 Hey, this is Josh from The Verge. Earlier this year, we had a chance to talk to Alan Mulally, the CEO of Ford at CES, and afterwards he had a lot of really fascinating stuff to say that we didn't get in that short interview. So he's here in New York, and we've got another chance to sit down with him and talk about where he sees technology going. So check it out. Alan, thanks so much for joining us. Glad to be here, Justin. Again, we got you for a second time, which is magical. And I want to talk about you a little bit before we talked about the company and what you guys are doing. You began your career as an engineer. You worked at Boeing, and you worked on cockpits. So how does a guy go from an engineer at Boeing, getting your hands dirty doing real design work, to CEO of Ford? How does that happen? Well, you're absolutely right, Josh. My dream was to work for Boeing and design commercial airplanes. And I had a chance to contribute to all of the airplanes, 727, the 737, the 747. I love going through these slowly. The 757, the 767. You didn't work on the 777? I had the opportunity to serve as the engineer in charge of the 777, and then the 787. And it was so neat, because what I really found my love was the fact that the airplanes got people together around the world, and we found you'd find out that people are more the same than different, and we worked together for the good of all of us. So I thought I was going to maybe have one more airplane that I was going to contribute to, and that would be a replacement to the 737. And then I got a call from Bill Ford. And Bill explained the situation at Ford. He explained that he needed and wanted help and would I consider coming. And I thought about it, and we discussed it as a family, and we decided to come. And in the end, Joshua, I felt like I was being asked to serve a second American and global icon. And it was important for manufacturing. It was important for the United States of America, for the economy, for energy independence, and security and sustainability. So I decided to come. And to your question, people were very concerned at the first about what did it mean for an airplane guy to be coming to the automobile industry? Right. Did they think you were going to try to put wings on everything? Well, and it was in trouble. And one of the early press conferences, one of the journalists raised their hand and said, Mr. Mulally, with all due respect, you know, the car business is very, very sophisticated, starting with the products. And so what does this mean? You don't know cars. And I said, well, I sure agree with you. Cars are very sophisticated. The aerodynamics, the integrated electronics, the materials, the systems integration, the quality, the fuel efficiency, safety, very sophisticated. And matter of fact, an automobile has nearly 10,000 parts. I just might point out that the 777 has 4 million parts. And it actually stays in the air. And after that, I never got another question. Did they ask you to challenge your engineering jobs? No. Well, I think it's odd that someone would ask. I mean, a plane is massively complex. And you've got to get them off the ground. You don't have to worry about that with cars. With cars, you want to keep them on the ground, basically, is your goal. So you went from this career being very involved in the minutia, the technical minutia, into overseeing this business. And does that inform how you approach it? I mean, do guys come in your office with a design? And do you start to say, well, you know what? This thing should actually turn this way. And maybe we, I mean, are you hands on now? Do you get into the engineering stuff? Or do you try to let them do their thing? Well, I would consider myself, I think, Joshua, as hands on. But I've come at it a little bit differently than the way you described it. Because the similarities between commercial airplanes and automobiles are striking. You need to have a point of view about the future, what do the customers really want, what do they really value? How do you bring those to the market in an effective way? And so maybe the neatest thing that I got a chance to contribute to when I came to Ford was, what is our point of view about the future of transportation? What do customers really want? What do they really value? And we ended up with really five main attributes that, worldwide, the customers really, really care about. One is quality, the second is fuel efficiency and low CO2, the third is safety, the next one is smart design like SYNC and MiFoil where you can be connected in a wired world, and of course, the last one is the very best value. Did you put, is this an engineer's cap, thinking we've got to identify the problems and just get right down to it? I mean, it sounds like you had to take a look at all of these wide variety of asks and say, well, we've got to find a way to quantify that. We've got to find a way to talk about it. Okay, now, let's talk about that. That's a really good point, Joshua, because Ford, before I came, it was okay to be just competitive. I mean, they made competitive cars, they were good, but there was not a brand promise or a commitment to be best in class. And to your point, you can measure everything versus the competition. And you're either best in class or you're not. And so we made a commitment as a team that every vehicle, from a Fiesta all the way up to an F-150, every time you got that from Ford, it would be best in class in those four characteristics. And then that data sets you free. You know exactly what the competition is doing. And now you can count on getting the best in class from Ford. So what was the first thing that you did at Ford that you thought, what was the first car, the first product that rolled off the line that you thought, this is the thing that we've got to do all the time now? Was there, you know, what's your first most, you know, the thing that