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Advanced Vehicle Technologies and

Alternative Fuels

Curtis MaglebyDirector, State and Local Government Relations

NCSL Advisory Council On EnergyNovember 27, 2007

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•• 8 generations since mechanical 8 generations since mechanical

power replaced animal powerpower replaced animal power

•• 4 generations since automobile 4 generations since automobile

inventedinvented

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•• to impact the planetto impact the planet’’s s

total ecosystemstotal ecosystems

•• to understand the to understand the

collective impactcollective impact

•• to have an opportunity to have an opportunity

to redefine our to redefine our

relationship with planetrelationship with planet

We are the first We are the first

generation:generation:

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"The automobile has brought freedom of "The automobile has brought freedom of

movement and prosperity to billions of people movement and prosperity to billions of people

around the world. At the same time, the costs of around the world. At the same time, the costs of

the tradeoffs associated with automobiles have the tradeoffs associated with automobiles have

been rising, and the need to address them has been rising, and the need to address them has

become increasingly urgent. Ford has a long become increasingly urgent. Ford has a long

history of environmental innovation and a renewed history of environmental innovation and a renewed

commitment to finding solutions that work for commitment to finding solutions that work for

everyone." everyone."

Bill Ford, Executive ChairmanBill Ford, Executive Chairman

Powertrain Technologies − Timeline

Near Term Mid Term Long Term

Sp

ecif

ic B

en

efi

t

Deployment TimeframeDeploymentDeployment

Development

Flexible Fuel EnginesFE % (15) - (25), but alternative fuel

Hybrid PowertrainFE % 5 - 45

Advanced Diesel ICEFE % 25 - 35

Fuel CellFE % 90+

Plug-in HybridsFE % 35 - 90

Ford continues to develop all of these Powertrain Technologies

1.5x1.5xCostCost

3x3xCostCost

6x6xCostCost

25x25xCostCost

1.1x 1.1x CostCost

Advanced Gasoline ICEFE % 15 - 201.2x1.2x

CostCost

Today

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Advanced Gasoline Engines

Benefits

� Reliable and familiar to consumers

� Compatible with ethanol fuel blends up to 10%

� U.S. gas prices relatively low compared to other markets

� Approaching near-zero emissions

� Fuel economy tradeoffs required to comply with increasingly stringent emissions and safety standards

� Cost effectiveness of incremental technologies

Challenges Key Facts

� Incremental improvements in efficiency: Six Speed Transmissions, Variable Displacement Engines, Turbo Direct Injection, Variable Cam Timing, Variable Compression Ratios

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E85 Flex Fuel

Benefits

� Promotes U.S. energy security and fuel diversity

� Agricultural-based renewable fuel

� Offers fuel flexibility for customers

� Incremental cost absorbed by Ford

� Limited fuel infrastructure

� Fuel cost vs. gasoline – 20% price differential needed

� Customer acceptance of fuel

� Fuel system components more expensive than gasoline

Challenges Key Facts

� Over 6 million E85 FFVs on the road today in the U.S.

� About 1,100 E85 stations in the U.S.

� The 5.4L F-Series is Ford’s latest FFV

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Flexible Fuel Vehicle Flexible Fuel Vehicle Flexible Fuel Vehicle Flexible Fuel Vehicle

FeaturesFeaturesFeaturesFeatures

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Why Ethanol Now?Why Ethanol Now?Why Ethanol Now?Why Ethanol Now?Opportunity for Immediate Impact

• Ford has placed over 2 million E85 FFVs on America’s roads

• As a whole, U.S. automakers have produced more than 6 million E85 flexible fuel vehicles

• If all of these vehicles were operated on E85, over 3.6 billiongallons of gasoline a year could be displaced.� That’s like saving a full year of gasoline consumption in a state like

Missouri or Tennessee.

• Ford, GM and DaimlerChrysler voluntarily committed to doubling our production of FFVs by 2010.� We expanded that commitment to include half our vehicles each year

by 2012, provided sufficient infrastructure is in place

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What Is Needed?What Is Needed?What Is Needed?What Is Needed?“Integrated Ethanol” …more E85 Stations with a focus on production/distribution/retail links to deliver customer value

E85 Availability Primarily in the Midwest (presently about 1,100stations – out of about 170,000 retail gasoline stations nationwide)

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Advanced Technology Diesel

Benefits

� Significant increase in fuel economy (20-30%)

� Higher performance, less noise, less odor

� Improved emissions� Ample refueling

infrastructure

� Lingering public perception

� Meeting stringent U.S. emission standards

� Fuel quality improvements (low sulfur, cetane)

� Higher incremental cost for vehicle and fuel

Challenges Key Facts

� All Ford diesel applications can use 5% biodiesel blends

� Low NOx levels may be achieved with urea co-fueling

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Hybrid Electric

Benefits� Significant increases

in CITY fuel economy(full hybrids)

