Ford details plans to become ‘most trusted mobility company’
Yesterday in New York Ford Motor Co. provided a strategic update to investors that detailed its plans to leverage its product strengths, brand, and global scale to refocus in an evolving and disruptive period for the automotive industry. The investor presentation was the culmination of a four-month deep dive into the company’s strategy and business operations led by new President and CEO Jim Hackett and his senior leadership team.
“Ford was built on the belief that freedom of movement drives human progress,” said Hackett, who became Ford President and CEO on May 22. “It drives our commitment to become the world’s most trusted mobility company, designing smart vehicles for a smart world that help people move more safely, confidently, and freely.”
The principles that company officials say it needs to act upon include preparing for disruption by becoming fitter; being in the vehicle business that moves both people and goods; developing vehicles that are smart and connected and that thrive in a new “transportation operating system;” and evolving to capitalize on new business opportunities within that operating system. Ford officials say that they will embrace the profound technological changes and new competition buffeting the industry to deliver vehicles and services designed around human-centered experiences.
To accomplish its goals, the company will accelerate the introduction of connected solutions, with 100% of U.S. vehicles built with connectivity by 2019 and 90% of global vehicles connected by 2020. The recent and “breathtaking” advances in deep learning will help it understand interactions to optimize autonomous vehicles. Top executives say the company is on track for a production-ready autonomous vehicle business with a focus on maximum utilization with a flexible vehicle format aided by future and existing partnerships with the likes of Argo AI for scalable, production-ready tech, Lyft to work toward commercialization, and Domino’s Pizza to research the customer experience of delivery services.
On the powertrain front, internal combustion engine capital expenditures will be reduced significantly and redeployed into electrification—on top of the previously announced $4.5 billion investment. From 2016 to 2022, the company says it will reduce engine architectures by 29% from 17 to 12, and annual powertrain capital spending will decline 32% from $1.7 to $1.2 billion. The company recently announced a dedicated electrification team focused on creating an ecosystem of products and services for electric vehicles; its new dedicated battery-electric team is called Edison. It is also exploring a strategic alliance with Zoyte to develop a line of low-cost all-electric passenger vehicles in China.
These initiatives build on Ford’s earlier commitment to deliver 13 new electric vehicles in the next five years, including an F-150 Hybrid, Mustang Hybrid, Transit Custom plug-in hybrid, an autonomous vehicle hybrid, Ford Police Responder Hybrid Sedan, and a fully electric small SUV.
Additional company initiatives include reducing orderable combinations of many nameplates to focus more on what customers value most. Already it has identified a tenfold reduction of orderable combinations in the next-generation Escape, and it is moving from about 35,000 combinations in the current-generation Fusion to 96 in the next generation. It is rethinking product development processes and incorporating new technology. In the next five years, Ford is aiming to reduce new vehicle development time by 20% with new tools and fewer orderable combinations. Through the use of virtual assembly lines, the company has been able to reduce new model changeover time by 25%. The company is also scrutinizing its future factories. Accelerating and scaling 3D printing, robotics, virtual reality tools, and big data will improve logistics and enable a more efficient manufacturing footprint.
The company says that these expectations, forecasts, and assumptions involve a number of risks that could affect its plans, including lower-than-anticipated market acceptance of Ford’s new or existing products or services; increased safety, emissions, fuel economy, or other regulations resulting in higher costs; and cybersecurity risks to its operational systems, security systems, and infrastructure.