 Hey, this is Josh from The Verge, and I'm sitting here with the Ford CEO, Alan Mulally, and the CTO of the company, Paul Mascareñas. Did I say that right? Perfect, Josh. Okay, good. You got it. I've been practicing that for five minutes straight now. You got it. And I'm excited to have you guys here. First off, because we usually don't sit down with men of your stature. I mean, CEO and CTO of Ford, that's... I mean, I could really affect the outcome of a great American company, right? Depending on what I say, if I suggest something really great to you, or really terrible. But we're at CES 2012, and you guys are here. What are you here talking about? Why are you here? Why have you come from Detroit to be in Las Vegas? Well, first of all, Josh, it's good to see you again, and it really is neat to be here. This is our fifth year being invited to the Consumer Electronics Show, and remember that we have been carer of the CES, both with the Focus and also with the Taurus. And now, today, we just revealed to the public for the very first time the new Ford Fusion hybrid vehicle. And what's really neat about that is the electronics, but also the integration of Sync and my Ford, and the applications that go with that to allow each of us to now have an integrated life with our electric vehicles. And the response has been really, really neat. Yeah. So, you've got a number of announcements and stuff that you're talking about right now. You're doing Sync. Tell me about Sync and why it's important to you. What is the thinking behind it, and how is it changing the way that you guys are doing what you do with your cars, the way you build them and think about? Oh, you bet. I might introduce it, and Paul has great perspective, too. But we took a point of view about six years ago that the automobile was going to be a mobile application. We could see where the digital technology was going. We could see where the entertainment was going, the software associated with the safety features, with fuel economy. It was going to be a mobile app. So we initially started with Microsoft and built a baseline automobile platform. And then we added MyFord on it and different applications then. And especially, we're focusing on keeping your eyes on the road and your hands on the wheel. So we went to voice activation. Remember, it was relatively new. We had maybe 100 commands at the time. But we knew that if you could seamlessly connect each of us and our smart devices to the Internet, but also do it safely, that that would be not only a reason to buy a Ford vehicle, but it would be a want to buy a Ford vehicle. So that's the way we started. We've been improving that capability over time. And now nearly 50 percent of all people that buy a Ford vehicle buy SYNC and MyFord. And once they've operated, 74 percent recommend it to their friends and would only get their next car if it had that. So you're saying 50 percent of people who go into a dealer, they say, I'm buying a car. You can get SYNC. Do you want it? They say, all right, I'll take it. Absolutely. And actually, the other way as well. They say, SYNC and MyFord Touch was a reason that I bought that Ford vehicle. That they're coming in for. So we look at it as a reason to buy. And just to give you a data point, we sold over four million vehicles already equipped with SYNC. With SYNC. So we've talked about the democratization of technology, which is a term we like. The vehicle is the ultimate mobile device. So being able to bring this really affordable technology to millions of customers around the world is part of the vision. And you're doing, I mean, you've got speech recognition technology in there. That's a tough one to crack. I mean, it's tough to get a computer to really recognize what you're saying. What kind of innovation are you doing in that space? That seems like it would be a big focus. I mean, are there partnerships or technologies that you're looking at or that you're using right now that you think are particularly... Yeah, great question. And of course, the vehicle itself is a challenging environment for voice recognition anyway, because you've got a lot of background noise. So a couple of things. One is partnering with the very, very best in the industry. So our partner Nuance, developing the voice engine and continuing to upgrade. And as they bring in improvements, we can introduce those into our vehicle with software upgrades as we're doing right now with the MyFullTouch. The second thing is just some things that we do inside the vehicle itself. So directionality of the microphones, for example, correct positioning, really making sure that it's very focused on the driver. But it really comes down to just partnering with the best in the industry. And people like Microsoft, people like Nuance, some of the app developers that we work with. So SYNC has... The kind of growth of these types of products in cars has dovetailed with a pretty trying time for the auto industry here in America. Do you feel in any way that... I mean, we're starting to see a ton of technology come to vehicles. I mean, cars are obviously a very advanced piece of technology, but also a very old piece of technology in the grand scheme of what this team deals with day to day. Do you feel like SYNC has given you an edge in terms of revitalizing or kind of reshaping what Ford is for the last few years? Oh, Josh, absolutely. We really, five or six years ago, we really tried to come to a point of view about what customers would really value, really value and pay for and want. And it came down to four major things. One is quality. They want the most fuel efficient vehicle. They want the safest vehicle, but they also want to be connected seamlessly to the internet. And the reason that we chose to not embed the capability in the vehicle is because we wanted to move with the consumer electronic speed. You to have one integrated life, the same communication devices you use outside the car, you use inside the car, then we add our value by managing the interface with the voice recognition and the interface with all the vehicle systems. And the response to that has been tremendous. It's a reason to buy. Ford has been leading that, which is also the reason that we were, I think, been so successful at consumer electronics because we're partnering with, we kept an open architecture, we're partnering with everybody to bring these applications in. But the neatest thing, to your point, as we move to more and more electrified vehicles, then all of a sudden you have a wonderful convergence of the digital technology, both on the vehicle and the electrical application, but also with how do you manage your car. I'm seeing it becomes less, you know, not just about navigation and music with the car itself. When are you going to charge it? Where are the charging stations? What's the right time to charge it? So you're running all those applications on your smartphone, transferring that information to the car, so you now have just one integrated life. And