It’s a question any Ford Motor Co. shareholder might want to know: where will the automaker be by 2021?
“It’s really hard to put a timeframe on anything because we’re always wrong, particularly with the rate of change in technology,” Bill Ford, executive chairman at Ford said during the audience Q&A portion of Brainstorm E, Fortune’s energy, technology, and sustainability summit that kicked off Monday in Carlsbad, Calif. “But I’ll take a stab at it.”
Ford’s official answer was in line with the company’s recent trajectory: experimenting and even implementing business models that go beyond traditional car ownership, a shift towards electric vehicles without abandoning the internal combustion engine altogether, and developing better ways for people get from point A to point B.
It’s true that the auto maker is pursuing all of those areas, including car-sharing and fractional ownership, electric vehicles, and even mobility experiments aimed at examining how people get around in rural Africa. But is that really what the automaker will be doing in five years? A closer examination of Ford’s discussion with Fortune editor Alan Murray provides a few more clues.
A push towards partnerships
The interest in mobility—all the different ways people get around urban and rural areas—has never been higher, particularly around finding ways to reduce traffic congestion. But, as Ford points out, eventually the company will have to monetize and make a business out of these ideas. It’s why he believes there will be more startups working with companies “like ours.”
“That’s going to be incumbent upon us,” he reflected. “That’s a muscle we haven’t used in many, many years, and we have to be accessible to young companies and know how to work with them.”
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This could mean more cooperation with startups—like its own 2011 partnership with Zipcar—or even an acquisition, such as GM’s recent $1 billion purchase of Cruise Automation. Ford is in a position to tap into startup talent. The company backs a startup accelerator called Techstars Mobility, and it has an research and innovation lab in Silicon Valley.
A bet on plug-in hybrid electrics
Earlier this year, Ford Motor announced plans to spend $4.5 billion to produce 13 electrified vehicles models. Yet, as the executive chairman noted, there isn’t a great pull for electrification from the customer right now. One look at the numbers, and the challenge to convert to electric is clear. Ford sold 780,354 F-150 trucks in 2015, compared to less than 1,600 Ford Focus electric vehicles.
So while the company is investing in all-electric vehicles, Ford sees more short-term promise in plug-in hybrid cars, which run on a combination of gas and electric.
“As a transitional technology plug-in hybrids make a lot of sense,” Ford said. “If you drive in a daily commute, let’s say in San Francisco all week, you could be on your electric battery and never tap into your internal combustion engine. But if you wanted to go to Los Angeles for the weekend, you could do that too without any range anxiety. So I think that’s a very interesting transitional technology, particularly for people where it’s their only vehicle.”
Ford has found more success working with local governments than the feds. Expect that strategy continue as it develops autonomous vehicle technology and experiments with car-sharing, on-demand parking, and ride-sharing business models.
“Cities around the world are often best places to try things to take the lead,” Ford posited. “There’s often less red tape, a bigger more identified need by the politicians and more receptivity.”
“It’s a tough environment, there’s no question,” he added in reference to Washington D.C. “It’s hard to get much of anything done.”
See full article here: http://fortune.com/2016/05/17/bill-ford-brainstorm-e-future/
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