At an event at its recently finished Palo Alto research facility yesterday, Ford invited a wide swath of media to come check out the new digs — technology journalists, automotive journalists, broadcast and print publications, the whole nine yards. The message they were trying to deliver was clear: Ford isn't just a Detroit car company parachuting in to work with Silicon Valley talent, they want to be a legitimate member of the Valley community.
The challenges aren't small: engineering Detroit steel isn't at the top of most Stanford grads' to-do lists, though there's a palpable sense that transportation is generally becoming one of the hottest fields on the planet. It's too early to judge whether Ford and its Big Three counterparts can latch onto that wave, but it's not for lack of trying.
The Palo Alto facility doesn't look any different from any other Valley startup headquarters — an unassuming building in an office complex — apart from a driving simulation room, a specially fitted garage with a Ford GT sitting in it, and a bookshelf filled with steering wheels that I noticed as I walked by. But the work is pretty unique: this is where the company hastily built an Apple Watch app to demonstrate, for instance. In all likelihood, much of Ford's work in vehicle autonomy will happen here over the years to come, alongside coworkers in Dearborn, Michigan and elsewhere.
Amid the PR tour, I had a chance to chat with Ford CEO Mark Fields. Fields has been in the job for a little less than a year, but he's not wasting any time trying to make a statement.
Chris Ziegler: You’ve had some time to settle into your new role now, but you have huge shoes to fill, right? Because I think Alan [Mullaly] is widely viewed as one of the most effective automotive executives of the last several decades. So what unique challenges has that presented you? To what degree do you see yourself as a caretaker for Ford right now versus someone who’s trying to push the boundaries?
Mark Fields: Well, I clearly don’t consider myself a caretaker, nor have I in any of my roles throughout my career. You know, the priorities, we’ve set three priorities for the company. The first one is the acceleration of our One Ford plan. And we’ve had that plan in place for six, seven years, and it was under Alan, but I had the opportunity to kind of co-develop that with him over the years and implement it. So I don’t see any reason, just because, oh, I’m the new CEO, we need to do a Student Body Left and a completely different strategy. But I think it was as relevant six, seven years ago as it is today. Although I think what will change is the pace of progress. Because we’ve had some learnings, and we can move ourselves even faster on a number of those things.
Secondly is this product excellence, deliver with passion. We want to make sure that every product that we come out with — it’s not just about competing in the segment. You know, we shouldn’t expect our customers to be more excited about our products than we are. And that’s why you have products like the Ford GT, the new F series, the new Ford Explorer that’s coming. And that means keeping the organization focused on four elements: being the best in quality, safety, fuel efficiency, and smart technology. Because you can try and do 20 different things well, and you end up only doing a couple of them well, and it confuses the organization. Every day when our people come in the door, they know that from a product excellence standpoint, those are the things we want to differentiate ourselves on.
And finally, a big priority for me and for the company is driving innovation into every part of our business. And it’s looking at innovation — it’s not showing the organization a 20-page PowerPoint presentation and saying "here’s how you innovate." Because as a company, innovation is in our DNA. It goes right back to our founder, and what Henry Ford did. And even recently for our company — Sync, EcoBoost engines, the aluminum F-150, the GT. So this is in our blood. So for us, it’s not about teaching the organization to innovate, it’s around allowing them to do it. No matter things big or small or complex or simple.
So one of the things I’m focusing on with the organization is how do we question tradition and not follow custom, not take anything for granted, and use technology where we can to enhance that customer experience. Or even if you’re in the company, if you’re not doing something for the customer, you’re doing something for another part of the company, how do we make it more effective? So those are the things that we’re working on under this banner of looking at some of these trends in the industry and the enabling technologies that are allowing those trends around connected car and autonomous vehicles and mobility, you know, car sharing, ride sharing, and how technology is changing the retail experience, the ownership experience, not only just the purchasing experience. And how are we looking at that holistically as a company, and looking at that as an opportunity, and moving the company forward.
"We want every one of our vehicles to be a halo product."
And clearly the Ford GT and the GT before it are major sources for trickle-down technology through the mainstream product lineup. But do you see that as an occasional one-off opportunity — it was, what, 10 or 11 years between those two products — or do you see that as part of Ford’s broader philosophy — we are going to have a hero product that showcases the very best of what Ford can do, and over time that technology is going to sprinkle through the lineup?
Well, our GT is really the culmination of a decade’s worth of work and innovation in those three areas of aerodynamics, lightweighting, and engine technology, EcoBoost engine technology. And that’s really kind of a showcase for a lot of this technology that we put in our products, plus a lot of technology — particularly around lightweighting that you’ll see in our products going forward. So we want to show with the GT how do you get performance through innovation. It’s just one element of our business.
