TECH or BUST
BIG AUTOMAKERS MUST EMBRACE TECHNOLOGY OR PERISH, FORD MOTOR EXEC TELLS CES.
• Traditional automakers are “screwed” if they don’t adapt to rapidly changing technologies while, if they do, they could be in for a period of much faster growth, according to a senior executive at Ford Motor Co.
“Our business is not growing faster than GDP, but I think if we change the definition of mobility and the Ford mindset from cars to mobility, we’re going to be in a faster growing market,” John Casesa, Ford’s group vicepresident of global strategy, told the CES tech conference in Las Vegas Wednesday.
“If we don’t figure it out, we’ll be screwed. I think that’s true for all the auto companies.”
The dramatic changes facing incumbent automakers are evident at CES itself. The biggest technology show in the world, CES has in recent years become the venue of choice for automakers and their suppliers to unveil new products and capabilities, increasingly overshadowing the North American International Auto Show in Detroit, which begins next week.
Over 200,000 square feet, or more than 10 per cent of CES’ total floor space, is dedicated to the auto industry this year, and includes exhibits from major players ranging from Ford to Toyota Motor Corp. to Hyundai Motor Co.
“Arguably, I think ( the auto industry) is the largest disruption out there, second only maybe to health care,” said Scott Corwin, managing director at global consulting firm Deloitte, who spoke on a panel with Casesa.
“They’re all wrestling with these fundamental questions about how value will be created.”
Ford has been more ambitious than many of its competitors in its efforts to adapt to a future that is expected to see shared vehicles and autonomous technology dramatically reduce vehicle sales.
It has created a separate company called Ford Smart Mobility, which is focused on expanding its services business. Casesa likened it to developing iTunes while the core company focuses on building iPods.
Ford has also set the somewhat audacious goal of massproducing a fully autonomous car, without steering wheel or brakes, by 2021.
“Every minute in t he United States 30 vehicles are sold … but every minute there are nine million miles trav- elled, there are 125,000 taxis or Ubers on the road, 60,000 shared rides,” he said. “If we define ( mobility) as people moved, miles travelled, then we think there’s a much bigger business out there for our company. So we don’t think of these changes as threats at all, we think of them as very liberating.”
It won’t be easy, though, to go head- to- head with more nimble tech companies, said Deloitte’s Corwin. “This is a vertically integrated industry that’s been in place since the time of Henry Ford,” Corwin said. “(Automakers) are struggling with how to actually generate the returns from the core legacy business and invest in the future and that’s a massive tension, whereas the technology folks don’t have that tension, they don’t have to protect a set of assets, they have a long history of disrupting industries, they also have fantastic cash reserves and they can fund development.”
Casesa agreed, but argued that automakers like Ford have no choice but to do both.
“If we don’t protect the core ( business), there’s no future,” he said. “All the earnings and cash flow in our company are from the core business … but we have to devote a disproportionate amount of management bandwidth to solving the new problems.”