An Interview With Alan Mulally, CEO of Ford

The Motley Fool recently sat down with Alan Mulally, CEO of Ford Motor Company for a quick chat that touched on several important topics. In the video below, we discuss Ford's strategy in China, how it views Japanese competitors and the weak yen, how Ford looks at Tesla and the future of the electric vehicle, and a few other topics.

A full transcript follows the video. 

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Brendan Byrnes: Hey, Fools. I'm Brendan Byrnes, and I'm joined today by Alan Mulally, who is, of course, the CEO of Ford. Thank you so much for your time.

Alan Mulally: Glad to see you.

Brendan: So, I wanted to ask you first about Tesla, which has obviously had a nice run over the past four months or so, and some people are wondering, "Is the electric vehicle the vehicle of the future?" What are Ford's thoughts on that, and how do you see this space evolving over the next decade or so?

Alan: Well, clearly, Tesla has done a very good job with a luxury version of the all-electric vehicle, and, of course, in Ford's case, we really do believe that we'll see more electrification going forward.

In our case, especially on the vehicles that go to large numbers of people, we see, first of all, the penetration for hybrid electric vehicles, then plug in hybrids, and then all electric vehicles, but the most economical fuel-efficiency benefit is with the hybrids today.

Brendan: I wanted to ask you about Toyota cutting prices on the Camry. Have you seen any impact on that on the Fusion? Going forward I know you're kind of constrained by production, and, kind of a related question, on the weak yen, can you see any progress on that and do you anticipate anything happening with that?

Alan: Well, clearly, everybody is concerned about currency manipulation, especially the yen, because we believe, and most everybody, that the market should set the currency rates.

We haven't seen manifestations of that yet in the United States in a big way, but clearly we're concerned, because a number of our Japanese competitors, their leadership has mentioned that they want to take advantage of this currency manipulation, so I'm just very pleased that the government leaders around the world are addressing this as part of the Free Trade Agreement, as you know, because it is just so important that we let the markets set the currencies.

Brendan: I wanted to ask you about China also, and the mix that we have there: small cars, it's mostly small cars being sold there right now, especially in the less affluent areas. How does Ford view that with your plant in Chongqing, and how do you see that playing out with the areas that have more affluence on the coast versus in the inland, which is a little bit less affluent. How do you see that mix and how does it affect your margins?

Alan: Oh, well, absolutely. Well, clearly, our plan around the world, Ford's plan is to offer our customers in every market segment around the world a complete family of vehicles, so small, and medium, and large; and cars, utilities, and trucks; all the way from the Fiesta all the way up, of course, to the popular F series.

And so it is no different in China. They love the smaller vehicles, but they also like the medium and the larger ones, also. We have great operations in Chongqing, as you mentioned, also in Nanjing, and also Nanchang. And we'll continue to expand our operations there and also expand our product line to be able to support that full line up of vehicles.

Brendan: So, finally, I think we talked about this last time, but Millenials is obviously a big thing for all automakers right now. We're seeing less millennials buying cars, also less millennials getting their licences. How does Ford attack that? Do you do anything actively to go seek them out or do you say, "When they come to the market, that's when we're really going to focus on that?" And how do you see that playing out long term? Is this a big deal?

Alan: Well, I think it is a big deal, because clearly it's going to be a very important part of our market going forward, and we really have spent a lot of time understanding what they want and what they value.

And it's interesting because at the most fundamental level, they want the finest quality, they want the best fuel efficiency, they want the latest safety features, but they also want a really smart design that allows them to be seamlessly connected to the Internet, which why you've seen us with our Sync, for example, with voice activation, hands on the wheel, eyes on the road, but also being seamlessly connected to the Internet using your own smart device, to be a really important part of our technology plan for the young generation, younger generation, and the response we've got is phenomenal, because you can get all that capability into the smaller sized vehicles: so the Fiesta, and the Focus, and the Fusion, and the response we've been getting from those customers is just fantastic.

Brendan: Great. My last question is just the future of manufacturing. I know you guys are doing a lot of innovative things, especially with the F series, with aluminum. How do you guys see that playing out longer term, and is 3-D printing something that Ford can use heavily in this space?

Alan: Well, just about 3-D printing, I think absolutely. Everything associated with being able to make products and use less time and less resources is going to be always very, very important for manufacturing and the car industry in particular.

