Electrifying New England October 2010 Ford Motor Company

Environmentally, Socially & Economically Sustainable Mobility From Our Executive Chairman… “Improved sustainable performance is not just a requirement, but a tremendous business opportunity.” - Bill Ford Our vision for the 21st century is to provide SUSTAINABLE transportation that is affordable in every sense of the word: Environmentally, Socially & Economically William Clay Ford 2nd

Environmental Sustainability Goals Reduce Emissions, including CO2 Eliminate Toxins Improve Air Quality Conserve Water Increase Use of Renewable Resources Increase Recyclability Increase Recycled Content Reduce Waste to Landfills Improve Energy Diversity Transparency in Reporting

Sustainability Strategy – Technology Migration 2007 2011 2020 2030 Near Term Mid Term Long Term Continue leverage of Hybrid technologies and deployment of alternative energy sources Begin migration to advanced technology Full implementation of known technology Near Term Mid Term Long Term Significant number of vehicles with EcoBoost engines Electric power steering 70 – 80% Dual clutch and 6 speed transmissions replacing 4 and 5 speeds Increase Hybrid applications Increased unibody applications Introduction of additional small vehicles Battery management systems 75% Aero improvement up to 5% EcoBoost engines available in nearly all vehicles Electric power steering 100% Six speed transmissions 100% Weight reduction of 250 – 750 lbs Engine displacement reduction aligned with weight save Additional Aero improvements up to 5% Increased use of Hybrids Introduction of PHEV and BEV Diesel use as market demands Percentage of internal combustion dependent on renewable fuels Volume expansion of Hybrid technologies Continued leverage of PHEV, BEV Clean electric / hydrogen fuels

Announced Ford Electrification Projects: Key is Leverage of High Volume Global Platforms 2004 CY 2010 CY 2012 CY 2018+ CY Transit Connect (Global C-Platform) BEV Battery Electric Vehicles Focus (Global C-Platform) PHEV Plug-in Hybrid Electric Vehicles Global Platform Global C-Platform Next Generation HEV HEV Hybrid Electric Vehicles Escape Global CD-Platform Next Generation HEV Fusion/Milan 4

2011 2020 Mid Term TRANSIT CONNECT BEV 2010 5

2011 2020 Mid Term PASSENGER CAR BEV 2011 6

PLUG-IN HYBRID 2012 Mid Term 2011 2020 PRODUCTION PLATFORM NOT YET ANNOUNCED EARLY/DEVELOPMENT WORK WAS DONE ON THE ESCAPE PLUG-IN HYBRID 2012 7

The key to success will be partnerships. What will it take to Commercialize Electric Vehicles? Cost-competitive technology Ownership (purchase and operation) costs as low as or better than gasoline vehicles Infrastructure Public, private, business, retail recharging infrastructure Vehicle to grid integration Incentives and education – federal and local The key to success will be partnerships.

The Key is Partnerships

Ford, DOE, EPRI and Utility Partners

Today’s Ford Escape Plug-in Project Formed in 2007 Unique partnership between automotive and utility sectors to accelerate the commercialization of PHEVs Project goals: Creation of New Business Models Development of open architectures, standards and specifications Create Customer Demand based on realistic expectations Diversifies transportation energy supply Two industries connected by a common fuel … driving our transportation and energy future…

Affordable Technology - Batteries Largely due to the battery, plug in electric vehicles are considerably more expensive than comparable ICE vehicles. Efforts are underway to address battery costs Pre-competitive industry research through the US Automotive Battery Consortium (USABC). Significant federal funding to establish domestic manufacturing and supply chain. Creating the demand for Lithium-ion batteries in stationary applications could make battery electric vehicles more competitive: New: economies of scale will reduce initial purchase price Used: residual value will improve the financing opportunities

Infrastructure Charging Customer Segments Most Frequent Less Frequent Main charge spot located in garage or driveway of residence. For fleets customers, main charge location is fleet depot where multiple chargers could be installed. Main charge location is work – allowing urban commuters/street parkers to have reliable charge. Also allows extended range for home chargers. For occasional trips, municipal charge locations could be viable option. If reservation system is implemented, could be used for main charge location. Charging Infrastructure is a key enabler to BEV’s – regardless of where the consumers end up charging their vehicles.

