The Future Of Hybrid And Electric Vehicles At Ford Motor Company

The Daily Energy Report interviews Nancy Gioia, Director of Global Electrification for Ford Motor Company. We discuss the viability of electric and hybrid vehicles and what strategies Ford is taking to dominate the market.

Full Transcript:

Nancy Gioia: With respect to global electrification, my responsibilities include all of the strategic planning for the products, the technologies, the approaches with our supply base. The interfaces with governments and communications, looking at policy as well as the deployment of our products. So it’s the product plan. It’s business plan. It’s new business models. It’s kind of figuring out how to make this new electrified future work for our customers and also a sustainable business. It’s kind of funny because there was a Mr. Henry Ford and Mr. Thomas Edison who had the one of the early electric vehicles back on the road in 1914. They jointly produced a vehicle. A lot of people don’t know this. By 1900, one-third of the cars on American roads were electric. By 1930, it was about zero. And the key reason being is people wanted to travel between cities because roadways went in. Electric cars didn’t have the range to be able to do that. So Detroit to Chicago would have been impossible in an electric car. The other part of it was the gas or petrol vehicle was about half the cost of an electrified vehicle. And then finally, women were the number one buyers of electric cars because they didn’t like to stand outside the car and turn the crank. So when the electric starter came along, it really enable everybody to comfortably get a vehicle that met all their functional needs, had better affordability, and met the distance needs that they wanted. Here we are a hundred years later. And it’s about the battery. It’s about the distance, the durability, the reliability, and the total cost for sustainable business models. So what’s kind of interesting is many of the challenges that have existed with electrification a hundred years ago, still exist today. The great news is technology has improved, cost structure’s improved. And I think in general around the world, the whole idea of energy management and consuming less energy is now forefront in a lot of people’s minds. So solutions are going to be much more accepted in the face of rising fuel prices, also it’s just the write thing to do from a climate change standpoint, from a social and economic standpoint. Being more efficient with energy is the right thing. So diversifying energy for transportation so it’s not just gasoline, diesel or oil-based. It’s bio-fuels and electricity. We’ll call it a fuel for vehicles. It really is a part of going forward our energy paradigm for personal transportation.

At Ford, when we say electrified vehicles, let me be clear, we talk about our hybrids, like our fantastic Escape or our Fusion hybrids that we’ve had in the market since 2004. The Escape launched, and we brought our Fusion to the market in 2009 calendar year. So we have hybrids. Then we have plug-in hybrids coming. In 2012, we’ll launch our first plug-in hybrid, and this is a vehicle that you can plug-in easily overnight, get thirty equivalent electric mile range. On top of that no range limitation, you’ll have all performance like a regular hybrid. Now later this year, in 2010, we launch a full-battery electric vehicle. And this is going to be the Transit Connect. This is a small commercial van. And it’s fantastic because it’s a commercial vehicle, lots of short distance drives, in-city kind of use. So we think it’s a great match for an electrified vehicle. We have another vehicle coming in 2011 calendar year, Focus Electric. It’s a full-battery electric Focus, built down the same line as the petrol Focus. So  it’s great because it’s efficiently produced, and we think it’s going to help on that overall challenge of affordability. So when you look at the Ford lineup, we’ll continue with our hybrids. We’ve got our next generation coming out in 2012. We add a plug-in hybrid. Later this year, we launch our first battery electric, the Transit Connect van, and in 2011, the battery electric vehicle, Focus Electric. So what we’re finding is no one fits everybody. Wait, we have to have solutions that meet the customer’s needs, their driving behavior, their distances, and their affordability. So, at Ford, we’re working on all three, and we think that’s an important part going forward for success of electrification.

Between now and 2020, we still think the majority of electrified vehicles on the road, seventy percent say whatever’s electrified will remain as full hybrids. Maybe twenty to twenty-five percent in 2020 will be plug-ins and then the remainder battery electrics. And a lot of this is driven by a couple of elements. One is the battery technology itself. For full-battery electric vehicles, we need a little bit more in those for mass market, what are called broader applications. We need more energy density. We need longer life and performance. Better temperature characteristics. And it has to certainly become significantly more affordable.

The other elements for both plug-in hybrids and a full-battery electric is you got to have infrastructure. You got to have access to a plug. So it’s going to take time for that to get in place. In these predictions, we looked at a lot of external consultants or others who analyze the industry. It’s fairly in line with what their thoughts are as well. That it will take time around the world to put in the infrastructure and to continue the technology. In the meantime, hybrids, no range limitation. You don’t have to have access to a plus. Minimally, you get about fifty percent over drive cycle. Fuel efficiency improvement, up to seventy-five percent in a city location. Boy, it’s still a fantastic solution and much more affordable, smaller battery. And as we downsize vehicles, we make them lighter weight, guess what, you get even more advantage with that hybrid in those  urban conditions. So we see it absolutely continuing, especially in North America or where you have longer distances to travel, very viable.

