Ford’s announcement that it’s getting out of the car business – its core business for a century –shocked many of its loyalists. On the chopping block are Ford sedans. The company said it would still make SUVs, crossovers, trucks and its iconic muscle car, the Ford Mustang.
Yet, while Ford is distancing itself from the manufacturing of cars, it is signaling that its future lies elsewhere. And that future is driverless.
There’s No Future In Car Ownership
On the heels of the announcement, market analysts pointed to the shifting tastes of American drivers – most prefer sitting higher in a car. And the fact that the fuel efficiency of SUVs has started to rival sedans, makes rising gas prices less of a concern to buyers.
But there are bigger forces at play. Ride-sharing has become immensely popular. The meteoric rise of companies like Uber and Lyft have spooked legacy car companies. Forward-thinking companies are following their lead, embracing transportation as a rented service rather than vehicle ownership.
Human drivers, though, are expensive, and prone to frequent error. In an effort to replace them, companies from Silicon Valley to Detroit are spending billions. Even after a self-driving Uber struck and killed a woman in Tempe, Arizona in March, Ford’s CEO said the company will still push to launch commercial autonomous vehicles in 2021.
That detail about the vehicles being commercial is important. Driverless cars aren’t cheap. LIDAR systems can cost $75,000 per car. Then there’s the other radar systems, cameras, computer systems and the car itself. Conservative estimates place the current cost of a driverless car at around $250,000.
Besides the cost, the other limitation is technology. Right now, driverless cars are best suited to certain geo-fenced areas. They work well on straight roads, like highways. They’re getting better in urban settings. But they certainly can’t go everywhere … yet.
Regardless, the promise of driverless technology is still valuable – and immensely important. And everyone wants to be the first to deliver it. Doing so in a meaningful way requires playing to the strengths of the technology – routine and predictable driving patterns.
Ford: The Next Mobility Platform
Although the company hasn’t officially announced its driverless ambitions, Ford’s partnerships with Lyft, Domino’s and Postmates signal where the company is placing bets.
The company also announced that it will be testing a “Transportation Mobility Cloud” in Miami, a platform that allows its partners to order an autonomous Ford vehicle on demand.
Jim Farley, Ford’s Executive Vice President for Global Markets, recently stated “Lyft is already testing the platform, which includes specific communications protocols that will be used to request and dispatch autonomous vehicles from our fleet for times and locations with surging customer demand, or to areas that are often underserved.”
In other words, Ford wants to evolve from a car manufacturer into an autonomous mobility platform. Its century-long manufacture of sedans is just the first causality on the road to reaching that goal.