How Ford Could Change Transportation (Again)
Like many companies in 2020, Ford too had a bad year. Ford’s sales of new vehicles in the U.S. fell by 15 percent. Making matters worse, it was also less profitable than its competitors. Ford’s profit margin was 6 percent in 2020, compared to an average margin of nearly 15 percent for GM, Toyota, and Honda.
Although this downturn can mostly be attributed to the COVID-19 pandemic, Ford’s sales of new vehicles in the U.S. market had been declining at an average rate of nearly 3 percent for the last 3 years prior to the pandemic. But it looks like the Detroit giant is not going down without a fight. In 2021 Ford announced plans to invest $7 billion USD into autonomous vehicle (AV) tech and $22 billion in electric vehicle (EV) development in the next 4 years. These massive investments are part of Ford’s long-term play to change the way Americans move.
Mobility as a Service
The inventory of vehicles in the US could be reduced by 22 percent by 2030. Why? Mobility as a Service (MaaS). Users don’t want to drive, they want to move, and move cheaply. Connected, autonomous, electric vehicles (CAEV) are the drivers of MaaS adoption.
Ford’s foray into MaaS started in 2014 with Chariot — a shuttle service for urban dwellers. It failed to gain traction and the project was closed down in 2018. Why? It wasn’t cheap and it wasn’t convenient. What are they doing about it?
They’re buying the pieces for CAEV one company at a time. In 2016 Ford acquired SAIPS, an AI company building computer vision to interpret data captured by sensors on AVs. The next year Ford put $1 billion into Argo AI, an AV technology company. VW also threw $2.6 billion into the company last July. Argo has a solid runway to build the virtual driver system for Ford’s SAE level 4 self-driving vehicles.
In 2019 Ford invested $500 million into Rivian, a luxury manufacturer of EV trucks and SUVs. It’s likely that Rivian was behind a lot of the tech used in the fully electric Ford F-150 dropping next year. If Ford delivers on even half of the features they’re promising, the electric F-150 will maintain the title of America’s #1 truck.
No Country for AVs
In 2016 Ford, Google, Uber, Lyft, and Volvo formed the Self-Driving Coalition for Safer Streets, a lobbying group for ADS in the US. But the coalition has been in a deadlock with state legislators since its inception. It’s likely that the myriad of bad press about AV testing have made lawmakers reluctant to issue testing permits for OEMs. Ford saw the writing on the wall, and decided to move its AV testing to a country where bad press doesn’t deter legislators. Ford went to China.
In 2017 Ford partnered with Baidu to test AVs using Vehicle-to-Everything (V2X) networks in China. The country is rapidly building out 5G infrastructure, making it the perfect testing ground for sending and receiving sensor data in AVs.
Hearts and Minds
US consumers are scared of AVs. 48 percent of US consumers in 2020 believed AVs were not a safe mode of travel. Ford has been granted a few AV testing permits in select areas, and it’s using them to change public perceptions. Commercial MaaS — testing AV-powered delivery services with Postmates, Walmart, and Domino’s in several major American cities. Is there nothing more American than getting Domino’s delivered by a robot Ford?
The Missing Piece
MaaS requires huge economies of scale. It is a winner-take-all market for the right OEM. Ford is building the hardware, but needs a partner with data-driven software to create an end-to-end MaaS platform. Who’s a free agent?
Uber gave up its self-driving initiative last year. $1 billion investment just wasn’t enough. But driverless cars are coming, and no Uber drivers = no Uber cars. Uber needs cars, Ford needs data.
A decade from now, you may not own a car at all. There’s a good chance you’ll be using your Uber app to call a robot Ford.