I think that manufacturing is so important, and as we've talked about, it's important to every country around the world, it's the foundation for economic development, for energy independence and security, but also for environmental sustainability.

I'm just so pleased that in the United States, but also in our operations around the world, the public-private partnership, to be able to continue improve each country's competitiveness, and also manufacturing be a foundation of economic development, it's really gratifying to see the leaders' appreciation of that today.

Brendan: Great. Alan Mulally, CEO of Ford, thank you so much for your time.

Alan: You're welcome. Thank you.


Read/Post Comments (17) | Recommend This Article (32)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 01, 2013, at 6:27 PM, sevenheart wrote:

    The interview ignores the glut of natural gas which can be converted to cleaner burning diesel (GTL), through processes converted to methanol and then gasoline (GTL), not to mention the fact that the technology for compressed natural gas (CNG) engines and eventual Liquified natural gas (LNG) already exists and will eclipse the energy wasting, limited range electric car. Natural gas will answer every demand of clean transportation power. Power plants, even those burning Natural Gas are notoriously inefficient uses of energy when you factor in what it takes to generate and line losses. Electric cars are a deception, just because they don't have direct emissions, doesn't mean they are environmentally clean. Natural gas will be the dominant fuel of the near future. Too bad questions regarding Ford's view of natural gas weren't asked, especially since Motley is a big fan of Westport. BTW, Ford is the only recommended Motley stock I've bought that has made me money- I'm up 40% and came to the game late!

  • Report this Comment On August 01, 2013, at 7:09 PM, cmalek wrote:

    The same reasons you cite for the inefficiency of natural gas power plants apply to CNG and LNG powered cars.

    Converting natural gas to "cleaner burning diesel" takes too many intermediate processes. Each process in the chain introduces its own inefficiencies. By the time you obtain the diesel, you have used more energy than the diesel will provide. This is the same problem that faces hydrogen powered vehicles. It takes more energy to produce the hydrogen that it will provide when burned in an engine.

  • Report this Comment On August 01, 2013, at 8:51 PM, EatMorChikn wrote:

    Alan Mulally was the KEY figure that prevented Ford from asking for BAILOUT Money used by the other U.S. Auto Makers! In one interview I read he said "You can't continue to offer this many options to an interior for a Ford Excursion!

    I think he also realizes like most other educated CEO's in the Automobie Industry! You don't have the infrastructure to support a lot of the innovative changes that might be possible! Eectric, LNG and CNG might work for distribution vehicles within a given range! But, for cross country - even coast to coast - gasoline and diesel still RULE! Give it a decade or more and we will see - but for today OIL and its by-products are still KING!

  • Report this Comment On August 01, 2013, at 10:32 PM, Stymie67 wrote:

    Sevenheart, I agree it would have been nice to get his take on natural gas, including the future plans for large trucks etc., but as it stands there is not yet the "proof of concept" that we are now starting to see with EVs, especially Tesla which has been demonstrably disruptive to the industry and seems posed to continue. I don't agree that EVs being clean technology is a deception. Yes they have their footprint but the objective studies done (see UCS report) concluded that EVEN IF charged by coal plants (and many places this is not the case) they are at least as good or better than the highest efficiency hybrids. And don't forget about the smog from the engines themselves...NG only reduces this a third, EVs reduce this 100%. This impacts overall health, with something like 4 billion a year in smog-related illnesses costing taxpayers money in health care costs. Factor in the future direction of EVs to be increasingly charged from renewable energy, and the case for EVs will only get stronger. I like this company and CEO, and own some F myself, but was not impressed with his comment about hybrids being the most fuel efficient. This is simply not true.

    Looking at the fortunes lately of CLNE and WPRT, I am not sure we are going to see a major upside any time soon with natural gas vehicles. It may really take off or it may not. EVs, I suspect, are here to stay now and look like they will be more and more mainstreamed into the future.

  • Report this Comment On August 01, 2013, at 11:25 PM, EatMorChikn wrote:

    Stymie, Lets get real the technology for EV is not to the point it is as reliable as carbon based or even the hybrid! I invested in AONE based on the fact they were on the cutting edge of batteries!

    As I recall they were/are even working on solutions for battery back-up units that could reduce or eliminate "Power Surges" on electric lines (Grid)! I think they are close but the costs and technology aren't quite there today! NG is a no-brainer but, you can't fill up on every street corner! (Besides, what are you going to do with all that exisiting infrastructure -refineries/pipelines etc. etc. etc.................!