So one of the things we’re doing with our electrified vehicles is we build them into the same platform as an efficient petrol or an efficient diesel solution. So all of the features, the functionality, be that connectivity and the refinement that you have on that Ford vehicle, you’re getting that in an electrified vehicle. On top of that, our electrified vehicles are right now, certainly, the Fusion, most fuel-efficient mid-size sedan in North America. The Escape Hybrid, the most fuel-efficient SUV on the planet. And so from a fuel consumption or fuel-efficiency standpoint, you’re going to see Ford’s fuel economy is a reason to buy all of our products. But in hybrids also, it will stand apart.

Now we also do a few other things that have been noted from those driving our cars and externally. One is what we call the Refined Hybrid Experience. The noise, the vibration, the harshness, the experience as in a hybrid as you go from engine mode to electric mode. Very refined, very quiet, seamless is the feedback that we’ve gotten from many, many of our customers, media, and folks driving the vehicle. They’re saying, “Wow! This is a hybrid. I didn’t even know.” Right? But then we’d done one other thing. We’ve added in a whole new interface, what we call a Human Machine Interface, but call it the Instrument Cluster. In the Fusion, we call it Smart Gauge with Eco Guide. And what this is, is it’s two high-resolution displays, LCD displays, speedometer in the center, but we provide all the information a hybrid customer would want. What’s your state of charge on the battery? Am I in EV mode? How much more can I go and still be in EV mode? How can I press the brakes and get maximum recharge? We call it The Coach. And this Coach can help you as you’re driving your hybrid, instantaneous feedback, to help you get between three to fifteen percent more efficiency from your car by just giving you that real-time feedback. What we’re finding is customers love it. It’s fun. It’s engaging. They say, “Hey, I’ve had a bad day at work. My car rewards  me”. I grow green leaves.” There’s things in there that people just enjoy. What we’re finding is that kind of feedback, that’s safe and non-distracting, at a glance, it’s good, useful information, is also a way to get customers excited about managing their own energy. And it makes vehicles fun. And so that’s the other part you’ll find in Ford vehicles. So you’ve got the fuel efficiency. You’ve got refinement. And you’ve got that fun-to-drive engaging experience.

Ben Lack: The interesting thing also is that the Coach, just like you were saying, is really its own interview management system. And it’s getting the driver really more knowledgeable about how their car is actually performing so that they themselves can really squeeze as much out of the car as they can. And I think this, and you’ll probably agree, that the education gap is probably one of the big reasons why folks are still on the petrol car and not moving as quickly to the other kind of next generation types of concepts, whether it’s the hybrid or the plug-ins or the battery models. What other steps is Ford taking to educate the marketplace about these new technologies?

Nancy Gioia: Education’s key. So a lot of what we do is we make vehicles available to other areas, cities. We’ve got classes that we’re supporting. Actually, Ford has worked with universities to create curriculum from electrified transportation, and new technology’s needed. Part of that is exciting at the university level, and then we also have high school curriculum on sustainability including electrification. So let’s start with our youth and talk about energy. Talk about what you might do, and then actually get them excited about this. The other thing is, some will say pragmatic, but I think what’s really important to us from a Ford perspective and just part of who we are, is the credibility of the data we present. It’s fact-based. We’re not trying to oversell. We’re not trying to step back and say it’s not possible. We’re saying, “Here’s realistically what you can get from these technologies. Here’s what you’re going to expect.” And our job is to deliver that to the best level possible. Part of what we have to move forward as new things come, we want to make sure the hype is minimized, and we set realistic expectations. Because without those, you over-promise, under-deliver. Not good. Not good for the technology. Not good for the adaptation. And then finally, making sure everything we design delivers that robustness, reliability. That it has the durability and customers don’t have to worry about engaging in this technology. They can trust that, “Hey, it’s on a Ford car. Guess what? I can be assured it’s going to be backed up by Ford. and it’s going to have the type of performance I expect.”

Ben Lack: Talk to us a little bit about the business side. The commercial customers that you guys have. The consumer market is obviously, incredibly large, and Ford wants to become a big player in it and is a big player in it. But the commercial sector with the purchase of fleets and getting this types of technology in the CNI space is obviously another spot where you guys want to play. Talk to us about how you’re attacking the businesses to get them to incorporate these technologies into their fleets.

