They said it at Brainstorm Green

Here are some highlights of FORTUNE’s Brainstorm Green conference, which wrapped up yesterday. I’m co-chair of the event, which brought about 300 corporate leaders, environmentalists, investors and academics to Laguna Niguel, CA, for three whirlwind days of talk about how business can help solve the world’s big environmental problems:

Alan Mulally at FORTUNE Brainstorm Green

The trouble with electric cars:  Batteries remain heavy and very expensive, adding about $12,000 to $15,000 to the cost of a Ford Focus that would otherwise be priced at about $22,000, said Ford’s CEO, Alan Mulally. During a q-and-a with the audience, he said:

…a battery for a hybrid vehicle is around a 2 kilowatt hour battery, weighs around 100 pounds, maybe around $2,000.  And as you move to a plug-in hybrid size, say around 8 to 10 kilowatt hours, then that weight moves up to around 300 pounds and the cost is around $7,000 to $8,000.  And then when you move into an all-electric vehicle the battery size moves up to around 23 kilowatt hours, it weighs around 600 to 700 pounds — some people actually are taking our seats to be able to carry the battery around, not us — and also they’re around $12,000 to $15,000….So, you can see why the economics are what they are.

Of course, drivers who pay $39,200 for a Focus EV will save a lot of money on fuel during the life of the car, depending on gas prices and how much they drive. That’s a reminder of another dilemma facing potential electric-car buyers.  Ford says its Focus can go up to 76 miles on a full charge, so it’s ideal for people (like me) who don’t drive much. But the less you drive, the longer it takes to recover the higher up-front costs of the car in the form of lower operating costs.

Even so, sales of hybrids and electrics were the fastest-growing segment in the U.S. auto market in the first quarter. They accounted for less than 5% of vehicles sold but Mulally said their share will grow as battery prices come down.

“We see this as continually growing,” he said. “This is a long-term journey.” [click to continue…]

Look who’s coming to Brainstorm Green

Next April, FORTUNE will again bring together some of the smartest people we know in sustainability for Brainstorm Green, the magazine’s annual conference on business and the environment.

This is will be our 5th Brainstorm Green–hard for me to believe, since I’ve been involved since the beginning–and we’ve again got a first-rate lineup of leaders from corporate America, the  environmental movement, the investment community and government, as well as a scattering of interesting writers, thinkers and doers about “green.”

Once again, the event will be held at the spectacular Ritz Carlton in Laguna Niguel, CA. Dates are April 16-18, 2012.

Alan Mulally

New faces for 2012 from the corporate world will include Alan Mulally, the president and CEO of Ford; Rob Walton, the chairman of Walmart; Andy Taylor, the chairman and CEO of Enteprise (they buy more cars than anyone in America); C. Larry Pope, the chairman and CEO of Smithfield Foods (they make more hot dogs than anyone in America, as I wrote in Smithfield Foods: Sustainable Pork?); Vance Bell, the chairman and CEO of Shaw Industries (the world’s largest carpet manufacturer, see my blogpost, This carpet has moral fiber); John Faraci, the chairman and CEO of International Paper; Gary Hirshberg, the CE-Yo of Stonyfield Farm; Russ Ford, the executive vice president of Shell; Bea Perez, the chief sustainability officer of Coca-Cola; and Trae Vassallo of Kleiner Perkins. [click to continue…]

Does Ford have a better idea?

Alan Mulally is getting excited.

The president and CEO of the Ford Motor Co. is talking up the Ford Fusion, a retooled, restyled, fuel-efficient midsize car that’s being introduced this spring.

“41 miles per the gallon!” exclaims Mulally. “I might add—eight miles per gallon better than the Toyota Camry! What do you think of that?”

Mulally’s not the effusive type. He’s an engineer, who after nearly 40 years at Boeing, became CEO of Ford in 2006. He’s interested in the details of composite materials, aerodynamics, energy efficiency, power trains and all that, but not in a way that would stir anyone’s passion.

But the Fusion has him all charged up, and that’s because it represents the future of Ford, Mulally said during an appearance at the Wall Street Journal’s Eco:Nomics conference. He was introduced as “the one American auto industry CEO who is not taking bailout money,” a remark that drew cheers from the crowd. Politely, no one brought up the fact that Ford posted a $5.9 billion loss in the fourth quarter of 2008, that it is revamping its balance sheet and that you can buy a share of its stock for less than the cost of a Big Mac. In today’s economy, he’s still an industry leader.

Understandably, Mulally—who, in fairness, didn’t create the mess he is now trying to clean up—preferred to focus on the future. He  said Ford now believes that, even with low gas prices, we are moving towards a world of rising oil prices, more fuel efficient cars (including dramatically more efficient internal combustion engines), smaller cars in the U.S. and elsewhere, and a shift to electric vehicles in the next decade or two.

“This is a tremendous transformation for Ford,” Mulally said.

Without giving a timeline, Mulally said he expects that Ford’s vehicle mix will do a U-turn in coming years. Small and medium-sized cars will generate two-thirds of the company’s revenues. Today, they contribute about one-third, with big cars, SUVS and trucks dominating the lineup. Economics will drive the shift.

“Over time, we’re going to be seeing ever increasing prices for energy,” says Mulally.

Among other things, Mulally said that Ford will introduce an all-electric van in 2010 and an all-electric sedan in 2011. “You’re going to see a major portion of our portfolio become electric vehicles,” he said.

He acknowledged that Ford has “lost a generation” of car buyers but said the company can win them back with higher quality, fuel-efficient, safer cars. The Fusion is a step in that direction—the hybrid version gets 41 mpg city and 36 highway and sells for about $28,000, the gasoline version gets 34 mpg highway (best in class) and 23 mpg in the city and sells for about $20.000 and the car is winning excellent reviews. USA Today’s James Healey wrote: “The 2010 Ford Fusion hybrid is the best gasoline-electric hybrid yet.” My bet: There’s an appetite among American car buyers for a well-made, U.S.-branded hybrid car. (The Fusion is assembled across the border in Mexico).

Still, Mulally acknowledged: “The hybrids are very tough economically.” Its takes years of driving lots of miles, even with high gas prices, to recoup the cost created by adding an electric motor to the existing gas engineer. An all-electric car makes  more sense, especially as battery technology improves and battery prices come down—no easy feat. Some people, including Mulally, worry that China, Korea and Japan are so far ahead of the U.S. when it comes to batteries that our dependence on Mideast oil could give way to a dependence on Asian battery manufacturers.

A final thought from Mulally: He put a positive spin on the congressional hearings that brought the auto industry CEOs to Washington, even those who flew private jets to get there.

“Who would have thought that going and testifying for 13 hours would be a positive?” he said. “We went there for the good of the industry. We did not need taxpayer money. We went through it because our competitors needed the money.” If GM and Chrysler go bankrupt, he said, auto industry suppliers could follow and that would endanger Ford.

So what was the upside? “Out that came, Ford was different. The whole world now knows that Ford is different. They’ve got great cars. They’re best in class. Maybe they’re worth another look. I’m going to give you a lot of reasons to consider Ford.”