'It’s Like a Moon Shot'

By the time he worked his way up from fledgling engineer to CEO of the Boeing Commercial Airplanes unit, Alan Mulally had revolutionized the design of commercial aircraft. As Ford Motor Co.’s CEO, he’s now out to do the same for the automobile. He recently spoke with NEWSWEEK’s Fareed Zakaria about energy efficiency and the cars of tomorrow. Excerpts:

People wonder, “Why is it that we can’t move to a hybrid future now?”

First you need the new technology to make it happen. Then you need a systems solution—the infrastructure. Finally there’s the economics.

What is the technological obstacle?

Batteries. Batteries today do not have enough energy per cell, they weigh too much, they have issues with charging and battery life, they have issues [with] durability, they have issues when it’s hot or cold outside, and they have safety issues. And you need to get the costs down. In the vehicles today, anywhere from $8,000 to $20,000 is the battery.

Are there any prospects for game-changing improvements?

The prospects go up with an increase in investment [in] R&D. As you increase investment, the time to find the breakthroughs decreases.

So why is the market not working to pour investment into this?

Because it’s like a moon shot or any big development—it takes a more concerted, integrated effort. That’s why we recommend to the government that there be a very focused effort on batteries. That leads us to the second part—the systems. Whatever we do, we need the infrastructure in place to be able to utilize those vehicles, charge them up in a timely manner. Not 12 to 16 hours, but four to six hours.

Now the economics.

Leaving out the Ford Fusion, most [all-electric or hybrid] vehicles cost substantially higher than people will pay. That’s why you see governments trying to subsidize manufacturers or the consumer. And there’s not enough money in the world to do this with subsidies. We need to get costs down.

But how do you expect to do this? Through greater volume of sales? Or new technology?

Both. But [the technology] also has to work in consumers’ eyes. If they get stuck one or two times, it’s over. We won’t get the kind of penetration and volume that we all need to make this work.

If we want to get off the oil addiction, doesn’t it make sense to have some kind of gas tax?

A tax on energy could and will be one part of a comprehensive energy policy. I think another piece is knowing what the real costs are because fossil fuels, biomass, solar, and wind [energy are] all being subsidized in one form or another. Once everybody appreciates the real cost of energy, that’s where taxes come in.

At Boeing you got substantial fuel efficiency by reengineering. Do you think that is possible with the automobile?

Absolutely. Look at the improvements we’ve made since 1975. On automobiles, we’ve improved fuel efficiency by 100 percent, and on trucks by 75 percent. At Ford, with the internal-combustion engine and direct fuel injection, we’re making a 25 percent improvement in miles per gallon and we’re reducing CO2 [emissions] by 15 percent. Add in the new lightweight materials, integrated electronics, aerodynamic advances, and right there is a technology road map that increases fuel efficiency. Then you go to the hybrids and the all-electric.

You operate in Europe very profitably. Do you feel that European regulations—a lot more subsidies for clean energy, higher taxes on gasoline—are the right approach?

Yeah, but it’s tough. The amount of technology we are putting into vehicles is very, very costly for the consumer. Everywhere we operate, the purchase decision for an automobile [involves] five things: quality, fuel efficiency, safety, smart-useful design, and value. In China, Europe, and the United States, the requirements for the customer are exactly the same. We are working with the big cities in China to try to move to an all-electric city.

But wait, an all-electric city would mean no cars. What would Ford be doing then?

All-electric or hybrid cars. The question is how do you move around and live in a city? How do you make seamless use of vehicles, rapid transit, and bicycles? In China, where you are putting in all the infrastructure new, you get a chance to really create a systems solution.

Editors’ note: This story originally stated that Alan Mulally was CEO of Boeing, rather than CEO of the Boeing Commercial Airplanes unit of the company.