Nancy Gioia: First of all, we do have a huge amount of commercial fleet business around the world. So the great news is we have a fantastic set of relationships with many of the worldwide customers today. And we have a very good sense that, just like our retail customers, several of them definitely want to lead the way and demonstrate and try some of the new technologies. So we’re working closely with them. The first thing we have to do is make product that’s applicable for their use. The Transit Connect commercial vehicle ideal, ideal for small deliveries, small businesses, postal services. A huge number of different types of applications for a full-battery electric vehicle type application. We’re working with our fleets to help them understand the cost benefit payoff. How many miles? What will the fuel cost savings be? Working with our utility partners and these fleet customers to say here’s net-net what that cost of ownership will be and that there is a benefit. We’re also working with policy makers to say, “Hey for those adopting this new technology, at the front-end, it is more expensive. How can we work together through, whether it’s incentives, it’s through taxation or reward our fleet customers for transitioning their fleet? For becoming a part of creating a lower CO2, a lower fuel consumption, portion of a city, for example?” So I think it’s piloting new ideas. It’s having the right product available which we think we do with our Transit Connect VEV as well as our hybrids and our plug-in hybrids can all be used in different kinds of fleet applications. Not everything’s a commercial van, for example. We have a lot of fleets that are customers where they support their salespeople with vehicles they have to drive. Hybrids can be a great alternative. So we help them understand that cost benefit. And we make sure that the products are there and as competitive and affordable.

Ben Lack: And you’re finding that these organizations, the partners that you guys have are adopting these technologies and incorporating this technology into their fleets?

Nancy Gioia: To be perfectly honest, I think they’re struggling a bit. Affordability is a major element in the cost benefit payoff. I mean, these are businesses. They must make the bottom line work as well. On top of that, it is new technology. Historically, a lot of the commercial fleets are not the early adopters of new technology, right. I mean, this is an investment. It’s facilitization. It’s capital investment. It has to have it’s life, it’s durability. They have to pay this off over time. It has to work for them, and it does work, right? So what we’re trying to do is make sure that they’re comfortable with the technology. We’re letting them get in it. We’re letting them try different vehicles. Experience it. Sharing with them the fantastic, reliability, durability data we have on our taxi fleet, for example, of Escapes. And we have Fusions in taxi service. Fantastic performance, great fuel efficiency, great reliability. So these are very pragmatic customers. So in spite of their desire and want to be out there, they also have shareholders, and they have to make the right business decisions. So our goal is to enable that through good dialogue, sharing, and letting them try the product.

Ben Lack: Final questions, and this is about the battery technology. There’s many that say that that there could be a model in place or over time to actually create stations where you can trade your batteries in for an already rechargeable battery so you’re not paying for the life of that entire battery which would hopefully bring the cost down of the overall operation of the vehicle. Is that something you guys are researching? What do you think are feasibilities of those types of technologies? And where do you see the battery markets going for the next five to ten years?

Nancy Gioia: Great question. Alternative business models, even back to 1914 again, alternative business models to help spread the cost or recognize the difference in fuels costs versus the charging, et cetera, have been looked at for many years, and we continue to investigate those. Our conclusion at this time is, for a variety reasons, which is, geez, if the battery isn’t a part of the vehicle and you go to sell it at the end of that, what’s the vehicle worth. How is that resale if consumers buy vehicles? There’s a lot of question about how to make all of that work as well as what is the secondary market for batteries, et cetera. So we’re working through trying to understand what are viable business models, what aren’t. We also know that the battery itself, a large, heavy, we have to make sure it’s packaged in a way that’s safe. It’s secure, the weight distribution. There’s lots of complexities here. But at the end of the day, where we are is we still believe the battery is a part of the vehicle. It’s integrated into the vehicle for optimum performance. And we want to make sure the customer has the right durability and life, whether it’s a hybrid, plug-in, or full-battery electric. And so that’s where we are now while we continue to investigate models. Batteries sell themselves. Between now and 2020, we expect the chemistries or technology to roll four to five times. There’s lots of iteration here to get it to be more affordable, better on performance. And what we want to do is make sure we’re right there. So as the technology improves, we can take immediate advantage of that. This is why, for example, we are taking over the design, the development, and the manufacturing of our battery systems in our hybrids. By doing that, we’re getting the best total cost on the hybrid battery pack, best integration into the vehicle. But as the battery cell changes, we can rapidly update that and move forward in that technology. I think we expect that continue for some time. So again, looking at the strategy, the supply, the relationships, total cost, the biggest issue that electrification faces, besides having infrastructure if you’re plugging in, if it’s a plug-in or you have to have that infrastructure, is affordability. So we need to have good solutions that deliver customer-focused product, all the features and functionality, all the other things that they want, but it has to be affordable. The payback period for mass market is what pragmatic customers are going to demand. We’re still working on that. Get it there for that large, large mass market.

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