Key Elements of the EV Infrastructure Smart vehicle to grid integration is necessary to minimize the impact of plug-in vehicles on the grid and to achieve charging efficiencies Time of use (load leveling) Renewables (charge when the wind is blowing) Consistent communication protocols are necessary National solution Open architecture Ability to charge anywhere, anytime? Bi-directional communication is necessary, bi-directional powerflow is not. Faster charging will be a key enabler of broader adoption (ie., <15 minutes).

Incentives and Education Closing the cost gap between plug-in vehicles and traditional technology will require additional incentivization – Federal, state, and local. Need to motivate purchases to drive toward economies of scale Non-fiscal incentives can be effective (eg., preferential parking, HOV lanes, etc.) Consumer Education is critical to create rational expectations Impact of temperature and accessories on range Charging impacts on battery life and condition Charging requirements – home, work, and public. This is not infrastructure Incentives are key to bridging the cost gap between plug in electric vehicles and more traditional technologies Incentives for infrastructure investment are also supported. Don’t always have to be fiscal – HOV lanes did a lot to push HEVs in the market; preferential parking, etc. Education is necessary to ensure consumers find the right car for their needs, and have access to the right infrastructure. How will their driving style impact performance? The climate of their region? Their use of interior accessories? What infrastructure do they need? How much time will their vehicle take to recharge? Is 240V necessary, or can they charge with 120V? While most plug-in vehicles will be designed to charge with either 240V or 120V, plugging in your car requires equipment more advanced than just an extension cord. Even 120V charging requires a simple EVSE that provide safety features.

Electrification of vehicles: not a new idea ….. In the early 1900’s more than 27 companies were building electric cars In 1914, Henry Ford and Thomas Edison experimented with an electric car using by Edison Batteries In 1915 the Ward Motor Vehicle Company offered an electric wagon for $875 on an 1yr installment plan for the vehicle and a $10.50/month rental fee for the Edison Storage battery Electrification is not a new idea.

Most Important Reason for Purchasing Electric Drive Vehicles is Fuel Savings Note: this 2009 survey is of car buyers - the target public audience, not first adopters, and thus provides a more realistic insight to the market for larger volumes. The good news is, customers recognize the fuel cost savings potential of battery electric vehicles. It’s interesting to note that “making a statement”, for these non-first adopters, was the lowest rated priority for over 60%. Over 70% of respondents indicated that fuel cost savings were the main reason for purchasing a BEV, PHEV or HEV. Source: 2009 Ford / University of Michigan Consumer Survey

Commercial Challenges However, customers are only willing to spend so much for that fuel economy improvement. 65% of the customers would only be willing to pay up to $3,000 to reduce fuel costs in half, a price that is comparable to today’s incremental costs for an HEV. And while some customers would be willing to spend up to $10,000, even that does not cover the incremental cost of an all electric vehicle battery system. Over 65% of customers would only be willing to pay up to $3,000 to reduce fuel costs in half – a price that is comparable to today’s incremental cost for an HEV. Source: 2009 Ford / University of Michigan Consumer Survey

Conclusions Electric vehicles – in many shapes and flavors – are coming; we need to make sure the market is ready for them. We need to focus on our common customer, working together to ensure they are comfortable with the new technology. It has to be easy: access to infrastructure where they need it, and where they want it Good communication about rates and options. An understanding of what EV technologies are: PHEV, EREV, BEV, HEV Ability to pick the best technology for their needs and personal goals. Foreknowledge of future charging needs. Streamlined permitting processes. Moving forward we need to continue working together: To get costs down, Car companies and utilities need to work together to identify potential hot-spots – clustered demand that may cause infrastructure challenges. We all need to work together to provide the education and outreach to educate the market.