For more than 100 years, Ford has built cars for the masses. On Friday, the company took its most concrete steps to date to splinter that business model among emerging alternatives to traditional car ownership.
Ford announced it has created a new subsidiary, Ford Smart Mobility, that will serve as an incubator for potential opportunities that range from ride sharing to fractional car ownership. While the company's rivals have made splashes with big acquisitions and launches of new brands, Ken Washington, Ford's vice president of research and advanced engineering, tells Autoblog the company made different strategic choices that resulted in the formation of the new subsidiary.
"This was a direct outcome of our very intentional approach to take our time and get it right," he said Saturday during the South By Southwest festivities in Austin, Texas. "We've been fairly deliberate about exploring the space and the options. There's a lot of ways people can move around."
"We thought doing it within the boundaries of our current company and being part of this innovation ecosystem, that's going to be hard," Washington said. "So we thought it was the right move – a separate but connected company. We wanted to get the most bang for our buck being separate, and still be connected so we can flow insights from customers back into our core business as well."
One of the first projects the Ford Smart Mobility subsidiary will examine is an extension of its Dynamic Shuttle pilot program that took place in London last year. The program is something of a mix between personal vehicles and public transportation that provides comfortable rides in a ride-hailing format. After receiving positive feedback during the initial phase of the pilot, Ford has expanded testing onto its Dearborn, Michigan, campus.
"That research pretty clearly told us that if there was an efficient shuttle service that could be routed dynamically, that was outfitted in a manner that gave you a comfortable ride and personal space, people would love it," Washington said. "That research was loud and clear. ... The results so far are pretty promising and telling us there's an exciting potential business that we could potentially take to multiple cities and introduce at some scale."
Ford Smart Mobility will be based in Dearborn, though it will work closely with the company's Research and Innovation Center in Palo Alto, California, which focuses on innovations in connected cars, mobility and autonomous vehicles.
Autonomous vehicle development will remain under the purview of Ford proper, Washington said, though technology and insights could flow to the Smart Mobility company, especially as it examines ride-sharing platforms. Even as Uber and Lyft are defining the ride-sharing market, Washington said Ford isn't so sure there's a business case for another ride-sharing platform, at least until self-driving cars are ready to do the driving.
"It's not clear how profitable or sustainable a business could be if you have drivers in the loop," he said. "If you just extrapolate the volume of need as cities grow and reach congested levels of 1 to 10 million people and beyond, the demand for ride-service vehicles and flexible ownership could pretty easily outstrip the availability of drivers. So it's unclear to us if it's a sustainable model with a driver. But we're not dismissing that either."
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Ford announced it has created a new subsidiary, Ford Smart Mobility, that will serve as an incubator for potential opportunities that range from ride sharing to fractional car ownership. While the company's rivals have made splashes with big acquisitions and launches of new brands, Ken Washington, Ford's vice president of research and advanced engineering, tells Autoblog the company made different strategic choices that resulted in the formation of the new subsidiary.
"This was a direct outcome of our very intentional approach to take our time and get it right," he said Saturday during the South By Southwest festivities in Austin, Texas. "We've been fairly deliberate about exploring the space and the options. There's a lot of ways people can move around."
Ford has conducted more than 30 experiments and pilot projects across the globe that fall under the mobility umbrella in recent years. As those progressed, Washington said it became clear within the company that it'd be difficult to build business models around those ideas and scale them within the confines of the main company. Forming a separate company became an attractive solution, much in the same way Google formed Alphabet late last year, a holding company for more ambitious projects that might not turn an immediate profit. Ford's stock has slid roughly 20 percent this year, despite record sales throughout the auto industry. It closed at $13.29 on Friday."We thought doing it within the boundaries of our current company and being part of this innovation ecosystem, that's going to be hard." – Ken Washington
"We thought doing it within the boundaries of our current company and being part of this innovation ecosystem, that's going to be hard," Washington said. "So we thought it was the right move – a separate but connected company. We wanted to get the most bang for our buck being separate, and still be connected so we can flow insights from customers back into our core business as well."
One of the first projects the Ford Smart Mobility subsidiary will examine is an extension of its Dynamic Shuttle pilot program that took place in London last year. The program is something of a mix between personal vehicles and public transportation that provides comfortable rides in a ride-hailing format. After receiving positive feedback during the initial phase of the pilot, Ford has expanded testing onto its Dearborn, Michigan, campus.
"That research pretty clearly told us that if there was an efficient shuttle service that could be routed dynamically, that was outfitted in a manner that gave you a comfortable ride and personal space, people would love it," Washington said. "That research was loud and clear. ... The results so far are pretty promising and telling us there's an exciting potential business that we could potentially take to multiple cities and introduce at some scale."
Ford Smart Mobility will be based in Dearborn, though it will work closely with the company's Research and Innovation Center in Palo Alto, California, which focuses on innovations in connected cars, mobility and autonomous vehicles.
Autonomous vehicle development will remain under the purview of Ford proper, Washington said, though technology and insights could flow to the Smart Mobility company, especially as it examines ride-sharing platforms. Even as Uber and Lyft are defining the ride-sharing market, Washington said Ford isn't so sure there's a business case for another ride-sharing platform, at least until self-driving cars are ready to do the driving.
"It's not clear how profitable or sustainable a business could be if you have drivers in the loop," he said. "If you just extrapolate the volume of need as cities grow and reach congested levels of 1 to 10 million people and beyond, the demand for ride-service vehicles and flexible ownership could pretty easily outstrip the availability of drivers. So it's unclear to us if it's a sustainable model with a driver. But we're not dismissing that either."
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