Published on December 7th, 2016 | by Zachary Shahan0
Retraction On Our Article About EV Comments From Ford CEO Mark Fields, But Just Barely …
December 7th, 2016 by Zachary Shahan
Update: Several hours after publishing, I added one key chart (the first chart in the article) after forgetting to include it initially.
We reported yesterday that Ford CEO Mark Fields said there was no market for electrified cars in the US. This seems to have been a misrepresentation of what was actually said in an interview with Bloomberg … but just barely.
After this was brought to my attention by some readers, I unpublished the article and we are retracting the claim. However, I think it’s worth specifying further exactly what Mark Fields said, what Ford is doing, and what is sitting right between the lines.
Below are Mark’s exact comments transcribed from the Bloomberg video after the news anchor asked him about an Alliance of Automobile Manufacturers letter asking for a review of all auto regulations:
“Well when you look at the policy recommendations we support, obviously we will continue to advocate for currency manipulation rules, for free and fair trade; we’ll continue to support comprehensive tax reform — and to your point, we want to make sure that fuel economy regulations are aligned with market realities.
“And I think we’ll engage as we always have done in very positive discussions with the administration and policymakers on what that means not only for our business, but importantly, what does it mean in terms of providing jobs and economic growth here in the United States?”
The news anchor then cut in with further questioning on this topic: “There’s a review coming up — I believe in 2018 — as to those fuel economy standards. If, in that world, you got to align the fuel standards with the reality of the world, what would it look like? How would it be different from what we have now?”
“Well, I think — when we agreed to the one national standard back in 2011, one of the things we agreed to was a checkpoint in 2018 — what they call a midterm review. And listen, as a company, we want to make sure that our vehicles are as easy on the planet as possible. We want to have great fuel economy for our customers. But we also want to make sure that those regulations are aligned with how consumers are reacting to some of the new technologies and the new economic realities. And that’s the discussion we want to have, because we want to make sure our vehicles provide great customers satisfaction but customers can afford it and it can provide economic growth in the country.”
There was a lot of corporate speak there, of course. I think the point was obvious and was actually more or less what our writer said and how he paraphrased it. However, there were some leaps in assumption there, so I’m going to take out several of the lines above and offer my own personal take on what I think Mark’s points were and what he was saying Ford would be pushing for. Also, below these comments is another section of the interview that wasn’t in the video and is more directly where the “no market” claim came from.
- “… we want to make sure that fuel economy regulations are aligned with market realities.”
The emphasis there was added because Mark added emphasis to those parts while speaking. The implication — which I think was obvious — was that fuel economy regulations don’t currently match certain “market realities.” He seemed to be saying that US fuel economy standards were too tough given what consumers want. That’s completely absurd.
Fuel economy routinely — even with very low oil prices — shows up as a top (or the top) interest of consumers. Simply by electrifying more vehicles, Ford and others could easily meet the fuel economy standards. If a plug is added, that also improves convenience for owners. A decent electric motor also adds instant torque/power that consumers love. For years, according to surveys conducted by Consumer Reports, plug-in vehicles like the Chevy Volt and Tesla Model S have led customer satisfaction surveys.
Where are fuel economy standards not matching up with market realities? There more to say on this, but I’ll leave it for future responses.
- “… what does it mean in terms of providing jobs and economic growth here in the United States?”
Well, it is hard to tell here if any specific thing is being requested, but I think it’s worth noting that big auto companies have been outsourcing jobs while Silicon Valley startup Tesla has created thousands of new auto jobs in the US — by flying far past lame fuel economy standards and delivering to consumers zero-emissions cars that people absolutely love. A giant “gigafactory” is being built in Nevada in order to provide the batteries for these cars. These are the “auto job industries” of the future. These are products that go so far beyond fuel economy regulations that it doesn’t even make sense to care if the fuel economy requirement is 54.5 MPG/MPGe or 100 MPG/MPGe.
Job creation is just another top reason why automakers should be onboard with innovation rather than trying to stifle it.
