Mulally: electric vehicles are our future

The times, they are a changin'. Carmakers that had seemed bulletproof, or at least too big to fail, are teetering on the brink of insolvency. Government regulations and stipulations on loan money are cinching down emissions and efficiency requirements. And tax incentives are spurring development of high-tech plug-in hybrids.

But that's just the tip of the iceberg, according to Ford CEO Alan Mulally. "In 10 years, 12 years, you are going to see a major portion of our portfolio move to electric vehicles," he said in front of a gathering at the Wall Street Journal's ECO:nomics conference in California.

But he's not forecasting the end of the internal combustion engine either. "Ten years is going to come very quickly and I think we'll have a significant improvement in the fuel efficiency in the internal combustion engine," said Mulally. They'll be used mainly in hybrids, however.

The driving force behind the switch to EVs? Rising energy prices, thinks Ford. The long-term view at the Blue Oval is that as abundant as transportation may be, it's fuel that is scarce, and switching to a more plentiful and universally available source - such as electricity - is the smart move.

To get to a future dominated by EVs, however, Ford has had to make some changes. A recent round of negotiations with the UAW saw significant saving on U.S.-built cars through $10 billion in reduced labor costs, reports Automotive News. The federal government is also offering big incentives on production of high-tech vehicles, though it has yet to distribute the funds, and President Barack Obama has called for one million plug-in hybrids on the streets by 2015, about half-way to Ford's 2019-2021 target for EVs.

Already, Ford has developed a number of battery-powered EVs, including a Ford Focus co-developed with Magna Steyr, and plans for an all-electric Transit Connect utility van are already in place to enter production by next year.