Product churn will go on even after autonomous cars take charge, Mark Fields tells Paul Myles. [Mob.Myles.2016.11.29]
Many have predicted that the onset of the driverless car will greatly reduce the carmaker’s ability to rely on volume product sales to maintain their profits.
On top of this, urban mobility demands are swinging away from the ownership business model of vehicles towards car-sharing and ride-hailing options, severing the traditional users’ emotional links the industry depended upon to market its wares.
Yet Ford’s chief executive, Mark Fields, takes a more sanguine view of the perceived threat to carmakers.
He expressed this view while speaking exclusively to TU-Automotive after his opening speech to launch the ninth generation of Ford’s top-selling Fiesta compact hatchback at its global reveal in Cologne, Germany.
Fields said: “I wouldn’t just jump to the conclusion that it will result in less product because when something is more available and it becomes cheaper, people use it more. Then when you look at mobility services, and the usuage of products, such as autonomous vehicles, they will accumulate mileage quicker than a private use vehicle and that could be helpful to car sales and, overall, to the car parts market.”
He also predicted that the traditional market is a long way from being a thing of the past, saying: “When you think of our core business, there will still be people who want to own vehicles and to drive them plus there is population growth around the world and that will support product.”
Fields expects product churn will continue to be a vital part of Ford’s business model but that it should not inhibit the company’s ambitions in other areas of commercial opportunity. He explained: “From our standpoint, we are going from focusing on the product and selling that, which has been our business model for the last 100 years and we will continue to focus on that, but to also expanding our business model to the usage of our products and we now have a wonderful opportunity because the size of this market is potentially double that of our traditional market and I think we’re well positioned to do that.”
However, he pledged autonomous vehicles will form an integral part of Ford’s future offering, saying: “Our commitment is to make autonomous vehicles available to millions of people. We have been researching autonomous vehicles for more than 10 years and it leaves us among the best placed in our industry.
“It’s our intention to have the first of four autonomous vehicles in 2021 in either a ride-hailer or ride-sharing source.
During his address to some 2,500 European dealers and members of the press, Fields outlined this opportunities. “Our long term vision for Ford is not just about selling more cars,” he said. “Our core business is still very, very important but our long-term vision is making people’s lives better by changing the way the world moves, just as our founder, Henry Ford, did 100 years ago.
“Today, we’re on the cusp of a mobility revolution and the world is becoming more crowded and more organised. Issues of congestion, emissions, road safety, pollution and air quality are affecting every one of us. At the same time, consumer attitudes are changing and all these trends are affecting how people move. This is causing us to think very, very differently and it affects ever single person in this room and watching on line today.
“There is a lot of talk about technology companies and how they, potentially, can disrupt the auto industry but, at Ford, we are currently in the process of disrupting ourselves. Inventing the future is not new for Ford, it’s in the DNAof our company. We were founded with a clear mission to make transportation accessible by using ingenuity and advanced production progress.”
He said “Ford is no longer only an automaker” and that it is “aggressively pursuing alternative technologies, including being a leader in connectivity, mobility and customer experience”. Mobility presents a huge business potential for carmakers, said Fields adding: “If you think about it this way – the traditional auto industry generates about $2.3Tln (£1.8Tln) in revenue each year, the transportation services are worth $5.4Tln and that’s going to grow in the next 15 years.
“For us this is not about moving from an old business to a new business, it’s simply about moving to a better business,” Fields said. “First we’re focusing on the development of new mobility services to help people move more easily in cities. We know that every city is unique with different needs and different transportation services and that’s especially relevant here in Europewhere the inner city systems affect the modes of transport that people use.”
He used the example of Ford acquiring Chariot, an app based crowd funded shuttle service operating Ford Transit minibuses in a service that that adapts to customer demand. “So here is an automaker talking about taking vehicles out of a city – that sounds pretty disruptive to me,” said Fields.
Hand-in-hand with Ford’s mobility ambitions, is its commitment to electric vehicles, said Fields. “This is a market that will continue to pick up pace as the technology becomes more affordable and charging infrastructure improves. That’s why we have announced our intention to join forces with other automakers to establish the necessary infrastructure. Initially we plan to build at least 400 ultra fast charging locations throughout Europewith capacity to charge 63M vehicles a year. By 2020, this effort will extend to 1,000s of high powered charging points for our customers. This will make the dream of owning an electric vehicle easier and also more practical.
“We’re serious about electrification and in fact we are investing $4.5M in electrified solutions by the end of the decade and will be introducing 13 new electric vehicles to our portfolio around the world.”
04 Jan 2017, Las Vegas, USA
The Consumer Telematics Show (CTS) kicks off the calendar year for the connected car community, serving two strategic purposes; it gives automakers a platform for new partnership and product announcements and acts as the largest and most focused meeting point for 500+ automotive execs before International CES®.