As it looks to its 113-year history, Ford Motor Company is aggressively preparing for a fast ride into a future projected to see as much change over the next five years as there has been in the previous 50.
On Sept. 12 and 13, to herald all it is generally up to, the company held its sixth annual Further With Ford “trends” conference at its world headquarters in Dearborn, Mich., and there it showcased its culture, perspective, technology, products, and more.
Front and center in the event punctuated by topical breakout sessions, and staged publicly viewed interviews with top executives, was much talk of its autonomous vehicle plans.
This dovetails with other transportation and consumer trends, including electrified drivetrains, ride sharing, connectivity, and other services that Ford – partnering also with new companies – has jumped into, as have most other major automakers.
For electric car enthusiasts, Ford says 13 new electrified vehivles will arrive by 2020, and at that time over 40 percent of its global portfolio will be electrified. “Electrified” is a catchall term implying hybrid, plug-in hybrid or battery electric. How many of these will be pure EVs? Your guess is as good as any, though it’s said a 200-mile EV in response to the Chevy Bolt, Tesla Model 3, and others is one, among possibly more. Plug-in hybrids are also expected, and even a hybrid F-150 is thought to be in the mix.
This initiative is being done thanks to the company’s largest-ever investment in its electrified technology – $4.5 billion over the next five years.
To be sure, the company is amping up for a brave new world, but even from the top, its Executive Chairman Bill Ford concedes it’s just headed in a general direction. Some things it feels more sure of, but many twists and turns are anticipated in a future no one really knows.
“What will our company look like in 2025? Well I think anybody who tells you they know is lying,” said Ford. “One thing I do know is that there will be many different business models, lots of different partnerships, many of which will be non traditional for an OEM and you’ll have different income streams as a business than you do today.”
The takeaway from him, and other top executives putting the company’s best face forward is it is doing all it can to leverage its assets for which ever way it goes.
Last year Ford Motor Company reported a record $10.8 billion before-tax profit, but with competition fierce, and up-and-comers like Tesla, and yet-secretive Google, Apple, and a bevy of other startups around the globe, flighty Wall Street is apprehensive. Ford’s stock value has felt the heat, and while the gamblers in New York have run companies like yet-unprofitable Tesla and Uber up, Ford’s valuation and price-to-earnings ratio has been low.
Ford is the only one of the former “Detroit Three” which dodged a bullet of U.S. bankruptcy protection, and thanks to hard work led by the highly talented and highly paid former President and CEO Alan Mulally, said Bill Ford, its operations are in far better shape.
A wake up call came also from the likes of Uber and other ride sharing companies which Raj Nair, executive vice president for product development, and chief technology officer, and others admit caught them unprepared for its rapid acceptance.
“I think we were all surprised by how quickly that came on,” said Nair.
Speaking from the same playbook, Ford President and CEO Mark Fields cited a spur that underscores a business case for “Ford Smart Mobility,” an umbrella under which are connectivity, mobility, autonomous vehicles, customer experience, data and analytics.
As it has in the past, Ford wants to show itself adroit at meeting the present need of helping people get around in new ways, including the elderly and infirm who cannot drive, plus many other needs in the face of growing cities.
Public demand for increased safety and convenience have essentially willed self-driving tech to be so when just a few years ago top experts were predicting they’d be decades out. Ford is not unique here, and while it speaks in glowing terms of challenges and opportunities, a race is on for what best estimates say is a market set to boom.
Tightening regulations further drive the reduced-emission aspect in a complete synergy of forces motivating Ford, as is the case with other automakers, large and small.
For its part, Ford sees profit potential, and it’s grabbed the biggest surfboard to ride with its own brand emblazoned on it to catch a wave into the next decade wherever it may take it.
Fields cited a few “factoids” that nail home the conviction that money is to be made:
Every minute, said Fields, 30 vehicles are sold in a U.S. passenger vehicle market in which last year 17.4 million units were sold.
And, for each of those inexorably piling up minutes, seven million miles are traveled on U.S. roads, 125,000 taxis and Ubers are being driven, and 60,000 shared rides are happening, he said. What’s more, 450,000 bytes of data move from connected vehicles, and 350,000 apps are downloaded.
