USA TODAY International Edition
CEO: PUBLIC- TRANSIT SOLUTIONS CAN BE PROFITABLE FOR FORD
Says ride- sharing plans could include autonomous vehicles
Ford is poised to reshape its business model to capitalize as cities redesign public transportation and urban development in the age of ride- hailing and selfdriving cars, CEO Mark Fields said in an interview.
It’s a far cry from simply making and selling cars to individual customers and corporate fleets, but Fields told USA TODAY in an interview at the Detroit auto show that Ford projects 20% profit margins from these socalled “mobility services,” which is about double typical North American profit margins for automakers in good times.
Fields said Ford plans to help cities design public- transit solutions and said Ford autonomous vehicles could be part of city- government ridesharing programs. Ford plans to release a self- driving car without a steering wheel that’s capable of operating in certain cities in 2021.
Some experts believe that in the future, many consumers will use their smartphones to summon self- driving cars instead of owning their own vehicles, a prospect that poses risks and opportunities for automakers. The risk is that automakers will sell far fewer cars, but the opportunity is that they can share in the new way in which its vehicles are used.
“New business models on mobility services can offer up a lot of opportunity for reoccurring revenue on, let’s say, the usage of our products, as well as new opportunities for us working with cities,” Fields said. “So we think it could add a whole new element of growth to our business going forward.”
Ford announced Monday at the North American International Auto Show that the company’s Chariot van ride- sharing service will expand from two cities to eight after it acquired the service in September.
Other moves are further out. “I suppose if you’re looking far enough out, we’ll have flying autonomous vehicles,” Ford Executive Chairman Bill Ford Jr. told a group of employees Sunday in an event attended by a USA TODAY reporter. “Why not? We already have drones. We will have the autonomous capability. So if you’re looking long term, I think that’s very much a possibility.”
In any case, the advent of autonomous vehicles will disrupt the business model for transportation giants such as Ford.
Fields spoke to USA TODAY about how the automaker is adapting. Here are excerpts, edited for clarity and space:
Q: Could we see autonomous vehicles as a publictransit solution?
A: Particularly in dense urban areas, there’s going to be a higher penetration or growth of autono- mous vehicles. Let’s say it’s in a ride- sharing or ride- hailing service.
Our view is that cities will want to coordinate all these different types of transportation options. We can be a part of helping them architect that, in addition to bringing, let’s say, a dynamic shuttle through Chariot, or bringing our autonomous vehicles or our electric vehicles.
Q: Do you have any goals in terms of benchmarks, years by which you want to have X percent of your revenue on services vs. sales of units?
A: We haven’t. We want to grow it. We’ve said that in these emerging opportunities around mobility services we think there’s a good opportunity to make healthy margins of 20%- plus.
Q: Your dealership model in the U. S. today — is it restrictive to this kind of transformation?
A: No, I actually think it’s a huge advantage for us. There will be a spectrum going forward where people will want to shop, buy, own and drive vehicles the way they have for many, many years. And clearly our dealers are playing an important role in that.
When you think about mobility services, autonomous vehicles, for example, up time is going to be really important. We have 10,000 distribution and service points around the world. That is a huge advantage for us that our dealers can play a very important role in.
Q: There’s a debate on how autonomous vehicles and ride- sharing will reshape cities. Some people think it may cause people to move closer to cities, and others think maybe people will move farther out. Do you have a perspective on that?
A: I think it’s still too early to tell. What we do know is it could change the landscape regardless. One of the reasons that we’re engaging cities is they’re thinking about their infrastructure investments going forward. The transportation system that served us the last hundred years is probably not going to serve us just as well the next hundred years.
Q: Do you view Uber and Lyft and other ride- hailing companies as competitors, partners or some combination of both?
A: All of the above. ... I think our approach is different from some of these other companies. We want to talk with a city first, understand what their issue is and partner with them to solve those problems.