While Ford has been emphasizing trucks and SUVs over passenger cars, that may soon be changing over to a new business model.
On Tuesday, the Detroit automaker launched Ford Autonomous Vehicles LLC to accelerate the growth of its autonomous vehicle business and to capitalize on market opportunities. The new subsidiary will receive a $4 billion investment to oversee all its AV research and the self-driving car network the automaker plans to launch in 2021.
In April, Ford's new CEO, Jim Hackett, announced the company would be focusing on big sellers like the Ford F-Series pickups and would pretty much be abandoning the car business. Low gasoline prices and strong sales of trucks and SUVs helped drive the decision.
Now the global automaker is adding another move — to become a leader in electrified, autonomous ride services targeted to become its own profitable business. The company aims to be competitive in the newly emerging mobility industry, which is expected to dominate the auto industry in decades to come.
Ford Autonomous Vehicles LLC, will include Ford’s self-driving systems integration, autonomous vehicle research and advanced engineering, AV transportation-as-a-service network development, user experience, business strategy and business development teams. The new business unit will be based at Ford’s Corktown campus in Detroit and includes Argo AI, a Pittsburgh-based partner for AV system development. The $4 billion investment includes $1 billion going to Argo AI.
Sherif Marakby, currently Ford vice president, Autonomous Vehicles and Electrification, has been appointed CEO of the new subsidiary. Marakby is handing over electrification duties to Tedd Cannia, global director, electrification, will lead Ford’s Team Edison. The automaker said that Team Edison is responsible for developing and bringing to market next-generation electric vehicles. Related: The Three Best Oil Majors Of 2018
Ford Autonomous Vehicles and Team Edison are part of Ford’s strategy to rethink the ownership experience. Investing in mobility companies in recent years has been part of that strategy. Another division, Ford Smart Mobility LLC, is part of that long-term business plan. That unit is dedicated to emerging mobility products and services such as Chariot, a San Francisco-based shuttle service.
Ford follows close behind General Motors launching GM Cruise, which recently helped that automaker secure $2.25 from Softbank for a stake in the new subsidiary. That makes for three dedicated AV technology companies joining Alphabet's Waymo.
German automaker Daimler has become a leading player in the mobility side of the business.
The Daimler Mobility Services GmbH financial holding company manages its mobility services – including Car2go, Moovel, MyTaxi, and Ride4Hire.
The automated, electric, sharing business model has been years in the making for Ford.
In April, Ford took more steps to operate its own robotaxi network “at scale” by 2021 to transport people and goods in the most ambitious details yet revealed by an automaker for anything like it. For years, Ford executives have been articulating the company’s move to reinvent itself into a “personal mobility” company. That’s been expanded to include fleet networks serving corporate and government leaders interested in managing autonomous passenger and cargo vehicles.
Ford’s business model ties into expectations that cities around the world are becoming increasingly crowded and traffic intensive. City and national governments are becoming strict about carbon emissions and want to see vehicles switched over from gasoline and diesel to electricity and, for a few of them, hydrogen fuel cells.
Government policy is also being adopted to reduce traffic jams, fatality rates, and to downsize the number vehicles on streets to open up space for pedestrians and bicycles.
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Ford has committed to bring thousands of new electrified vehicles to China to support the government’s “new energy vehicle” policy and growing market demand for electric vehicles in the market. The fleet side of the business has also been important to Ford, including the launch of hybrid police cars last fall.
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Corporate mergers and partnerships are being forged by automakers and technology companies to lead the way in autonomous, electrified mobility networks in the near future. In May, Fiat Chrysler Automobiles (FCA) announced an expanded partnership with Waymo that will add up to 62,000 more Chrysler Pacifica minivans to Waymo’s self-driving car fleet later this year.
In September, Cruise Automation and its owner, GM, announced that they’re ready to mass produce a vehicle designed to become fully autonomous. The automated vehicle will be based on a third-generation Cruise self-driving platform, using the Chevrolet Bolt. It will be manufactured at GM’s Orion, Michigan plant, where the company previously announced it would be producing their Bolt autonomous test cars.
By Jon LeSage for Oilprice.com
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