It could be a gold mine to sell intangibles like services centered around “experiences” and not the 20th century industrial mindset of only churning out widgets.
“So for us, we’ve been so fixated on our business model over 100-plus years of the thing and how many of the things we sold. Right? In terms of vehicles,” said Fields in a follow-up commentary on the topic. “But now we can think of the usage of our product and we’re thinking about, it’s not just about number of units sold, that’s still really important, but vehicle miles traveled is more important – is just as important as number of units sold; and that’s why you’re seeing so many new competitors that we never even thought we have in our business before interested in the mobility business because the addressable market is huge.”
When the president and CEO of a $10 billion company says with conviction “the addressable market is huge,” that sends a signal that has suffuses through top management, and into all that it plans to do.
Ford has tech development operations in Dearborn, Silicon Valley, and Germany, and is hiring, strategizing, brainstorming, trying new things, and leveraging everything feasible, even its good name.
Henry Ford is described in history books for an impact on society that Tesla’s Elon Musk is still trying to cement home for himself, and along with so many tangible levers being turned, this intangible was also invoked by Fields.
“Now Henry Ford was a very important disruptor in his day. And he drove a radical change at the start of the 20th century,” said Fields with a slight smile as he floated this implicit comparison without naming the present day disruptor. “A change that helped people all over the world follow their dreams and build better lives to the freedom of transportation.”
“And we see this moment right here and right now in the very same light. And we are continuing to do what Ford has done for the past hundred years plus. We’re making peoples’ lives better by changing the way the world moves. Making transportation accessible to millions of folks and providing new mobility solutions for people for decades to come.”
Autonomous Drive: Profound As The Moving Assembly Line
Ford has actually been involved in autonomous technology since 2004 when it accepted the original DARPA challenge. Driverless Fusion Hybrids being tested today are precursors leading to level 4 fully autonomous cars like no one has yet seen in public use just five years from now.
“We believe that the next decade is going to be defined by the automation of the automobile. In fact we see autonomous vehicles as having as significance an impact on society as Ford’s moving assembly line did more than 100 years ago,” said Fields again leveraging the heritage to make a profound assertion. “And that’s why we recently announced our intent to have a high volume fully autonomous vehicle in commercial operation by 2021 in a ride hailing or ride sharing service and that means there will be no steering wheel, there’s not going to be a gas pedal, there’s not going to be a brake pedal at all, and essentially a driver is not going to be required.”
The level 4 autonomous cars are themselves to be stepping stones for the ultimate – mass-produced SAE level 5 cars for “millions” of people expected by “mid decade.”
No one at Ford has put a date-certain on this, as steep “challenges” are nearly euphemistically alluded to even for the planned level 4 cars.
At this stage, plans are for the level 4 commercially operated cars by 2021 to be “geofenced” in limited areas, confined within the reality of very specific and clear maps.
Cost is not stated, but it is prohibitively expensive at this stage while projected to come down with scale and improvements in technology.
For autonomous cars available to the multitudes to be a success, Fields foresees four “buckets” or hurdles to overcome, namely, technological, regulatory, economic (cost), and adoption (people getting used to them).
The positive-thinking corporate success speak by Ford’s executives effervesces an attitude of embracing and loving these “challenges” and “opportunities” as much as any Type A personality loves challenges and opportunities of a door not yet open, or opposition to his will.
Challenges including navigating through snow, fog, construction or crash scenes with direction being given by workers or cops by hand signals are just some of numerous hurdles. Human drivers also rely on eye contact, and how to make the machine do this and so many other subtle things as well are another challenge – and opportunity.
Mining For Gold
The company, as it explores sub businesses and technologies that all interplay off of each other – ride sharing, electrified vehicles, autonomous tech, connectivity, etc – is of course intent on making it profitable.
Nair, as did others, spoke of risk taking with an entrepreneurial spirit a la Silicon Valley, and it’s prepared even to lose some of the bets it places. It’s one thing to wager billions on an aluminum F-150, he said, but upper management knows risks will have to be taken as they feel out new markets with their new whiz-bang technology and use cases.
