The Fuse

Ford Triples Engineering Investment to Develop Affordable, Autonomous Vehicle

by R. Kress | March 01, 2016

Ford CEO Mark Fields has just announced that the American automaker is tripling its engineering investment in semi-autonomous vehicle technologies as it expands larger mobility program. The head of the 112-year old automaker also said that the company is now looking to transition from its roots as a car company to its future as a mobility company. Earlier this year, Ford also tripled its fleet of autonomous test vehicles currently hitting the roads in California, Arizona and Michigan.

In this latest announcement, Fields compared this investment undertaking to those that came before—not from other automakers, but rather from other technology companies: He included FitBit, Apple and Zipcar as examples of innovation Ford is seeking to mirror.

“Right now, there are about 1 billion vehicles on the road worldwide. And it took roughly 100 years to get to this level. Yet, with more people and greater prosperity, many experts believe that number will double in the next 20 years, and then possibly double again,” Fields said. “So as the world changes, we in the auto industry have a decision to make. We can think like car companies, and view this growth as merely a sales opportunity. Or, we can think like innovators… and find ways to reduce consumers’ wasted time and resources in traffic and work to avoid the potential for global gridlock. It’s why we at Ford are thinking not just like a car company, but like a mobility company.”

As proof, Fields laid out Ford’s Blueprint for Mobility, including details of the semi and fully autonomous features his company is currently undertaking. First off are adaptive cruise controls and collision warnings to alert a driver that he’s veering out of a lane. If the driver fails to respond to the warning, the technology can automatically steer it back into the lane. The next automatic technologies are intended to make parking easier: From helping drivers find a parking space to steering them into one.

Technologies aside, electric vehicle industry veteran Tony Posawatz sees the Ford announcement as a larger shift in the company’s philosophy toward transparency and openness.

“The automakers have a tendency to keep a lot of their [intellectual property] and their [research and development] to themselves. But I think in the spirit of reshaping automobiles and mobility in the future, they need to be viewed and perceived as being part of this future change in the world of transportation.”

“I think the automakers have a tendency to keep a lot of their [intellectual property] and their [research and development] to themselves,” the former head of development for GM’s Chevy Volt and former CEO of Fisker Automotive tells The Fuse. “I think in the spirit of reshaping automobiles and mobility in the future, they need to be viewed and perceived as being part of this future change in the world of transportation. So rather than keep these things private and secret to keep a competitive advantage, these OEMs—including Ford—are trying to signal to the world that they’re working to solve these problems.”

Posawatz compares Ford’s undertaking to GM’s January announcement that it would invest $500 million in ride-sharing company Lyft. Together, the companies are forging an alliance to develop a network of connected, autonomous vehicles that are available on-demand for ride-sharing users.

“I think it’s a good vision for the future for the car manufacturers to look at all the transportation and mobility solutions and how they can best fit in to continue to create value for their shareholders and stakeholders in the future,” Posawatz explains, cautioning, however, that it’s still too early to be sure of which strategies will be right and which will ultimately not be fruitful. “Obviously companies like Uber have changed the landscape with the degree to which they’ve shaken up the taxi business. In cities, many young people choose [Uber] as a transportation option and that’s something that the Fords and GMs have to take note of because these business models can be extended beyond just taxi service in some areas.”

Tony Seba, author of Clean Disruption of Energy and Transportation and lecturer at Stanford University, sees Ford’s announcement as a response to a larger trend in consumer behaviors that are now shifting how we buy and use cars.

“We will transition from owning a car to having mobility as a service. In other words, car ownership will become obsolete,” Seba forecasts. “When that happens, car manufacturers will not sell their vehicles to end users but [rather] to mobility providers like Uber, Lyft, or Zipcar. In other words, car manufacturers will lose their most valuable asset: Their relationship with the end user.”

Seba believes this market transition is behind GM’s investment in Lyft and Ford’s tripling its investment in smart mobility efforts.

“Think about the companies that provide Google or Facebook with the computers or routers in their data centers,” Seba says, by way of example. “Our relationship as consumers is with Google or Facebook, not with the computer manufacturers.  Likewise, the ‘mobility services’ industry will create the relationship with the end user and by extension that’s where the branding and high margin potential will be.”

Seba also mentions GM’s investment in Lyft as another sign of a major US automaker taking heed of the market transition. Additionally, he points to BMW’s investment in San Francisco-based car-sharing company DriveNow as another example of this trend.

“But neither one of these companies has said as definitively as Ford that their strategy is to become both a manufacturer and a mobility provider,” Seba points out.

There is, of course, one comment from Fields that has attracted much buzz.

“When the first Ford autonomous vehicle comes out it will be an autonomous vehicle designed to serve millions of customers—not just for those who buy luxury vehicles,” Fields said.

Seba views this comment as a sign that Ford is tackling the dominant presence of Tesla in this space.

“Essentially every conventional car company who has recently announced a new electric or autonomous vehicle is positioning itself relative to Tesla Motors,” Seba says.

But, Seba also points out that the price of technology associated with autonomous features is dropping steadily, making these features available now to even lower-end vehicles.

Poswatz sees Ford’s message as unrelated to Tesla. Rather, he sees it as a signal to the technology community at large, declaring that Ford is open for business in the arena of innovation.

“Historically some of the domestic manufacturers have been viewed as reluctant to change, unwilling to embrace innovation,” Posawatz says. “I think it’s very healthy that they’re engaging and putting the sign in front of the door saying they’re working in that space. Part of that is to attract potential partners to work with them… It’s a very important signal for a mainstream and historic American OEM to say they’re open for business and are open to all kinds of mobility solutions.”