it becomes, if I could just build on that, it becomes an experience. So the technologies that we're putting in our vehicles are an enabler to an ownership experience with your vehicle. Whether it's connectivity, whether it's the safety technologies that we put in the car, the fuel efficient technologies. And you know, as we create this experience for our customer, clearly very relevant value affordable, but at the same time it's differentiating our vehicles, which I think is what you were asking, is differentiating our vehicles from our competitors. And probably the most important thing, redefining our image and reputation as a company. As a technology. Right. No, I mean, and I think it has done that. Being a part of CES and C-Bit and the other tech shows. And you've got people coming into your product from a completely different angle, right? Absolutely. You're starting from technology and looking at the vehicle. So you've got the Fusion, which is a hybrid. How important is, how important are hybrids to Ford moving forward and beyond that electric vehicles and then what's after that? I mean, obviously, well, I'll let you answer that one. Well, I think that it starts, first of all, with a point of view about where the world's going and with respect to fuel efficiency, we really believe, like I think most people, that we all are going to pay more for energy going forward. So what we have found now as energy prices have moved up is that fuel efficiency is a reason to buy. It's one of the top reasons to buy a vehicle. It's interesting, Josh, because whether you're in a fiesta-sized vehicle or if you're in an F-150 vehicle, the consumer wants the best fuel efficiency in that vehicle, in that vehicle class. So everything we have been doing is what can we bring to technology to continuously improve. A lot of room to improve the internal combustion engine. A direct fuel injection, turbo charging, lightweight materials, aerodynamics, integrated electronics, all a significant improvement in the internal combustion engine. Then we see alternative fuels. We see biofuels and ethanol. We make our vehicles compatible with that. And then to your point, the electrification. And Ford's strategy is so different because we aren't making just separate electrical demonstrators. We actually electrify the entire platform. So like the Focus or the Fusion, you can get a petrol, you can get a diesel, you can get a hybrid, you can get a plug-in hybrid with a bigger battery, or you can get an all-electric vehicle with no internal combustion engine. And the neatest thing about our strategy is that we build them on the same production line. Most of the parts are the same. And with our scale now, we can offer these vehicles to the consumer more affordably than anybody else. So you can imagine the coming together of that technology with the SYNC and myFord and being able to operate the vehicle as an ecosystem. But do you see that the internal combustion engine, I mean, you think that's a technology to keep investing in in terms of... Absolutely....refining the...basically the type of car we've known for since cars have been around. And the improvement is dramatic. Our turbocharging direct fuel injection today increases the fuel efficiency by 30 percent, reduced the CO2 by nearly 20 percent. But it's all going to be about the economics because we need to continue to make breakthroughs on the batteries. We have lithium ion batteries today, but these batteries can weigh 400 or 500 pounds. They can cost $10,000 to $12,000. So the widespread adoption of this technology is going to be based on getting the economics to be more compelling. That's why we want to use our scale to be able to provide them more affordably. So when do we get to the point where the internal combustion engine is...we're not using it anymore. Where do you see...I mean, there's got to be a point where we say fossil fuels or at least that particular...one particular type is where we're cutting ourselves off from it. How far down the road is that? It's a great question. Obviously, we're a global company. We're serving markets all around the world that are different. For example, Europe is...and North America are way more mature in terms of technology infrastructure to support electrification than some of the emerging markets. So when we look at it, you know, there's years and years and years of development ahead for the internal combustion engine as we know it today, whether it's the fuel efficient gasoline engines, EcoBoost, direct injection, turbocharged, the high efficiency diesels that are very popular in Europe. So our strategy is to have a full range of efficient powertrains, and we're calling that strategy the power of choice. And what the power of choice means is let the customer choose what is the most appropriate powertrain for their lifestyle and their needs. For a customer in a city center, very short commutes, and so electric vehicle could be the absolute perfect choice. Yeah. And you think that adoption will happen? Let's say here in America. I mean, not everywhere, but it's got to start happening somewhere. Today, it's a very small percent of our total sales. It's increasing. You know, by the end of the decade, we could see 10, 15 percent of our vehicles being electrified using one of those technologies, whether it's a mild hybrid, stop-start, a conventional hybrid. When we were talking earlier, Alan mentioned the fusion. We actually have two hybrids in the fusion. We have a conventional hybrid, and we have a plug-in hybrid. So again, depending on your usage and the type of driving style, you pick the engine that best suits your needs, the power of choice again. And then with those, and I know you guys have to guess, so I'll just wrap it up, but with those vehicles, if they're utilizing electric in any way, sync is playing into that. Oh, absolutely. That's part of the sync universe now is the control. Is that a whole ecosystem where... Mobile app. Yeah, the mobile application, you can deal with your vehicle when you're outside the vehicle, you can check and see what your charging is, what your route's going to be. So it's almost like an application to manage your life. Right. All right, last question. What kind of car do you drive? I drive a different vehicle every night. Really? Either a Ford vehicle, Josh, or a competitor's vehicle, because we made a commitment to the consumer five years ago that every vehicle that we made was going to be best in class, and so we drive them to actually know what our competitors are. So you drive your own vehicles and the competitors. Now do you have to say you also drive the competitor's vehicles? No, of course we do. It's part of the business. We drive our vehicles, we drive our competitors. You don't have a weekend preference? I do. My Mustang. I love my Mustang. Yeah, it's very fitting. And my Taurus. Thank you so much, J.S. Thank you so much. Really appreciate it. Great having you here. Pleasure. Thank you. Thanks. Yeah, thanks man.