As Fields alluded to as well, Nair said the light bulb came on in everyone’s mind that this could pay big when Uber became as successful as it has to date, and Nair outlined the thought behind this:
In terms of “mobility,” cheapest is mass transit at roughly 30 cents per mile, Nair said, but it’s not nearly as convenient as a chauffer – for those who can afford that – or a taxi, itself about $6 per mile.
Uber, which has threatened the livelihood of taxi drivers, saves itself the expense of assets by leveraging off of other peoples’ cars and has brought the per mile cost down to roughly $2.50 per mile depending on surge price, said Nair.
“What Uber and the other ride services have done is really lower that model [cost],” Nair said.
Buying one’s own car can be cost effective too, and getting around in one might cost $1.50 per mile assuming a modest-to-average priced car.
The next logical step in cutting cost beyond these modalities, said Nair, is ride sharing with autonomous cars, and this is where Ford can come in.
“If you were to take the ride service model, the most expensive thing in that model is actually the driver,” said Nair. “And if you were to automate it – just like a robot were replacing an operator in a factory – automating that, you could reduce the cost per mile to let’s say a buck a mile.”
When Elon Musk announced the Model 3, talk was similar of folks one day renting out their cars when not being driven.
Whether this prospect of turning one’s personal $35,000 or conceivably much higher priced personal vehicle to strangers sits well with as many people as futurists think it will is still something that has to be proven.
But this kind of thinking is part of what’s infected automakers rushing to be positioned in case it is true this next goldmine indeed pays off.
Not least in all this future talk are ethical considerations. Just on Monday, the U.S. Department of Transportation issued its long-awaited guidelines on autonomous vehicles, and rhetoric that’s now becoming familiar was invoked.
But as it is with EVs, and other issues, even politics, not everyone in the general public is paying attention, yet.
As the reality sinks in, assuming it does, more discussion will be needed on controversial concerns.
For example, in programming vehicles with artificial intelligence, algorithms will have to be in place for life and death decisions to be made by the car.
Want an extreme example? If your autonomous car had the choice of saving you and your loved one by plowing into a crowd of people on a city sidewalk, or saving the many lives in the crowd and running you into an oncoming bus, what should it do? The machine is expected to think in a millisecond and do things reactive humans do not necessarily do.
The above is only one extreme hypothetical scenario. There will be countless others more sobering or less concerning that will take place assuming autonomous cars start to come in the ”millions.”
In all cases, assuming the horizontal elevator on wheels has no manual controls, occupants will be along for the ride, having forfeited their personal autonomy of control in exchange for the convenient ride in the autonomous car.
Already consumer watchdogs have chimed in urging decision makers put on the proverbial brakes before they take this society down a road to somewhere while so many in the public who stand to be affected are already mentally asleep at the wheel.
For their part, the feds echoed Elon Musk who touts the safety of less-than-perfect driverless cars as a lesser of potential evils outweighing other considerations.
“Ninety-four percent of crashes on U.S. roadways are caused by a human choice or error,” said NHTSA Administrator Dr. Mark Rosekind. “We are moving forward on the safe deployment of automated technologies because of the enormous promise they hold to address the overwhelming majority of crashes and save lives.
Another concern is whether the “freedom” driverless cars afford in due time leads to the removal of the freedom to drive one’s own automobile.
If the technology is perfected and autonomous driving does prove so effective that the primary vehicles crashing are human-driven, it’s postulated the argument will inevitably arise to curb personal driving, or eliminate it in some or even all cases over time.
Just as the insurance lobby once petitioned Congress for a 55 mph nationwide speed limit, and argued it would save lives and money, so could arguments be brought in time against people driving on public roads.
Others have pooh-poohed that notion as not going to happen, seeing things more optimistically. Others besides have hoped that a middle ground will be found as people otherwise take their chances with the law of unintended consequences.
But as Bill Ford said, no one knows the future, even as the future is being radically reshaped now. As pieces of the future puzzle are rapidly coming into place, to date the ethics conversation has been spotty, shallow, and much more needs to be assessed, he said citing a car that will make choices a normal reactive person might not.
“I think that’s going to require some very deep and meaningful conversation as a society in terms of how do we want these vehicles to behave, whose lives are they going to save?” said Ford. “And no one company is going to settle that. The technology is absolutely progressing, and its going to be great … “