you were most sure about? Well, there were a couple of them. The first one is so, was so interesting because it was the new Taurus. As you know, when we were designing the triple seven at Boeing, Ford was designing the Taurus. As I know, this is of course, classic. The Taurus was, you know, eight years, the number one vehicle in the United States. We made 7 million Torai. Right. And we made the- Is that how you refer to them? The Torai? That's a plural of a Torai. Sure. All right. So, when I, I knew about it because Don Peterson was the chairman of Ford, but he was on the Boeing board. So, when I was leading the design effort on triple seven, he told me about the Taurus. He invited, said, would you like to meet him? I invited him to Seattle. We compared the technology, the processes, the working together. What year is this? This is 1980, 81, 82. Okay. Oh, so this is back then. And so, so I met all of them and they were fantastic and they're talented people and making a great product. And so, when I got the call from Bill, I thought, you know, I'm just going home. I know all about it. So, I arrive. I, I want to see all the products. They line them all up and I'm walking down the room and there's no Taurus. I said, you guys, where did the Taurus go? I mean, this is the most, one of the most popular cars I've ever had. And he said, well, we made a couple look like a football. They didn't sell very well. So, we stopped it. I said, this was one of the most fantastic brands in the world. And I said, so what do you want us to do? And I said, well, how long does it take to make a new Taurus? And I said, maybe four years. And I said, let's make the very best Taurus ever and let's do it in two years. And so, the new Taurus that you see now is that design. But the most important thing for the Ford team was that we're going to have this consistency of purpose. We're going to keep those nameplates and every year we were going to improve them so the customer knew exactly what to expect from Ford. So, the Taurus is your, that's the start of your Ford. So, let's talk a little bit about the future. We're talking about the past, but I want to talk about where, the present and the future. You're obviously investing in electric. This is the trend now, right? Everybody's making hybrids or electric vehicles. You've got a smattering. Is electric, is it the real thing or is it the in between thing for us right now? Because we're going to talk about internal combustion because I know you have some strong thoughts on that. But electric isn't where we're going to stay. That doesn't seem like the place that we're all moving towards as an end game. What do you think? I think, Joshua, it's going to be both and even more. There is such an opportunity to improve the internal combustion engine today, whether it's petrol or whether it's diesel. You really believe that? You said that last time we talked and I did a little, I'm going to challenge you just a tiny bit. I did a little research and on average, we were looking at some stats and passenger cars get about 10 miles more per gallon now than they did in 1980, today. So we've gained on average 10 miles per gallon. That doesn't seem like in 30 years we've gone that far with internal combustion. People just fall asleep for the last 25 years? I'm curious. Let's talk about this a little bit more. Do you remember in 1975, we had the oil embargo and we're all on the line. I wasn't born yet. I'm sorry. But I've read about it. I've heard about it. I think it's well documented. It sounds like something I've heard of. Yeah, it was a real hassle. For car companies, especially. Ford decided that, my gosh, the most important thing we can do is increase our fuel efficiency of all our vehicles. So we actually passed laws to have slopes for improvement of fuel mileage. Since that time, in 1975, we have improved the fuel mileage of cars by 110% and by trucks by over 75% based on the enabling technology. Just you guys or the industry as a whole? The industry as a whole. Okay. So we're right there on the leading edge of that and back to the internal combustion engine, with just direct fuel injection and turbo charging, we can improve the fuel mileage by nearly 20% and reduce the CO2 by nearly 15%. So you're going to see a lot of improvement with internal combustion. Plus, that's the most affordable technology right now to improve. Right. Now to your point, we're also making flexible fuel vehicles, whether it's ethanol or biomass or whether it's natural gas, we'll have those vehicles also available. The reason is that no one right now can predict the end game on the enabling technology. Then after the alternative fuels, I think, are electric vehicles. Okay. So you can make them more affordable. Yep. You can make them more fuel efficient. You can kind of make them modular in the way that you build them. And make them in the quantities that people want now. Right. Because we can move the production line around. Right. So you see if there's a demand for, hey, we need all electrics in this region or whatever, you suddenly can ramp up production on that. It's easier because you've got these shared pieces. Exactly. Okay. So let's say we're in New York. And we talked about this. We actually had a dinner and I asked you about this. And I thought your answer was really interesting. We're in a mega city, right? It's highly congested. You really can't put more cars in the road. We already have too many cars as it is. How does Ford, in a world, let's say in a world where we've got a sprawl of cities like this, and that is kind of where we're moving, you look at places like China and other parts of the world that are starting to really ramp up this, you know, a more modern, more congested city, where does Ford live there? Where does Ford fit into that? You know, if you can't go buy a car, if you can't get a car on the street. This is really important