common platform to take advantage of economies of scale on the majority of vehicle parts. We can really drive down costs associated with those parts. In terms of build-to- order cars – if our competitors have a unique electric vehicle, they guess its demand and size its production upon that guess. If they get it wrong, people get laid off, plants get shut down. Since we’ve put the battery electric Focus on the same platform as the gasoline Focus, we build those vehicles down the same assembly line. If orders shoot up for the battery electric Focus, no problem, we build more. If not, we build more gasoline Focus.

Q: What’s the idea behind Ford working with cities to encourage public transport?
A: One of our biggest issues is the congestion problem. Producing more vehicles isn’t the answer. The concept was to encourage people to not drive their vehicles into the city once a week. If people question whether that’s a sustainable model, I say we are still selling vehicles. We don’t see it as cannibalizing. We want to be part of the solution.

Q: What are the near-term and long-term challenges for alternative vehicles?
A: Near-term, the affordability piece. Are people interested in protecting the environment? Absolutely. Are people interested in going to the gas station less? Absolutely. People will say, I can only afford so much. All advances we’re making in gasoline vehicles have ironically been a detriment to our alternative vehicles. Long term, affordability will be less of an issue. Customers will have many choices in types of fuels and features. How do you educate dealers and customers on the complexity? That’s what we’re thinking now.

Teh is assistant editor of Bloomberg New Energy Finance's Clean Energy & Carbon Brief.

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