� Uses existing fueling infrastructure

� Can achieve near zero emission levels

� Full-hybrid technology is most effective in city and

stop-and-go driving

� Incremental cost for hybrid option

� Limited U.S. supply base for battery technology

� Applications to broader vehicle segments and use profile (e.g. air conditioning)

� Customer acceptance/ value

�

Challenges Key Facts� Wide variety of hybrid

technologies exist across the industry (mild to full)

� Ford delivered 20 HEV-FFV demo vehicles this spring

� Ford is expanding hybrid applications –5 models by 2008

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Plug-in Hybrids

Benefits� Breakthrough fuel

economy improvements for customers with 20-40 miles daily use

� Off-peak electric charging provides low-cost power opportunity

� Interconnectivity with home/business power system can offset peak load costs

� High cost of battery storage systems (2-3x hybrid systems) requires new business model involving wind, utilities, renewable fuel providers and policy makers

� Battery must complement stationary applications to ensure high residual value after vehicle use

Challenges Key Facts� Ford and Southern

California Edison collaborating on industry first demo program

� Ford to deliver small fleet of vehicles for testing

� High-density lithium ion battery cost exceeds $15,000; long-life characteristics can support vehicle and post-vehicle energy storage applications

14Ford Leadership - developing

tomorrow's Plug-in HEV's

Rear Cargo Area1) replace production high voltage battery

with high energy Li-Ion battery 2) add battery charger3) add gateway module for plug-in control 4) revise rear structure for added weight

and safety performance5) redesigned suspension for added weight

Transaxle/Engine Compartment1) modify transaxle oil lubrication/cooling circuit for

extended engine-off durability2) add oil to air heat exchanger to increase continuous

operating capability of electric machines

High Voltage EDS1) increase wire

diameter to handle 60 kW peak power

2) Modify safety shutdown

110 V AC plug-in door

Other Areas1) Emissions - need revise strategy to

meet PZEV w/extended engine off time2) Climate control - need new approaches

for heating vehicle and defrosting during extended engine off time

Brakes / Chassis1) Update regen and brakes/chassis for revised weight distribution/function

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Appliances

Tools

Windmills

Home Generators

Current State: Independent Solutions

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Advanced Lithium

Batteriesfor Mobile and

StationaryUses

Utility DataManagement

and Operations

Utilities & Autos Working TogetherUtilities & Autos Working TogetherUtilities & Autos Working TogetherUtilities & Autos Working Together

SmartAppliances

Edison SmartConnect™

RenewablesWind/ Solar

Exploring Customer Value From Exploring Customer Value From ““Plugging InPlugging In””

• Use low cost off-peak energy to charge vehicle

• Storing energy in advanced batteries - “drive” the

wheels and occasionally “power” the house

• Storing energy on-site from wind/solar generation

• Using Edison’s SmartConnect ™ advance meter to

provide both customer information and control

•Night time energy use to enable renewables

• Finding new uses for “new” batteries will lower costs of future hybrid batteries

Lower PHEV acquisitionLower PHEV acquisition

& Ownership Costs?& Ownership Costs?

Utility Value?Utility Value?

Off Peak

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PHEVs - Solar and Wind Power Common Issues

� Solar energy

� peaks about 4 hours before daily peak load� Is intermittent and varies by season� Needs back-up power or storage

� Wind energy

� Is intermittent and varies by season � Peaks at different times in different seasons and locations� Is hard for the grid operator and power plants

� A “must take” resource � Requires fast ramping up and down of power plants� Causes frequency regulation problems

� Needs back-up power or storage � May be hard for grid to have large amount of wind w/o

storage

Goals• Accelerate the introduction of Plug-in Hybrid Vehicles to the US market • Develop data/knowledge leading to creation of new viable business models• Lead bringing key stakeholders together -- utilities/suppliers/government• Utilize Ford and SCE unique customer knowledge and interface experience

to develop customer driven solutions.

Challenges• Value proposition of PHEV's not clear -- Customer/OEM/Utilities/others • Much hype and misunderstanding surrounding PHEV's• Vehicle test and interface standards undefined• Development of energy storage technology, raw material, & manufacturing • Maturity of vehicle and grid technologies to support

• Smart connection• energy storage (i.e. battery) + other HEV components

Two industries tied together through a

common fuel to change the transportation

and energy paradigm

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Stabilizing Atmospheric

CO2 Levels

200200

300300

400400

700700

19001900 19501950 20002000 20502050 21002100 21502150 22002200 22502250

YearYear

Atm

osp

heri

c C

on

cen

trati

on

(A

tmo

sp

heri

c C

on

cen

trati

on

(p

pm

pp

m))