  • Report this Comment On August 01, 2013, at 11:30 PM, EatMorChikn wrote:

    One aside: You are seeing an upside in NG Fleet Vehicles - that's the most logical place to start!

    Thank You - Pickens Plan!

  • Report this Comment On August 01, 2013, at 11:51 PM, jlevando wrote:

    For such an insightful guy, he sure like to you "clearly" a lot.

  • Report this Comment On August 01, 2013, at 11:52 PM, jomueller1 wrote:

    As an engineer I always like to look into the future. I wish Mr. Mullaly had mentioned the new developments in photovoltaic coatings of surfaces.

    Most cars spend much more time parked than moving. Even if they collect only a few kWh per day that adds up. Sure, the cost has to be low to make it worthwhile.

    Other than that I agree with other commenters that at this time gasoline and diesel cannot be beaten.

    Personally, I want to reinvent the way we move about. That would not be good for any car manufacturer unless they change their business model.

  • Report this Comment On August 02, 2013, at 2:18 AM, sevenheart wrote:

    We're not talking about complex refining of natural gas, this (refining diesel from nat gas) is proven, simple technology working in the southern hemisphere for about a decade. Exxon Mobil has developed the process to convert nat gas to methanol to gasoline. Furthermore, complex refining isn't necessary beyond the process to dry gas for current use, which by the way produces the NGLs that are a vital chemical feedstock. I'm buying Cheneire and other nat gas transportation and refining businesses, the physics is proven. Go ahead and buy Tesla which has sold something like 400 cars and wait for 3-4 hours to recharge a dead battery after driving 100 miles. People will fill their nat gas tanks in times comparable to current petroleum fueled vehicles. The massive surplus in nat gas that has shifted us from Peak Oil to energy exporter status took about 15 years, nat gas prices have only dropped in the last year and a half reflecting the abundance and we've only just begun to unlock resources we couldn't get out. I don't say this as an echo chamber of clever marketing and propaganda, I have been involved in the nat gas industry for over 30 years from drilling to processing. We have burned nat gas in compressor engines for decades, there is nothing new about the technology. Gas to Liquids (GTL) is a simple step in the transition to supply existing supply chains to supplying an infrastructure that is being built now. Keep in mind the technology for a PC computer existed in the 1960s, it wasn't until the late 1980s that it all came together to create Apple and others. Tesla and the Chevy Volt have captured the imaginations of a poorly educated media who believe that if CO2 is 4/10ths of 1 % of the atmosphere the climate will be irreversibly changed and the only hope is the failed physics and economics of "alternative energy". We've used wind energy for centuries, and while photovoltaics continues to become thinner and cheaper, the fact remains they lose efficiency from day one and are depleted in less than 25 years and will have to be replaced. How is everyone's Solyndra stock doing?

  • Report this Comment On August 02, 2013, at 8:33 AM, Stockgamblr wrote:

    I SO appreciate the copy for those of us who don't have the patience for videos!

  • Report this Comment On August 02, 2013, at 10:49 AM, dmk005 wrote:

    The audio level for this interview was horrible.

  • Report this Comment On August 02, 2013, at 11:03 AM, TMFNiner wrote:

    Thanks for all the comments everyone.

    I would have liked to ask about Ford's thoughts on natural gas vehicles as well, but we had very limited time (hence the only 5 minute interview).

    Frankly, I thought it was more important to get Mulally's thoughts on electric vehicles considering Tesla's strong performance lately and the electric vehicle debate that Tesla has driven.

    I think the technology that converts natural gas into diesel will certainly be exciting to watch, and some big energy companies are investing heavily in this space. This approach solves the infrastructure problem of natural gas powered vehicles.

    As far as natural gas powered vehicles go, I think mass market consumer adoption is quite a ways off, if we ever get there. One commenter mentioned Westport - I visited the company's HQ in Vancouver recently with a team of Fools (interviews will be posted soon). They were very clear where they see opportunity right now, which is the commercial space including fleet sales, trucking, and locomotive engines. That's not to say that WPRT isn't active in the consumer space, they have partnerships with Ford, GM, among others to put natural gas powered engines in pickups (including light-duty), but it's clear where their focus is. (See link below for Ford's recent announcement of natural gas fuel systems in the F-150.)

    http://www.bloomberg.com/news/2013-07-31/ford-to-offer-syste...