- “… as a company, we want to make sure that our vehicles are as easy on the planet as possible.”
Well, that’s just pure bull shit. If that were true, Ford would have taken up a leadership role in the electric car field years ago. It wouldn’t be content to produce, sell, and horribly market (see this and this) compliance cars for several years. It obviously wouldn’t lobby to lower fuel economy standards.
In fact, if such a strong claim were true, Ford would be aiming to become the first big automaker that was 100% electric — but it isn’t doing anything of the sort.
Thankfully, Ford has finally come around and said it doesn’t want to simply make compliance EVs any more, and that it wants to lead in the electric SUV and pickup truck markets. But it seems any such products are still years off, since Ford took so long to come to this decision.
- “But we also want to make sure that those regulations are aligned with how consumers are reacting to some of the new technologies and the new economic realities.”
Ah, yes, how are customers responding? On the one hand, Ford has only sold ~21,000 plug-in cars this year in the US (and not many more worldwide, where it doesn’t really offer these models). On the other hand, ~400,000 people have put down a $1,000 reservation for a $35,000 (base price) Tesla Model 3 — years in advance of the model being produced and with very little marketing. With >100,000 of them putting the reservation down before even seeing the car. Market demand should tell us something, but any effort to weaken fuel economy regulations rather than step up to the freakin’ plate are cowardly, fundamentally immoral, ignorant, and should not be treated seriously. Unfortunately, we live in a “post-truth” world.
There was apparently more to the interview that wasn’t in the video, which is where our writer picked up the “no market” claim/paraphrase — in other words, Bloomberg first summarized Mark’s comments as saying that. Here’s the relevant section from Bloomberg‘s article:
“In 2008, there were 12 electrified vehicles offered in the U.S. market and it represented 2.3 percent of the industry,” Fields said in the interview. “Fast forward to 2016, there’s 55 models, and year to date it’s 2.8 percent.”
This isn’t exactly a formula for success, he said. “At the end of the day, you’ve got to have customers, so obviously there would be pressure on the business if there’s not a market,” he said.
Mark is falsely equating # of models with automaker effort to produce compelling electric vehicles and to market them beyond a very niche segment of the market (climate hawks). Mark should know as well as anyone how much effort has been put in by the large automakers. Ford’s models were completely compliance cars (they just cut some storage and seating space out of gas car models and stuck in batteries — there’s a hilariously sad Ford video about this from years ago that I’m unfortunately not finding now). Ford even admitted recently that these were only compliance cars, when noting that it now wants to go beyond producing compliance EVs.
Mark should also know how Tesla has done in the small portion of the market it essentially had to start in:
And Mark should know that Tesla is set to have similar success in a much bigger market, with ~400,000 reservations for an electric car that has hardly been marketed, a car that is sure to eat up a significant portion of Ford’s sales.
Mark should know that battery prices have fallen dramatically in the past few years, and that the industry is ripe for change. To imply that there isn’t demand in this market is completely dishonest, in my humble opinion.
I really hope Mark Fields and Ford’s team haven’t been reading my tips for trolling EVs. But …
Every step of the way — whether when it came to adding catalytic converters, increasing fuel economy, or adding seatbelts — America’s big automakers have fought progress. They fight & fight & fight, lobby & lobby & lobby — all in the name of consumers who “have shown” they don’t want change. The claims are generally bunk, especially since it’s hard for most consumers to know they want a better technology if you won’t show them the technology and why it’s actually better. Such claims remind me of this quote often attributed to Henry Ford:
“If I had asked people what they wanted, they would have said faster horses.”
Ironic that the legacy company of a genuine disruptor — a person who broke open a big new market by making progressive innovations — is now being held down by people who don’t want to be leaders in the car market of the future.
But let’s be honest, with this switch to electric vehicles, auto executives are in a tough spot. Just check out this exercise in accounting for fictitious auto giant “Bord.” It’s too bad they can’t be honest with us and their shareholders (unless caught in a massive diesel scandal).
Image credit: screenshot from Bloomberg interview
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