'Great opportunity' ahead for automakers

BY Kelly Taylor. Sep 23 04:00 am

DEARBORN, Mich. — For the past 113 years, Ford and other carmakers have had a relatively simple business model: sell stuff people want.

But what if they don’t want it, whatever that “it” may be, anymore?

For technology journalist Dan Lyons, the coming decades for carmakers could be either the apocalypse or the dawn of a new generation.

For increasing numbers of people, cars are not the stuff of dreams the way they’ve been since the days of American Graffiti.

Lyons drew a parallel between the automotive business and the handheld telephone business.

After companies such as Apple and Samsung pointed the way toward big screens, streaming video and full Internet capabilities, former stalwarts such as BlackBerry and Nokia — who dominated the handheld phone business but failed to anticipate the market’s direction — faded, practically into oblivion.

“How do you keep Ford from becoming the next BlackBerry or Nokia?” the author of Disrupted: My Misadventure in the Start-up Bubble, asked a conference at Ford world headquarters. “Ford has to disrupt its business model before somebody does it for them.”

This year, Ford has committed to blowing up its business plan — moving from a company that moves steel to a company that moves people and happens to move steel, as well.

The story is the same down the road at General Motors in Detroit, which has just launched one of its boldest hiring moves ever: 1,000 Canadian engineers hired over the next five years will help shape the future of the new GM, with a focus on providing mobility, rather than just selling cars.

In both cases, the companies are banking on the automotive business looking drastically different in the next 20 years, as an increasingly urban world population looks for options to get around other than two cars in every driveway.

For Bill Ford Jr., Ford’s executive chairman, it’s not as frightening as it seems.

“Rather than scary, I think it’s a great opportunity,” he said.

“It’s not clear where some of these opportunities are, but we have to build a business model around them.”

Most of those opportunities will likely be in some form of mobility, helping people move through cities and making their lives easier.

But Ford also sees another side of the equation.

“Take unemployment, for example. There’s a lot of research that shows structural unemployment happens because people simply can’t get to where the work is,” he said.

Mobility and connected-vehicle technology, he added, can also help with health care and service delivery in the third world.

“That part of mobility I find very interesting and I’m excited to help solve,” he added. “It’s every bit an important element to mobility as global gridlock.”

Ford is already working on one prototype service called GoDrive, in which customers in London rent car-sharing vehicles. It charges 17 pence (C29¢) per minute, for about 10 pounds (C$17) per hour of use.

Raj Nair, Ford’s executive vice-president of product development, said the coming changes — as more people seek alternatives to car ownership, from car-sharing services such as GoDrive and Car2Go to ride-hailing services such as Lyft or Uber to ride-sharing and multimodal forms of transit — means Ford has to find ways to provide those services.

That means providing the vehicles and the infrastructure. Ford recently acquired crowd-sourcing ride-sharing service Chariot and is experimenting with what it calls dynamic shuttle.

Dynamic shuttle is one of Ford’s ideas: this puts a fleet of vehicles such as Ford Transit passenger vans on the road.

You, as the customer, log in through an app on your smartphone, pick your starting and end points and specify the latest you can arrive.

The system would then find a van near your location and quote you a price, say $15.

At this point, you know that if you end up being the only person on the van from start to finish, it’s going to cost you $15.

However, if in the interim the system gets more ride requests, that would result in detours but still get you there on time.

You would get company on the ride, but also a reduced fare as the other passengers would kick in their share for the ride.

Such a service operates on the Ford properties in Dearborn, Mich., now, where staff use an app to request a ride.

It’s not commercialized, but the commercial model is expected to be similar to Uber, where purchases are paid online.

The hardest part might be setting aside the conservatism that comes with the old business model, where small moves — changing from V-8s to turbo V-6s or from steel to aluminum for truck bodies — meant taking huge gambles.

All in an environment that “doesn’t tolerate failure very well,” he said.

“You can’t apply that level of thinking,” he said.

“Dynamic shuttles, e-bikes, innovative technology — it’s smaller scale but could be important. And, a bad bet is not going to bring the business down.”

kelly.taylor@freepress.mb.ca