Blog Post

Ford Chairman: 5 Forces That Will Shape the Green Car Industry

Ford Focus BEV

“Exceptionally important.” That’s what Ford Motor (s F) Chairman Bill Ford expects electric vehicles will be at some point in the future. But a silver bullet? It’s not at all clear that electric vehicles will become a dominant technology anytime soon in the transportation sector, or that there will be a one-size-fits-all vehicle technology for the market, said Ford in closing remarks at the Fortune Brainstorm Green conference on Wednesday.

That uncertainty about how the nascent markets for electric, plug-in hybrid, hybrid and alternative fuel vehicles will develop is why the automaker has opted to place its chips on a range of technologies, including biofuels, diesel, hydrogen and yes, electric cars. “It’s easy to sit here and say, ‘It’s gonna be electric,'” he said, but until that market arrives, Ford said the automaker has to keep developing other technologies.

The chairman weighed in on some of those efforts in his remarks, as well as Ford’s future as a mobility provider and the challenge from China. Here’s five forces he touched on that will shape the green car industry:

Why the U.S. Government Should Subsidize the Battery Business

Speaking on the heels of greentech venture investor Vinod Khosla’s comments yesterday that Uncle Sam’s investments in batteries have distorted the green car market, Ford argued in favor of government subsidizing the battery industry.

For Ford, building up this industry in the U.S. is a matter of national security. “It’s a defense issue, if nothing else,” he said, adding that he considers it “really important that we are competitive as a nation in this really critical technology.”

He acknowledged that, “You can be a purist about it and say hands off government, let all these companies go at it on their own.” But that would mean putting U.S. companies at a disadvantage, he said, because “that’s not what other countries are doing.”

The Challenge from China

When will we see Chinese cars on U.S. roads? Well, they’re here now, said Ford, noting the automaker’s recent sale of loss-making brand Volvo to Chinese automaker Geely. Finalized late last month, that represented a landmark deal — the first time a Chinese automaker has bought a major global car brand. But Ford made clear today he sees the acquisition as only one piece of a much larger trend.

The level of “brain power and amount of money that’s being poured into battery development in China is really quite staggering,” he said. Referring to China-based car companies, he said, “They all have plans to come over, and we would be absolutely crazy,” to underestimate their ability to make a dent in the U.S. market. “We gotta run scared every day.”

Biofuels Have Legs (in the States, Anyway)

Ford allowed in his talk today that biofuels, “might not make sense for land-strapped, or land-constrained economies.” But he thinks the U.S. has enough land to spare for production of fuels from biological materials. Whether made from cellulose or “lots and lots of different sources,” Ford said next-gen biofuels “still got legs” and could make sense for the U.S. market.

The Importance of a Common Platform

The times, they are a changin’ when it comes to Ford Motor’s approach to supply and demand. The automaker doesn’t want to find itself in the old cycle of building cars that consumers don’t want, and then scrambling to make room on dealership lots for new models. Ford said, “We don’t want to be in the game of trying to shove them out the door regardless of what the demand is.”

This is the thinking behind Ford Motor’s decision to build plug-in versions of existing models, rather than having a “dedicated” electric or plug-in hybrid vehicle, according to Ford.

Having a common platform across its global markets for the Ford Focus, for example (an existing model slated to come out with an electric version in 2011), Ford said the company can easily adjust the mix of electric vs. gas Focus models rolling off the production lines depending on how the market develops. “You can completely flex up [production] if the demand is there.”

Exploring Mobility as a Service

“We make cars and trucks today, but who knows?” Maybe in the future, said Ford — who noted he’s seen “flying cars that actually work” and finds driverless cars “quite interesting” — the automaker will shift at least part of its business to provide mobility as more of a service. That’s the imperative of a world accelerating toward urbanization, he said. The next big cities, arising in developing economies, “will need very different mobility solutions than our current model allows for.”

A number of startups, non-profits and municipalities are racing to offer some alternatives to owning or leasing your own vehicle, and are using the web and mobile devices to match cars and drivers. Zipcar is the world’s largest car sharing network, but there’s also City CarShare in San Francisco, PhillyCarShare in Philadelphia, Autolib (an all-electric network) in Paris, and Daimler’s car2go project in Austin and Germany — not to mention the app developers helping people find carpools using their online social networks.

One model that appeals to Ford is Hong Kong’s Octopus system, which allows users to buy one ticket good for a variety of transportation options en route to their destination. Rather than being “afraid” of the 20 cars that Zipcar says each of the vehicles in its car sharing service ends up taking off the road, Ford said, “We ought to embrace it.”

Related reports on GigaOM Pro (subscription required):

Electric Vehicles Give “Mobility as a Service” a Jumpstart

Mobility on Demand Takes Aim at Transport Networks’ “Last Mile”

3 Responses to “Ford Chairman: 5 Forces That Will Shape the Green Car Industry”