Ford’s CEO wants to sell mobility, not just machines.
Mark Fields, the CEO of Ford Motor Company, doesn’t merely predict a future where cars matter less. He’s been actively trying to get there, ever since he took the stage at the 2015 Consumer Electronics Show to announce his company’s plans to sell “mobility,” rather than horsepower alone.
“The existing infrastructure for motor vehicles simply cannot sustain the sheer number of vehicles expected to be on the road in the coming years,” he told the audience. “Our roadmap has to include not only smarter cars, but smarter roads and smarter cities.”
For Ford, diving into the smart cities movement meant opening conversations with global mayors about tough transportation challenges. That led to 25 pilot projects, starting in 2014, in urban centers around the world. A predictive parking system in London. An on-demand employee shuttle at a Ford plant in Michigan. A car-share program for coworkers in Bangalore.
Not all of the ideas stuck, but some of them led to partnerships and acquisitions. Last fall, Ford bought Chariot, a shuttle-van start-up, that was already offering on-demand rides along flexible routes in the Bay Area. In the same breath, it announced a $49 million investment to brand and expand San Francisco’s bike-share program.
That system is revving up to serve a wider swath of the city, with each bike equipped with a telemetry unit transmitting location data back to a central server—useful for mapping demand for Chariot shuttles, and perhaps, the future fleet of self-driving shared-ride vehicles Ford promises to have on roads by 2021. After all, cars aren’t dead to America’s first automaker—they sold 2.6 million vehicles in the U.S. last year, the company’s best annual sales in a decade. But Fields seems to be keenly aware that the beginning of the end of private vehicle ownership may be around the next corner.
Is the public ready for a world where cars drive us? Field chatted with CityLab this week to weigh in.
Ford has taken a proactive approach to working with cities to figure out their problems, rather than peddling them a product right off the bat. What are the problems public leaders are coming to you with?
It was very interesting in the very beginning [of Ford’s pivot to being a “mobility” company], when we’d go out and talk with leaders globally. They had this conundrum: As megacities grow, how do they decrease congestion and pollution and also increase flow? Because for a lot of these mayors, mobility in cities is not just an issue about quality of life. If people can’t move to shop, go to restaurants, do business, and get goods delivered, then cities stagnate.
We’ve also heard frustration around the advent of ride-hailing services, with congestion going up and curb space going down. So we thought, what can we do? What assets can we bring to help solve that conundrum and open up new growth opportunities for us?
That’s when we acquired Chariot, a dynamic shuttle service without set routes, in the city of San Francisco. For every Chariot in service, it takes 25 cars off the road [according to a study funded by Ford]. All of a sudden, it helps solve San Francisco’s unique congestion issues.
Every city has different issues. But they are variations on the same theme: We want to have a conversation up front about what the challenges are, and make it a win-win, rather than take the approach of simply doing business within city limits.
Are there cities that have taken the lead on “smart city” planning that you particularly admire?
We’re talking with a number of cities now, in addition to the city of San Francisco. We’re bringing Chariot to Austin soon, and we’ll be rolling it out to total of eight cities. London is quite interesting; the mayor there has been very forward thinking about congestion and mobility issues. You could also look to cities that made it to final round of the Smart Cities Challenge that the federal government had last year—they’re all leaders, too.
There seems to be a sense among automakers and government that autonomous vehicles are a “when,” not an “if.” But polls suggest a vast majority of Americans don’t trust manufacturers to make safe cars. How would you characterize the public’s readiness for the self-driving future?
Thirty years ago, when we introduced cruise control in vehicles, people said they’d never trust a vehicle that would let you take your foot off the accelerator. It was the same thing with adaptive cruise control, where the vehicle brakes for you. But lo and behold, when people started to experience it, and gained confidence that it was safe, the adoption period was pretty quick.
I think it’s the same now. No one has driven in an autonomous vehicle, with the exception of all the companies working on them. Once we introduce a level-four vehicle—with no steering wheel or accelerator—by 2021, people are going to start experiencing it, and adoption will come quickly. There’s still a lot to do—making sure the technology works, that it’s safe, and that people have confidence in it. That all falls under the umbrella of sustainable mobility for us. AVs are one piece of our pivot from being an auto company to a mobility company, to provide more solutions to folks at a time when we’re seeing more and more congestion.
The momentum behind AVs has clearly accelerated within the past nine months. What was the most important factor, would you say? What do you look towards as the next benchmark?
I think when you look at the challenges that stand before autonomous vehicles, they fall into four buckets: technology, regulation, adoption from a consumer standpoint, and adoption from an economic standpoint. The discussion around AVs that’s turned from an if to a when has been around the development of technology. It’s the sensors and higher capabilities but also software and algorithms. There is still a lot of development ahead for these. But lately there have been a number of turbocharged announcements by Ford and its new competitors in the space, like Waymo and Uber. I think that’s created a kind of critical mass.
When you look to the next 6 to 12 months, one of the big pivot points will be on the regulatory front. The National Highway Traffic Safety Administration has been very forward leaning on putting out AV guidelines for comment. That’s very encouraging, because technology leads regulatory frameworks. Here in the U.S., the government realizes the economic and societal benefits that could come from AVs. So I think as the regulatory framework helps the operation of AVs, and the testing of them, that will be another indicator that it’s an inevitability.
What do you hope to see from the new administration, in terms of regulating AVs?
Our strong preference is not to have a fifty-state patchwork. We’d like to see one national standard, just like we have with fuel economy. That helps us meet the challenge of development, and that will work its way up to [help lower] costs to consumers. We’re working with federal agencies on that, and we want to be a trusted source of input. We do have “street cred” with regulators. We advocate for a national standard on our own, and in partnerships like the Self-Driving Coalition for Safer Streets, a group between ourselves, Volvo, Waymo, and Uber. It’s a group that’s advocating for policies that will encourage the development of autonomous vehicles in a safe way.
Fords plans to have a fleet of fully driverless cars available for ride-sharing by 2021. I’ve heard sources suggest that Ford’s strategy is to expose consumers to shared AVs as a way to prime them to eventually buy their own. True?
Well, the main reason for self-driving to be a mobility service first is the economics. When you look at the very high cost for autonomy, for the software development on the vehicles, it makes sense to put that into mobility service first, and allow the cars enough time [to come down in cost].
Secondly, our view is that it will take a few years for AVs to really scale. At the advent of autonomous vehicles, cities will want to encourage them, but also they’ll want to ensure that there’s an appropriate period of time for testing, and that they’re comfortable with how they’re working in cities. From there it will ramp up. In terms of a large level of demand for private ownership, or in terms of dual use where customer can either drive it or have it fully autonomous, we view that something that could happen mid-decade and beyond.