    A lot of the problem is driven by the chicken and the egg issue of not having a big network of natural gas refueling stations. There are about 1k natural gas stations in the US vs. well over 100k traditional gas stations. CLNE is trying to help fix the infrastructure problem with America's Natural Gas Highway, but those are LNG stations and built for trucking, certainly not a complete solution (electric vehicle makers are trying to work through a similar problem right now, i.e Tesla's supercharger network).

    In short, there's no doubt that the economics of natural gas powered vehicles make sense. There are big strides being made right now in the commercial space, and further out in the future it may become a more mainstream consumer choice. I wouldn't expect any tectonic shifts in the near term in the consumer vehicle space though.

    Thanks for reading.

    Fool on,

    Brendan

  • Report this Comment On August 02, 2013, at 11:07 AM, TMFNiner wrote:

    @dmk005

    Apologies for the poor audio, it was an on-site interview in a public place and tough to get the sound right.

    You can refer to the transcript if you can't make out any parts of the interview.

    Fool on,

    Brendan

  • Report this Comment On August 02, 2013, at 7:05 PM, EatMorChikn wrote:

    Brendan,

    I have a small tale to tell and a big QUESTION for you to ponder?? It hasn't been that long ago that I had a conversation with an AT&T technician who was working on my phone line! I asked him about the future of the technonolgy in his business! Some companies were betting on cable to the home others were looking at wireless to the pole etc. But, in the meantime the old legacy system (which is the hardwired/landlined phone system) still had to be maintained! Even though many customers were getting Cell Phones (wireless) and dropping their land lines! So, when you want to talk about the future (and there are no doubt some promising options). The transition - even cost to maintain two systems between the new and the old almost make it prohibative for change - unless there is a clear and distinct advantage!!!! (i.e. What do you do with all the infrastructurejobs/distributors/retailors and Howcan you afford to support two or more alternatives/competitors/ideas/solutions??)

  • Report this Comment On August 02, 2013, at 7:20 PM, EatMorChikn wrote:

    Btw: I once heard Capitalism defined as : Creative Destruction. However, that destruction has to be economically JUSTIFIED!

  • Report this Comment On August 06, 2013, at 2:18 PM, SkyRainger wrote:

    Gents, gasoline and diesel will always be the economical way to put the auto into the working stiffs hands and buttocks. It's the technology added to these autos that will see 50 or 60 miles to the gallon without loss of power or performance. Until they make a F16 cost effective for a pipe fitter salary the gasoline / diesel powered vehicle is what I'll drive. Now, technology can improve the vehicle mpg without loss of performance. A military vehicle was designed to carry 6-9 light fighters but had no transmission and outperformed 4 seater HWMMV and STRYKER vehicles. It was powered by a 4 cylinder diesel engine and had 6 wheels and averaged 60mph burning a gallon of diesel every 15 miles. Military did not accept this vehicle but the technology is applicable to any modern vehicle today. The 4 cyc diesel provide a charging platform to an onboard pwer plant to supplied AC to 6 electric motors in each wheel eliminating the transmission. The beauty is that the military vehicle could actually coast along on one electric wheeled motor. Obviously, not the desired means of travel but Call me a pragmatic but if I could run my F250 King Ranch on a 4 banger diesel and get say 30-40mpg without loss of performance I'm sold. My point is that our gov't needs to support and encourage innovation not shape it to their political platform. By the way what ever happen to our space industry that was the catalyst of innovation?

  • Report this Comment On August 07, 2013, at 12:52 PM, SkepikI wrote:

    Brendan: <a lot of the problem is driven by the chicken and egg problem of not having a big network of natural gas refueling stations>

    NO kidding... most people underestimate the expense and difficulty of doing this. We routinely attempt to permit LNG facilities and fail based somewhat on public opposition and somewhat on our stiffing bureacracy imagine what happens with scores of CNG stations and storage. My home (a stationary and constant consumer of propane, trucked in) is not even in the NG pipeline infrastructure due to its "expensive" location, not even as complex or expensive as a filling station. Less than a mile to current NG service, too few houses to justify it....

    Hybrids may only be the bridge, or they may be the very long term solution as they improve. The complexities and expense, not to mention the sheer cussedness of your neighbors opposing NG fueling stations should not be underestimated.

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