Busi

nes

s A

s U

sual

Re

du

ce

d R

isk

R

ed

uce

d R

isk

of

of

En

vir

on

me

nta

l Im

pact

En

vir

on

me

nta

l Im

pact

500500

600600

Accepted Range To Minimize Environmental Impact

650 ppm: 2.3 - 3.7 °C

550 ppm: 2.0 - 3.4 °C

450 ppm: 1.7 - 2.8 °C

s3

Slide 19

s3 statchio, 10/8/2007

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Contributions to CO2 emissions

Japan and

Australia

6%

Eastern Europe

4%

China

14%

Developing Asia

12%

Mid East

5%

Africa

4%

Central and Sourth

America

4%

Russia

6%

Canada

2%

United States

24%

Western Europe

17%

Mexico

2%

� On-road light-duty cars and trucks contribute about 19% of US and 14% of global CO2 emissions.

� Vehicles are a significant source of GHGs but are often perceived to be the major source.

Global

United StatesUS Transportation

References: - Global: Energy Information Agency, International Energy Outlook 2006, Table A10- United States: Energy Information Agency, Emissions of Greenhouse Gases in the US, Tables 7-10- US Transportation: EPA, Greenhouse gas Emissions from the U.S. Transportation Sector 1990-2003, Figure 2-2

Industrial

18%

Transportation

32%

Electric Utilities

39%

Residential

7%

Commercial

4%

Light Duty Trucks

23%

Other Trucks

21%

Buses Boats

Trains

5%Aircraft

10%Other

3%

Cars

38%

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FuelIndustry

Auto

IndustryConsumers

Government

Integrated Approach With Shared Integrated Approach With Shared Integrated Approach With Shared Integrated Approach With Shared

ResponsibilityResponsibilityResponsibilityResponsibility

Our initial modeling efforts show that the most cost effective solutions to lowering CO2 emissions is a combination of bio-fuels and vehicle technology advancements.

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Vehicle Technology PathVehicle Technology Path

Volume roll-out of Hybrid

technologies and alternative energy sources

Long Term

Near term

�Significant GTDI

�Dual clutch and 6 speed replacing 4 and 5 speeds

�Increased hybrid applications

�New smaller showroom entries

�Battery management systems

�Improve aero to 5%

Mid term

�Weight reduction of 250 - 750 lbs

�Engine displacement reduction

�Widespread GTDI

�Increased use of hybrids as a percentage of gas engines

�Diesel up to 10%

�Additional Aero improvements

Long term

�Percentage of internal combustion dependant on renewable fuels

�Volume introduction of HEV, PHEV

�Introduction of BEV and fuel cell vehicles

�Clean electric / hydrogen fuels

2007 2012 2020 2030

Near Term

Begin migration to advanced technology

Mid Term

Full implementation of known technology

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Global Market DriversGlobal Market DriversGlobal Market DriversGlobal Market Drivers

Different needs drive different solutions. No Single Solution Fits All.

Customer ExpectationsCustomer Expectations

TaxationTaxation Climate ChangeClimate Change

Energy SecurityEnergy Security

Population

Density and

Transportation

Demand

Population

Density and

Transportation

Demand

RegulatoryRegulatoryAvailable IncomeAvailable Income

Fuel Cost &

Infrastructure

Fuel Cost &

Infrastructure

CompetitionCompetition

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Low Carbon Fuels Migration PlanLow Carbon Fuels Migration Plan

Mid TermNear Term

Begin migration to advanced technology

Full implementation of known technology

Volume roll-out of stretch technologies and alternative energy sources

Long Term

Near Term Mid Term Long Term

2007 2012 2020 2030

�1st gen biofuels ramp-up to capacity

�Growth of fossil fuel peaks as advanced vehicle tech migrates into the in-use fleet

�2nd gen biofuelsbecome viable

�Total renewable fuel capacity is expanded

�Fleet programs confirm readiness of plug-in HEV and hydrogen vehicles

�Renewable fuels are the primary content as fossil fuels ramp down

�Clean alternative fuels (electricity and hydrogen) enable volume applications of plug-in HEVs, H2ICEs, and eventually FCVs

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Consumer InvolvementConsumer Involvement

Mid TermNear Term Long Term

Near Term Mid Term Long Term

2007 2012 2020 2030

�Consumer demand is inelastic in the near term.

�Broader knowledge of and experience with advanced technology vehicles.

�Consumer demand more elastic longer term.

�Consumer’s choice of vehicle and fuel reflects carbon constrained world.

�Urban planning and land use support demand for reduced transport.

�Moderate impact from vehicle and fuel price signals.

�Greater availability of advanced vehicle technologies and low carbon fuels.

�Increased mass transit and congestion reduction measures.

