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What Ford’s New Guy Said about the Future of Self-Driving Cars

Summary:
You get to own and steer a car for a while longer, if you insist. Ford Motor Co.’s new CEO, Jim Hackett, is approaching the end of his self-imposed 100-day review of the company’s operations. And self-driving cars is the big thing. He took over after Mark Fields was sacked on around May 21 for a lack of strategy, a public tiff with the Trump administration, declining US sales and market share, production cuts, layoffs, and most unforgivably, the share price. The stock sagged nearly 40% from the day Fields had taken over three years earlier until he got fired. Since then, shares have edged down further, closing at .64 on Thursday, the lowest since November 2012. So for the new guy, there are a lot of things to review in his first 100 days. And on Thursday, at Ford’s “City of

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You get to own and steer a car for a while longer, if you insist.

Ford Motor Co.’s new CEO, Jim Hackett, is approaching the end of his self-imposed 100-day review of the company’s operations. And self-driving cars is the big thing.

He took over after Mark Fields was sacked on around May 21 for a lack of strategy, a public tiff with the Trump administration, declining US sales and market share, production cuts, layoffs, and most unforgivably, the share price.

The stock sagged nearly 40% from the day Fields had taken over three years earlier until he got fired. Since then, shares have edged down further, closing at $10.64 on Thursday, the lowest since November 2012.

So for the new guy, there are a lot of things to review in his first 100 days. And on Thursday, at Ford’s “City of Tomorrow Symposium” in San Francisco – dedicated to “reflecting on the future of cities and urban mobility” – he reflected on the future of self-driving cars.

He’d been elevated from Ford’s “Smart Mobility” unit that works on autonomous vehicles. This move shows that AVs are a priority for Ford. But it is woefully behind Alphabet’s Waymo, according to data collected by the California DMV and reported in May for the year that ended on November 30, 2016.

The report shows how many total miles the AVs of various companies drove on public roads in California over the 12-month period without human intervention, and how many miles on average they could drive before human intervention occurred (the “disengagement”). Waymo’s vehicles drove on average 5,127 miles per disengagement; Ford’s vehicles, 196 miles:

  1. Waymo: 635,867 miles driven, 5,127 miles/disengagement
  2. GM/Cruise: 9,668 miles driven, 34 miles/disengagement
  3. Nissan: 4,099 miles driven, 28 miles/disengagement
  4. Bosch: 983 miles driven, 0.6 miles/disengagement
  5. Mercedes: 673 miles driven, 2 miles/disengagement
  6. BMW: 638 miles driven, 638 miles/disengagement
  7. Ford: 590 miles driven, 196 miles/disengagement
  8. Tesla: 550 miles driven, 3 miles/disengagement




So Hackett has his hands full. And in an interview at the symposium, he told the Wall Street Journal that Ford is rethinking how people will want to use self-driving technology.

Under Fields, the goal had been to have a fully autonomous vehicle without steering wheel or pedals on the market by 2021, to be used by ride-hailing companies – the driver-less Ubers. For Hackett, that schedule is still intact, but Ford is reviewing how to deploy the technology. And that might be different than envisioned before.

“The biggest leap is the nature of the human interpretation of using it,” he told The Journal. “If you think we’re going to take the [autonomous vehicle] and just replace the station wagon, I don’t believe that’s what’s going to happen. The AV will replace and do something that the station wagon can’t do – not just drive itself – but other things.”

He used the example of how computing technology took surprising turns, to where you can watch HBO on a smartphone.

“It’s about aligning the technology to what the market wants it to do – is it a new station wagon or is it an Uber vehicle?” he said. “We have work to do.”

AVs will redefine the car business. Alphabet won’t build cars, but it’s trying to control the technology that guides them. For automakers, this is scary competition from Silicon Valley. And so he said, since becoming CEO, he has been to Silicon Valley five times.

He has realized the importance of the infrastructure around self-driving vehicles, he told The Journal. This includes an operating system that allows everything to communicate and to coordinate:

“There’s a marriage of the evolution of the technology of the vehicle and the evolution of the system it works in,” he said. “In my 100-day review, I’m more convinced that the harmony of that is key to Ford.”

Alas, not only is Ford behind in testing self-driving vehicle technologies, it is also behind in connected-car services, such as updating vehicle software via wireless technologies, something that other automakers, including Tesla, have down pat.

In an interview with the Associated Press, also at the Symposium, Hackett was on the defensive over Ford’s acquisitions, such as the San Francisco startup Chariot which is driving folks around in San Francisco in 14-passenger vans and has since expanded its service to other cities. And to help out with artificial intelligence for AVs, Ford is investing $1 billion in a robotics startup, Argo AI.

Ford is undertaking these efforts while its dealers are getting restless with aging car and truck models – and they’re clamoring for a refreshed model lineup.

But Hackett said that these acquisitions had not taken money away from developing new models, and new stuff was in the pipeline. The amount Ford spends on the future is small compared to what it spends on car and truck development, he said. Successful CEOs have to prepare for the future and take care of the present.

People who live in cities now have more transport choices, including rideshare services, but personal car ownership will survive, he told the AP:

People already own vehicles and prefer to drive them knowing that they aren’t used 90% of the time, Hackett said. “I’m not ready to admit that Ford is facing a world where it’s losing a lot of personal buyers,” he said. “But I would admit that they’re going to have a lot more options.”

So it looks like the vision makes room for everyone in the foreseeable future: For people who insist on touching a steering wheel as they move down the road in a car they own, and for people who’d rather leave the driving to a robot they don’t own – and everyone in between. But as far as Corporate America is concerned, the impact of Silicon Valley might reshuffle the deck of the car business.

In Uber’s struggles to keep the cost of its drivers down but have them pick up customers in pleasing new vehicles, rather then in the old beaters, it has forgotten to do the basic car-business math. Now layoffs and massive losses loom in that division. Read…  Uber Gets Run Over by its Own Subprime Auto Leases




Wolf Richter
Founder, Wolf Street Corp. In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China.

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