Auto manufacturers are usually only known for speed, agility, and risk-taking at the racetrack. When it comes to developing products, their moves are calculated, built-to-budget, and many years in the making. The industry’s adversity to risk frequently results in designed-by-committee cars that put sales numbers and margins ahead of innovation. However, as carmakers are getting serious about connected vehicles and mobility solutions, many are acting more like agile tech companies than the slow-moving manufacturers of the past.
Giving Mobility Room to Grow
Ford Motor Company launched Ford Smart Mobility LLC, a new subsidiary formed to design, build, grow and invest in emerging mobility services a little less than a year ago. “Ford Smart Mobility and expanding into mobility services are significant growth opportunities,” said Mark Fields, president and CEO, Ford Motor Company in a press release. “Our plan is to quickly become part of the growing transportation services market, which already accounts for $5.4 trillion in annual revenue.”
Separating connectivity, mobility, autonomous vehicles, and data and analytics a bit from the bureaucracy of the mothership gives the company more freedom to take risks, invest in new technology, and test new products and services. The company has said that Ford Smart Mobility is “designed to compete like a startup company” and it can design and build mobility services on its own, and collaborate with startups and tech companies.
Acquire and Conquer
In an age where car companies are shedding operations to run leaner, it is a bit surprising to see the stream of acquisitions that are being made to fuel the mobility machine. Instead of simply competing with disruptors directly, automakers are now partnering with and acquiring competitors instead. Ford has invested billions in mobility-related acquisitions in the last few years, including picking up vanpooling company Chariot, and most recently, the $1 billion buy-up of autonomous car startup Argo AI. Argo AI was cofounded by Google Car project veteran Bryan Salesky and Uber engineer Peter Rander, who met while working at Carnegie Mellon University’s robotics and engineering school.
“The reason for the investment is not only to drive the delivery of our own autonomous vehicle by 2021, but also to deliver value to our shareholders by creating a software platform that can be licensed to others,” Ford CEO Mark Fields told USA TODAY. “This move gets us the agility and speed of a startup combined with Ford’s global scale.”
Other OEMs have been revving up acquisitions too, with GM acquiring autonomous technology company Cruise and taking a huge stake in Lyft. Mercedes-Benz also invested in and acquired startups such as FlightCar, Hailo, and Blacklane and Toyota bought AI firm Jaybridge Robotics. PwC estimates that the amount spent on acquisitions in the auto sector increased by an incredible 340 percent between 2014 and 2015—and it continues to grow.
Try and Fail
Failure is not a word that is taken lightly in the automotive industry. Launching a flop can cost billions of dollars and all-important brand image can take huge hits from poorly-received cars. The mobility business is changing that, and Detroit is taking the Silicon Valley “try and fail” tack. It helps that sticking your neck out with new services is a lot less costly than an Edselesque disaster. For instance, last year Ford launched a shared leasing program called Ford Credit Link, where up to six people could share a lease on a single car. Six months in, the pilot program had exactly zero takers. By the end of 2016, the program was quietly killed. But it did not scare the company into playing it safe, in fact, it was taken as a lesson learned.
“We’ll pivot, and we’ll continue to experiment,” said Ford Credit CEO Joy Falotico, by “looking at more flexible products and solutions and looking at … what kind of financing products we need for the shared side.”
Following this flub, Ford launched a mobile wallet called FordPay to support the services that will be in FordPass, a free smartphone app, which was launched as a resource to help drivers find parking and check transportation options for specific routes.
Fail, learn, and try again is a good look for the automotive industry. The more lessons in agility they can pick up from the tech industry, the faster that innovative new products will come to market. And if some of the ideas don’t cross the finish line, it’s just part of the race.
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