Letter from William Clay Ford, Jr.

As I look back on the last few years, I am inspired by how quickly and completely our company has transformed itself: from significant losses to significant profits; from a U.S. company with a global presence to one that is truly integrated globally; and from a company that was at times satisfied with average performance to one that is taking a leadership role in fuel economy, safety, environmental performance and technological innovation. In short, we have gone from being a company with a storied past to one with a storied past and a promising future.

We plan to build on this progress as the world economy recovers, using innovative technology to tackle global challenges. In 2010, for example, we began delivering a battery-powered Ford Transit Connect commercial van, the first of a new family of advanced lithium-ion battery-charged vehicles we are launching over the next three years. In 2011 we will begin selling the Ford Focus Electric, a battery-powered car, to the general public. Three other vehicles, including two next-generation hybrids and a plug-in hybrid, will launch in North America in 2012 and Europe in 2013.

We are offering a full range of electrified vehicles to make it easier for our customers to embrace this exciting new technology. In addition, we are doing everything we can to make these vehicles as affordable as possible. We are building our electrified vehicles on our highest-volume global vehicle platforms to reduce costs and increase quality. This also gives us more flexibility to meet market demand in different regions of the world and to ramp up production quickly if demand exceeds our projections.

We are also improving fuel economy across our entire portfolio to meet the needs of our customers and fulfill our commitment to reduce carbon dioxide (CO₂) emissions from our vehicles. For example, the all-new Ford Explorer with a 2.0L EcoBoost™ engine will have up to a 30 percent fuel economy improvement over the previous model.

You will find many more such examples throughout this report, as well as a detailed discussion about progress toward our science-based commitment to help stabilize CO₂ concentrations in the atmosphere at 450 ppm. That may sound complicated, but it is really quite straightforward. We figured out how much we need to reduce CO₂ emissions from Ford products and operations to do our share to keep atmospheric CO₂ concentrations from rising to a critical level. Then, we set a goal to reduce our emissions by that amount. We cannot achieve the needed reductions overnight, so we have mapped a series of reductions over time for each of the major regions in which we operate. We continue to plan our long-term global product portfolio to achieve these reductions.

A growing population and increased prosperity around the world will create tremendous opportunity for the automotive industry, as well as significant challenges. Today, there are about 800 million cars on the road, worldwide. With more people and higher levels of income in developing countries, experts predict that number could grow to between 2 and 4 billion vehicles by mid-century.

This growing vehicle population will increase concerns about the availability and affordability of fuel and the impact of CO₂ emissions on the environment. In addition, in the decades to come, 75 percent of the world’s population will live in cities, and 50 of those cities will have populations of more than 10 million people each. Traffic congestion and other mobility challenges could limit economic growth and compromise the quality of life in these crowded urban areas.

As we reach the limits of conventional models of mobility, we are looking at different models that offer a practical route forward. New approaches take a more holistic view of transportation needs and options, relying on collaborative partnerships and information technology to bring together existing services, products, technologies, infrastructure and design into something that is greater than the sum of its parts – smarter, more sustainable, more convenient, more equitable and better connected. We are exploring ways to leverage technological innovations to tackle mobility challenges.

For example, we are aggressively accelerating our commitment to wirelessly connected “intelligent” vehicles, also known as vehicle-to-vehicle communications. In 2011 we are doubling our investment in intelligent vehicles, forming a new 20-member task force of scientists and engineers to explore the technology’s broader possibilities and becoming the first automaker to build prototype vehicles for demonstrations across the U.S.

We believe intelligent vehicles that “talk” to each other through advanced Wi-Fi could revolutionize the driving experience, helping drivers avoid collisions and easing traffic delays to save both time and fuel costs. Congestion could be avoided through a network of intelligent vehicles and infrastructure that would process real-time traffic and road information and allow drivers to choose alternate routes.

The mobility challenge – and other global challenges we face as a society and an industry – present us with an incredible opportunity to add value for our stakeholders and shareholders. Companies that address these issues with solutions that customers want will gain a significant competitive advantage. That is the strategy we are pursuing at Ford. It is consistent with the long-held values of our company. It also positions us to continue to thrive by providing great products and value to society that build a strong business and a better world.

William Clay Ford, Jr.
Executive Chairman
June 2011