We don’t look at it saying, well, we need one halo product and eventually all that stuff will trickle down. We want every one of our vehicles to be a halo product, so, part of it as a company — again, it goes back to our ethos as a company — is for innovations, we want to make sure innovations are accessible for everyone and not just a specific portion of the population. So when you look at our semi-autonomous features on our vehicles, you can get them on a Focus all the way up to our Lincolns in varying degrees. So it’s not a hero car for hero car’s sake. It is a technology showcase, but it’s just kind of a culmination of a lot of things that we do already, all wrapped in a sexy product.
The drivetrain is a really interesting choice, and I don’t want to belabor the point, but it seems like there was an opportunity to showcase some really wild drivetrain tech there. And I’m sure that there’s still a lot of drivetrain tech going into this, but if you look at a product like the 918 or the LaFerrari, I wouldn’t say that they made too many aerodynamic compromises to make those true hybrid products. So can you talk a little more about that decision and the logic that went into that choice?
There were conversations. And clearly we want to be able to challenge custom and question tradition, and one of them is, in those kind of vehicles, big V-8s are important. Well, what about a V-6? And a V-6 that produces 600-plus horsepower and gives you the power and capability of a larger displacement engine in a smaller displacement engine that is more efficient and, as Raj [Nair] says, is packaged more efficiently so you can do a lot more things with the design. Better fuel economy, which is not the most important reason for a car like the GT, but it sure does help. So we’re changing the paradigm on that, and that’s the path that we took for this particular vehicle.
You know, as you know, we offer a full lineup of powertrains in many of our vehicles, everything from full electrified to plug-ins to hybrids to conventional gas engines like we have with the GT. So we look across our product portfolio and we want to make sure we’re innovating a lot of those elements, and that’s why you see that power choice across our engine lineup.
Actually, I had a good conversation with Mike Tinskey last week about some of that stuff when he was in New York. But what surprised me, what really surprised me was he mentioned that penetration of the hybrid and EV powertrains is only at 1, 2, 3 percent, somewhere in that range. And I would’ve, if I had to venture a guess I would’ve guessed it was somewhere between 10 and 20 percent. So it’s interesting just how far you have to go to get to that tipping point. Is that something that you think about a lot? Are you concerned with getting to that tipping point quickly?
Well, we think about it a lot. And the first thing we think about is, again, having that choice for consumers. And I think we have one of the largest choices around for the powertrains that I mentioned. But we think about it a lot because at the end of the day, there has to be customer demand for these vehicles. And it’s incumbent upon us as a manufacturer to offer them, to make them compelling.
But to put it into perspective, in 2010 or '11 there were probably 10 or 12 electrified vehicles, and either conventional or plug-in hybrids, and they made up about 2.5 percent of the total industry. Year to date, there are over 55 electrified vehicles in the industry, and year to date, through the first quarter, they take up… 2.5 percent of the industry. So the success of these has to be dependent on the customer’s adoption of these technologies, and for it to make sense for them economically, and that’s why it’s so important, you know, part of the one national standard, the fuel economy requirements by 2025, which we are supportive of, it’s going to depend on that customer acceptance. And that’s why [we have] the mid-term review, which is a review that we’ve agreed with the government in 2018 is so important, because we need to check the feasibility of reaching those goals. We need to check the customer affordability, the customer acceptance of those technologies, the impact on jobs, those type of things. But that’s the facts, and right now, the adoption is not where it needs to be to reach those goals.
And to what extent do you think the onus is on automakers to drive that adoption, versus other market factors?
Well, I think that from our standpoint, from Ford’s standpoint, our responsibility is to offer a compelling product, and we think we’re doing that. And continue to work on the cost to make it as affordable to the customer as possible. Beyond that, you gotta, at the end of the day, you gotta have a customer who’s going to want that kind of technology. So, you know, I think that’s why this review is so important.
What would you identify as the biggest limiting factor right now? I know battery scale is an ongoing problem, but is there anything else?
Well, yeah, the cost of the battery. That’s the biggest challenge on electrified vehicles. The range is also an opportunity and a challenge depending upon how you look at it, because lots of folks including ourselves are working on range. And there’s elements of range anxiety that the customer has, et cetera, so we’re working hard as well as the rest of the industry to include the range capability. There’s always the infrastructure piece of it, the charging infrastructure piece of it, that needs to be worked on. So there’s a whole host of things.
