As most automakers work to develop new products and upgrade existing products, Ford is busy engineering ways to land drones in pickup beds and how to better medical supplies to remote African countries. This radical departure from the status quo is risky at best, yet if Ford can figure out a way to bring additional sources of income, it could redefine what an automaker can accomplish.
A few weeks ago, Ford flew in dozens of journalists for an annual gathering showcasing what they have been working on. While most of these events showcase sales results or even sneak peeks of next-generation cars, Ford took a different route. Instead, they spoke about how they are studying medical supply delivery in remote locales, developing a car share program to meet the needs of city dwellers like those in London, working on a better bus service to get people where they are going and how they are expanding their green car technology including investing $4.5 billion into research and development as well as adding 13 new EV vehicles globally.
While that news certainly wasn’t what many of my colleagues expected, Ford announced more news this week furthering a non-traditional path at the 2016 Consumer Electronics Show. One announcement was a partnership with Amazon in order to use their Echo voice-recognition system. This system, paired with Ford’s SYNC connectivity system, allows owners to use Alexa app in order to start up their cars, determine range and even open the garage door from the road.
Also, Ford announced it is working on engineering ways to land a drone in the back of a pickup. The idea is for search and rescue personnel to better utilize drones in the field to locate missing people.
All of these announcements seem at odds with a company who is known for its full-size trucks, Explorer SUV and the sporty Mustang. Yet, Ford envisions itself as an innovative company challenging the status quo and executives see a rebirth of what makes an automotive company like Apple did when it reinvented itself away from a computer company.
Ford Has Been Innovating For a While
In fact, Ford has been leading the way to a new automotive future right under our noses. For example, did you know Ford has more than 650 electrified vehicle patents and approximately 1,000 pending patent applications? Probably not. How about Ford spending $8 Billion to help fund a battery lab at the University of Michigan? Again, probably not.
If the electric car talk has the gasoline combustion enthusiast in you cringing, consider this: For the 2015 model year, the F-150 was sold with an EcoBoost engine 64 percent of the time. This continues a shift away from the larger 5.0L V8 which just a year ago was making up 45 percent of all F-150s sold. Also consider for the 2015 model year, Ford equipped nearly half of the EcoBoost trucks with its smaller 2.7L V6 engine. That’s right. Consumers are opting for a continually smaller engine with more innovation than a big V8.
While the use of aluminum in the F-150, the use of smaller turbocharged engines (like the 2.7L V6 engine), the loss of a rear-axle in the Mustang, the shift towards EV vehicles and the increase in spending on ride sharing, bus and other non-traditional programs may make the average Ford assembly line employee shake their head, it is hard to knock their success so far. As it stands Ford closed 2015 with a 5 percent increase, its best since pre-recession 2006, the F-series vehicle lineup outsold its nearest competitor by 179,810 units (more than some competitors produce in a year) and the new Explorer had its best performance in December 2015 (18,892 units) since 2005.
What’s the Risk Then?
You may be wondering what’s the big deal. So what Ford is looking into healthcare delivery and they are building more electric vehicles. Who cares? A whole host of people are watching carefully.
First, let’s understand the risk. Currently, Ford is spending millions on these “pet” projects. While some will deliver new technologies (like the backup trailer assist on the new F-150), others will simply sputter out. This is OK since times are good. However, when times aren’t so good, these pet projects are going to be seen as a egregious waste of money. This could be especially the case if say competitors take this opportunity to improve their vehicles in key ways that set Ford back.
What happens then? Well, if I am on Ford’s Board of Directors, I immediately call for the resignations of all the key company executives. Next, I borrow against credit and/or raid any places for additional capital (say the less-profitable EV vehicle development) and spend all the money on profit generators like the F-150. I also spend money convincing the buying public, Ford is a car manufacture.
If things fall apart, this may well just set the company back for years until it can develop the latest automotive powertrain and technology to rise to the top.
Now, there are those who will say Ford will not forget their core business. This is true a part of Ford is going to keep their feet anchored in the present while another part will look to the future, CEO Mark Fields has said as much. However, this doesn’t always work out. Humans are well humans and we naturally focus more time and attention on things that interest us. If too many Ford executives get caught looking into the future, this could backfire quickly on Ford.
While the risk is certainly there, it almost goes without saying things are good at Ford right now, really good. It remains to be seen if these new innovations can keep propelling the company forward. For now, some of the ideas may seem different, but it is clear they are working.