SOUTHFIELD, MICHIGAN—At a private dinner that was part of the press preview days at the Detroit Auto Show, Ford board chairman William Clay Ford seemed both exhilarated and apprehensive. “I’m excited about the way the country is going,” he said. “But with gas below $2 a gallon we need an energy policy that drives demand for the cars we’re building.” Ford isn’t getting behind a single option, but he mentioned a gas tax several times.

Make no mistake, Ford is going green. The company has two new hybrids, the 41-mpg Ford Fusion and Mercury Milano, and it is moving ahead with a compact battery-only electric vehicle for 2011. There will be a battery-operated commercial van next year, and its plug-in hybrid (I drove an early version a few months ago) arrives in 2012.

But will there be customers for all these green cars? Bill Ford hopes so. “We need clarity,” he said. “We don’t know what the volumes are going to be.” For that reason, Ford is planning to roll out only 10,000 of its battery cars, which will be based on the Focus. “If the demand is there, we can build more product,” said Lisa Drake, chief engineer for Ford’s Global Hybrid Strategy and Vehicle Programs. That’s the big if.

I was able to drive a “mule” of the battery car around downtown Detroit, and though it looked like an austere Focus, it was quite fun on the road. Electrics can boast of strong off-line acceleration, and this prototype (built in collaboration with Magna International) took off like a scalded cat. Range is in 100-mile range, with a 450-pound, 23 kilowatt-hour battery pack. How much will it cost? “We want to make it affordable,” said Drake. “It won’t be $120,000.”

Bill Ford describes its green efforts as “the right thing to do,” and he’s long had a reputation as the company’s environmental conscience. It clearly hasn’t deserted him now that Ford is embattled by the auto slowdown (though not as battered as GM or Chrysler). He says he’s talking with green eminences such as Paul Hawken and Amory Lovins, and is driving the new direction. “We’re betting that in the long term fuel becomes expensive again,” he said. “The bigger risk is doing nothing.”

If battery cars are the way forward, we’ll need infrastructure to plug them in, and Ford told me that he’s had multiple talks with Better Place’s Shai Agassi, which has signed deals to create charging networks with such diverse locations as Israel, Denmark, Australia and the city of San Francisco. “Better Place is an interesting model,” Ford said. “We have to be open-minded, not dogmatic. We can’t go green unilaterally.”

Jim's previous blog posts from the Detroit Auto Show:

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