because as you point out, not only in the United States, but in the really high growth countries like in China, like Chongqing, we have a tremendous operation in Chongqing. And it's a city of 35 million people. And what we believe is that cities are going to become even more and more prominent. And we need to be part of rapid transit, personal mobility, how do you move around? Not necessarily in a separate vehicle. And some of the things that we found very interesting, like in Hong Kong, the business model that they're developing is that you have one way of charging. You can go from bicycles for the ferries to the cars to the subways. The idea is to put together a system where you have your personal mobility, but you can use all the different ways, the ways to move around. How Ford plays in that, we're not sure as a business model yet, but we know that we're absolutely committed to personal mobility, which is where we started. You want to be there. And we want to be there. And you would make mass transit, and that's something that you guys are working on? Absolutely. And what's really important is that we, Joshua, the citizens of the world are going to decide that. Because, you know, just like we have a couple of kids who live in New York City, and they love the subway, and they love moving around. And to your point, when they want to move outside, then you can time share on cars or lots of ways of moving around. So we really want to help be part of that solution. But the vast majority of the world has the freedom to move around on the highways. Right. Well, I mean, America's big, right? And not everywhere is like New York. We really care about that solution. But people are coming to cities. I mean, we've seen that they're kind of starting to gravitate more towards these large cities. So there have to be solutions that go beyond just to- That are a sister solution that allow us to move around. A pickup truck. A pickup truck, obviously. Absolutely. So you talked about technology roadmap earlier. Hydrogen. So that's what I wanted to ask about. So if electric is what we're doing now, and you mentioned ethanol, I think, and some of these- Biofuels. Biofuels, which are there, but they're not, the infrastructure isn't there. And it's not like everybody's decided that's the thing. Earlier we talked about hydrogen off camera. We were talking about hydrogens. Tell me what hydrogen means to you guys as a, this is your business. You need to find the future fuel. Because look, oil is, I think we all agree, I mean, maybe you don't, but it's a finite resource, right? We don't have infinite amount of oil here. We got to move to something else. You think hydrogen is that place? You think that's the long game? Joshua, it really could be. And remember, it wasn't very many years ago where most of the technical community believed that hydrogen was going to be the next answer. Well, you know, clearly you need to generate the hydrogen clean. You need the infrastructure for the hydrogen. You need cost effective batteries to store the electricity that comes out of a hydrogen vehicle, which also need very cost effective fuel cells to help generate the electricity. So if you think of electric vehicles today, what the hydrogen would add to it is you have a hydrogen tank on the vehicle. You also have a fuel cell. So you take the hydrogen, combine it with platinum. Water comes out the tailpipe. Electricity goes over to the battery. You need a very efficient, cost effective battery. So you need everything you need with electricity today, plus a breakthrough on the cost and efficiency of the fuel cell, plus the infrastructure. Now having said that, that combination of the use of electricity, plus if you generate the hydrogen clean, is a very compelling vision. Now the cost and the economics are going to determine everything. So that's why we are investing heavily in cost effective fuel cells, as well as the cost effective lighter weight batteries. And then I think between public and private partnerships will come what's needed to develop the hydrogen as an infrastructure that is needed. So I think it's very compelling. You think we're going to get there? I think it's a real possibility in the future. And what's the, give me a time frame. Do you have a vision of it? You guys must be, if you've got a roadmap. Yep, it's further out. Like 10 years, 20 years? At least. Because what we really need to do is make the breakthrough in those components. And that's what we're focused on, because that's what we can contribute to. Right. I've got a couple more. I know you have a very busy schedule. My first question is your view on, these are some big ones. The environment, as an automaker, you guys must get more hell than anybody when it comes to the environment, when it comes to pollution. What is your take on, where do you, in Ford's list of values, you've got, obviously you have to turn a profit. You want to make cars that people love and want to go and buy. Where on your, I'm sure you've got many other priorities, where on your list of priorities is helping to preserve or protect our natural resources and the environment? Where do you stay on that? Obviously it's important. You're not going to tell me it's not a priority. But when you're making these decisions, how often is that coming into play? Are you always thinking about it? Like give me some of the mindset behind Ford's view. You're going to find this very interesting is that it is right there at the top of the key priorities for us as a business. I'll come at it a couple different ways. Remember when we talked about what's important to the customers worldwide, quality, fuel efficiency, safety, and smart design. So right at the top is a reason to buy is fuel efficiency, miles per gallon and low CO2. That's what people care about. And remember, we've taken a point of view, which I think most people share, that we