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U.S. Fleet Fuel Consumption: U.S. Fleet Fuel Consumption: U.S. Fleet Fuel Consumption: U.S. Fleet Fuel Consumption:

Influenced by Vehicle Miles Influenced by Vehicle Miles Influenced by Vehicle Miles Influenced by Vehicle Miles

TraveledTraveledTraveledTraveled

63%

GasolineConsumed(Bils. Gallons)

719 Billion

13% 38%Crude Oil

Imports

1960s1960s 1970s1970s 1980s1980s 1990s1990s 2000s2000s

61 101 137

Total MilesTraveled

2.9 Trillion

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U.S. New Vehicle PricesDown 30% Since 1996

* Adjusted for Inflation

-5

-4

-3

-2

-1

0

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07

Perc

en

t C

han

ge O

ver

Pri

or

Year

-1.0 %

-3.3 %

-3.0 %

-3.7 %

-2.7 %

Latest (June 2007): -4.5 %

U.S. New Vehicle PricesPercent Change Over Prior Year

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US EU

49%Gasoline

51%Diesel

Fuel

92%Automatic

20%Automatic

80%Manual

8%Manual

Transmissions

28%4-Cyl.

Avg.

3.5L

Cylinder Count

3%5-Cyl.

47%6-Cyl.

23%8-Cyl.

Avg.

1.7L

99.8%Gasoline

0.2%Diesel

US EU

84%4-Cyl.

1%8-Cyl.

8%6-Cyl.

2%5-Cyl.

5%3-Cyl.

US EU

Autos in Europe vs. United States

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B class C class CD class D class Light Truck

SUVVans

Vehicle Segmentation:Vehicle Segmentation:Vehicle Segmentation:Vehicle Segmentation:

Ford U.S. vs. Ford EuropeFord U.S. vs. Ford EuropeFord U.S. vs. Ford EuropeFord U.S. vs. Ford Europe

US EUUS EU US EU US EU US EU US EU

29%

0%

39%

6%

13%9%

0%

27%

1%

54%

18%

4%

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Corporate Average Fuel Economy: Corporate Average Fuel Economy: Corporate Average Fuel Economy: Corporate Average Fuel Economy:

Determining A ManufacturerDetermining A ManufacturerDetermining A ManufacturerDetermining A Manufacturer’’’’s CAFEs CAFEs CAFEs CAFE

Auto

Industry

• CAFE is the sales weighted harmonic average fuel economy of a manufacturer’s fleet of passenger cars or light trucks.

• There are three separate fleets an automaker must manage – domestic passenger car, import passenger car and a truck fleet (combined).

• CAFE constrains the mix of products that Ford can sell. Recently reformed light truck rules attempt to set standards independent of mix, but this has not yet been applied to passenger cars.

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Corporate Average Fuel Economy: Corporate Average Fuel Economy: Corporate Average Fuel Economy: Corporate Average Fuel Economy:

Determining A ManufacturerDetermining A ManufacturerDetermining A ManufacturerDetermining A Manufacturer’’’’s CAFEs CAFEs CAFEs CAFE

Calculation Methodology – Example Calculation

• Car and truck fleet CAFE values are calculated via a “harmonic” average versus a simple “arithmetic” average.

• A manufacturer produces 1,000 units of Vehicle A and 1,000 units of Vehicle B for a total production volume of 2,000 units

• If Vehicle A achieves 40 mpg and Vehicle B achieves 20 mpg, using simple arithmetic averaging we would expect a 30 mpg CAFE. However, with harmonic average:

FOR A COMPANY TO MAINTAIN A 30 MPG CAFE LEVEL WITH THESE TWO

MODELS, IT WOULD HAVE TO PRODUCE TWO 40 MPG VEHICLES FOR

EVERY 20 MPG VEHICLES IT SOLD

2000 [ (1,000 x 40) + (1,000 x 20) ]

[ (1,000 / 40) + (1,000 / 20) ] 2000Harmonic = = 26.67 mpg Arithmetic = = 30.00 mpg

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The Role of Stakeholders:The Role of Stakeholders:The Role of Stakeholders:The Role of Stakeholders:

An Integrated ApproachAn Integrated ApproachAn Integrated ApproachAn Integrated Approach

FuelFuel

IndustryIndustry

AutoAuto

IndustryIndustry

ConsumersConsumers

GovernmentGovernment

� Invest in developing and marketing E85� Increase R&D into advanced low carbon bio-fuels (including

cellulosic ethanol)

� Accelerate advanced technology vehicle deployment� Continue to improve the efficiency of our products� Educate consumers/provide “eco-driving” training

� Policies to align consumer action with vehicles and fuels� Incentives for advanced technology vehicles & E85 fueling

infrastructure development� Investment in improved road traffic management

infrastructure� Public awareness and education

� Drive vehicles in an energy-conscious fashion� Vehicle choice and miles traveled ultimately determines how

much fuel is consumed