I was talking to some of your staff out here. They were saying that at the graduate level, there’s still perhaps a bit of a stigma around the auto industry in maybe not being their first choice. And I’m wondering — obviously this office is a part of changing that, but what other ideas do you have to try to flip that script a little bit?
A couple things. What’s really important to young people these days is, you’ve got to give them meaningful work. Meaningful and interesting work. And when you look at the auto industry, not only the type of product it is, in terms of folks to get excited about, but even for folks who aren’t excited about a vehicle, how would you like to be part of a company that’s trying to change yet again how the world moves? So that higher order of, do you relate to the mission of the company?
And then secondly, from a career standpoint, you can have a great career at Ford. When I go out recruiting at some of the colleges, some of the students look at me and say, "How long have worked at Ford?" And I say 26 years, and they look at me like I have three heads: "26 years, my goodness, I haven’t even been alive that long!"
And my point to them is, I’ve had multiple careers during my 26 years at Ford. I’ve had the opportunity to work in different parts of the business I never thought I would. I’ve had the opportunity to live in places I never thought I would visit, nevertheless live in. So that’s another piece of joining our company, and you can have a great career and a varied career as you go through your life, and personally develop and professionally develop, but also contribute to a company.
So I think another thing I mentioned out there was that cars offer perhaps a bigger canvas for designers than anything else on the planet, especially now that smartphones are just glass rectangles, whereas cars take all shapes and sizes. Is there any sort of feedback loop between the designers inside the company and the technologists inside the company? Is that a two-way conversation, or are they culturally very different groups inside the company?
More and more it’s a combination effort, because traditionally in the car business you would have the seat engineer work on the seat; you’d have the HVAC engineer work on the HVAC, and you’d optimize it for that. Sometimes the flow of that worked, and sometimes you thought to yourself, "What?"
Design by committee, right?
Yeah, or these knobs are square, and those are round, and that’s kinda weird. We want our — I want our engineers thinking about experiences. And then how does technology enable that experience, as opposed to just thinking about technology. So we’re spending a lot of time on that, for the lack of a better term, that user experience and that design experience. And that requires our designers to work very closely with our technologists to come up with "wow" kinds of experiences.
An example is, when you approach our Lincolns, our Lincoln MKC and our new MKX which are coming out, as you approach the vehicle, the lights will come on, both exterior and interior, welcome you to the vehicle. That was getting our designers working our technologists particularly around lighting, and working around together to say, "Gee, how do we make a warm and embracing experience as you get to the vehicle?" As opposed to, "Hey, there’s this cool technology that will make the lights come on, and maybe we’ll do it on the rear of the vehicle but not on the inside," so you just think differently.
"I want our engineers thinking about experiences."
I do want to touch on Smart Mobility, because I know that’s a big push for you. It seems like a lot of this stuff — particularly something like the Ford GT, is in fundamental conflict with Smart Mobility and some of those initiatives, right? Because one is very much focused on the mass transit-style commuter, someone who doesn’t own a car and doesn’t necessarily want to own a car ever, and then you have something that’s for the pure enthusiast. And I wonder, looking 10 or 20 years into the future, how does Ford sort of preserve its DNA and also push into these segments that are frankly kind of anti-car?
It’s a great question, because I think what you’re seeing just with the GT itself, we not only love driving, we love advanced technology. And advanced technology obviously applies to hardware but it also applies to some of these things that we’re doing with these mobility experiments. So we don’t view driving and mobility and autonomy as mutually exclusive, because we want to make progress on all those fronts. So, you know, as we think about our business, part of our strategy is being a full family of vehicles serving all markets, and one of the other important parts of our strategy is to make sure that we lead in innovative mobility solutions.
So, you can do both. You just have to have a point of view as a company that has one foot in today, that says, "Okay, what do you have to deliver today in terms of products, in terms of monthly sales, in terms of quarterly financials," all that kind of good stuff. And then one foot in the future that says, as a company, "What do we view the world as in 10 or 15 years? What do we want to play and how do we want to play?" And then rewind back to today and make the appropriate capital allocation decisions, resource decisions to set you up for that. And for us, that future is around — there’s going to be customers who want to own a vehicle and want that joy of driving, and we’re going to be there for them and we’re going to be there with a very compelling experience. There’s going to be other customers, particularly in major urban areas, who want access versus ownership. And that’s why, focusing on these mobility experiences and these experiments, we’re going to learn how do we solve some of these customer and societal issues, but are there business opportunities that are in there for us that will complement our traditional business?