all are going to pay more for energy going forward as the whole world grows. So this is really, really a high priority, which is why we're investing so much in this enabling technology roadmap. But I'd go even further than that, Joshua, and that is the companies that are sustainable, they're going to continue to make products that people want and value, are also going to be the ones that do it using less resources and less time. So everything about our operation is continuously improving to use less water, less energy, less materials, less changer, and we rework so that we make the vehicles that people want, but we're using less time and less resources. So in a fundamental way, the essence of the fundamentals of our business is sustainability. I'd like to go even further than that. One of the things that has always excited me, and I have a passion for it, in automobiles or in cars, is that manufacturing with a big M is part of the solution to the big issues that you are describing today. Economic development for all of us, because if we don't economically grow, we can't provide the wonderful careers and jobs for people to grow. Two is energy independence and security, which we all know is really important to all of us. And the third is environmental sustainability. So I would propose to you that the automobile industry, and Ford in particular, the intersection of those three big issues are something we are very proud about, because that is the foundation for us running a successful business. And you mentioned manufacturing. You're talking about jobs, right? I mean, you're talking about the way these things are made, not just... Absolutely. I mean, you're talking about the way they're made both with the materials and the processes, but also the people. Absolutely. So I mean, we've, as a technology news site, we've covered a lot of sort of the outsourcing of the things that... the outsourcing of these jobs to get the things that we want. Is manufacturing something that doesn't happen in America anymore, that is increasingly not happening in America? Do you think that we can return to America as a country that's known for its manufacturing? Because it seems like in the last... I mean, correct me if I'm wrong, but it seems like in the last, you know, what, 50, 25 years at least, we're not known as a place that builds things. We're known as a place that ships jobs off to have things built elsewhere. You're absolutely right. And to answer your question, I mean, that has been the recent history, and to answer your question, there is no reason that we can't compete with the best companies and countries in the world by designing and making things. That's a decision that we make as a country. And just to give you a little perspective on Ford, the most important thing, again, is are you competitive? And remember, it wasn't very many years ago where our cost structure was such where we couldn't make vehicles in the United States and make them profitably. And we were actually moving them out of the United States to Mexico to everywhere else. Well, one of the things that I...one of the reasons I came to Ford was to work with all the stakeholders, including the unions, including everybody, and what does it take to create an effective company that has a cost structure in addition to great products where we can make them right here in the United States. And what we have done over the last five years is...I'm just so pleased for all the stakeholders because we have competitive wages, competitive benefits now because everybody worked together on it. We are now bringing jobs back in the United States. The technology roadmap you described in Michigan Assembly, we are making petrols, hybrids, plug-in hybrids in all electric in the United States on smaller vehicles and making a reasonable return. So we know we can do that. Now, I'd like to back up just a little bit on your question, too. The other thing is the United States competitiveness. That means we also have to have free trade agreements around the world that make sense. And that's why you watched us take such a strong stand on the South Korea free trade agreement that we really do open up the markets around the world because we can compete if we have the markets to serve also. That's why we need to have the markets determine the currency and the exchange rates and not have that set by the governments and not target different countries with different products. But we do that and we work our competitiveness, then there's no reason that we can't compete with the best in the world. And, Joshua, one of the neat things is that when you look at the research and development in the United States and around the world, nearly 70 percent of all the research and development that's for the future, for all the products and services we all want and value are associated with manufacturing. So I don't know of one country ever that's had a sustained period of prosperity that didn't have a strong, healthy, competitive manufacturing base. And you think we can retain that? We can do it and we are leading by example to show it can be done. We're going to be hiring 12,000 new employees over the next couple of years. We're bringing work back into the United States because we're competitive. If we're not competitive, the work should go to somebody else. We believe in the marketplace, allocating precious resources, but there's no reason that if we decide to do it and work together that we can't be competitive. But do our workers, this is what I want to know, and I think you're a man in the position to tell me, do our workers have to accept, you know, look, when you're outsourcing jobs, not you, but I mean in general, you're getting cheaper labor, you're getting people who are going to work harder because they desperately need those jobs and they've never had them before. Do we have to say to workers in America, look, this isn't going to be a picnic. You know, you're going to have to really, it's going to be lower wages, it's going to be longer hours. Is that the answer? No. I mean, can we create this great American work environment? I think that, you know, that we built this country on and also compete on the cost of that labor and the cost of building this. I think we can have it all. It doesn't necessarily mean that we have to have the lowest wages, but we need to be the most productive. And that's where our school system, our ingenuity, the enabling technology, everything about it starts with us, with creation, right, and innovation. And we can, and we absolutely can have higher wages. We can't be way out of whack. We have to be somewhat competitive. But the real competitive is are we using our enabling technology and innovation and working together to produce products that people really do want and value more creatively and more effectively than a competition. So what's the biggest roadblock right now to you? As a man in your position, what's the roadblock you look at, you wake up every day and you think, if I just clear this one thing out of the way, we can change things? Well, in Ford's case, I think the most important thing is that we just stay laser focused on the Ford brand promise. As we covered once before, remember Ford had become a house of brands. We had Aston Martin and Jaguar and Land Rover and Volvo and Mazda. And so the consumer didn't know what Ford stood for. Well, now all those are gone. We're laser focused on that Ford brand. So your roadblock was you needed to define Ford better to a consumer. And you think you've done that. You think you've cleared that roadblock. Oh, absolutely. When we started out five years ago in the United States, for many of our vehicles, for the smaller ones, we were a discount brand because we couldn't make cars affordably. Well, now we have closed that gap with world class competitors. And they now value the vehicle on the value per vehicle. Plus our cost effectiveness as we've talked about. So again, that consistency of purpose and that brand promise in the customer's eyes that they know what they can get from the Ford Motor Company and that consistency of purpose is the most important thing that we continue to do. Interesting. All right, final question. Yes, sir. I recently interviewed Neil deGrasse Tyson, who's an astrophysicist and just a genius basically. And we talked about igniting or reigniting this kind of jobs in America and the idea of innovation in America. And his thinking is that we need to be back in the days of space travel and getting out and exploring the galaxy and thinking about, you know, and through the, you know, we want to go to Mars, we want to go beyond Mars, we're going to innovate, we're going to create new technologies and new jobs, and it's going to reignite America's imagination. And what is your take on that? Wow. I have a take on that, Joshua. So 19, early 1960s, I'm in high school. Well, first of all, I agree. But I want to tell you a personal story about why I agree so much. So I'm in high school and President Kennedy addresses the nation on TV and he says to the nation that we are going to go to the moon. And the reason is that we're going to learn so much, the technology, the innovation, the how to do it, the unknown, the new frontiers, but we're going to find so much and learn so much about ourselves and what we can do and what we can do by working together on something that is so big and so exciting. So I switched from a liberal arts curriculum to calculus and physics and science classes and I decided that I wanted to be part of that compelling vision. That was so compelling because it was going to make such a big difference. So I enrolled in the University of Kansas in aeronautical and astronautical engineering. I joined the United States Air Force and started flight training to become an astronaut. And everything was going great and then on some of my flight tests, I found out that there were shades of gray that I couldn't see. And the first landing on the moon was going to be a manual landing and you had to be able to see all the craters and the shades. So I just didn't have the right stuff and at the time you had to have the right stuff to go to the moon. And so they gave me the choice of staying in the program and maybe going for a later flight or I could go continue my studies at the University of Kansas. And of course I was devastated, but it was such a compelling vision and I had aligned my life to support it that I was very fortunate that my thesis advisor was the head of aerodynamics at the Boeing company. And he said, Alan, another compelling vision associated with really big deal things that make a difference is you could contribute to commercial airplanes. And he was working on some research work for Boeing. He invited me to join him on the research work. He took me to Seattle and I saw Amarillo City, the doors to the Boeing factory, the 737s and I knew I found my next compelling vision to help make commercial airplanes to get people together around the world. And 37 years at Boeing and I had a chance to contribute to every one. And then Bill Ford calls and another compelling vision, a second American global icon, a person opened up the highways to all mankind that made life pleasanter, more worthwhile, meaningful in the lifestyle we have today. So his point is so important that we all want to make a difference. We all want to be associated with a compelling vision and use our talents and working together to do things we can't do by ourselves. So I think he is making a really, really good point. That's incredible. I had no idea we got basically an astronaut running Ford at this point. I mean, it's close, about as close as you can get without actually going, right? So that's incredible. Alan, thank you so much for telling us that. That's great. Thanks a lot.