As company executives explained the plans for two new business units that will be parts of Ford’s automotive operations, they also outlined the role the connected services will play in each.
An online press conference held Wednesday (March 2) followed Ford’s announcement that it has formed separate business units for electric vehicles and internal combustion engine (ICE) vehicles. The company said it aims to accelerate the development and scaling of electric, connected vehicles — and to produce 2 million such vehicles annually by 2026.
Electric vehicle-focused Ford Model e and ICE-centric Ford Blue will be run as distinct businesses while also supporting each other and Ford Pro, an existing unit that serves commercial and government customers. The plan is for all three businesses to have their own profit and loss (P&L) statements by 2023.
“We have an extraordinary opportunity to lead this thrilling new era of connected and electric vehicles, give our customers the very best of Ford, and help make a real difference for the health of the planet,” Ford Executive Chair Bill Ford said in a press release announcing the change.
Delivering Customer Experiences
Ford Model e will build electric vehicles and will develop software and connected vehicle technologies and services for all of Ford. Key words used to describe this business unit include innovation, leading edge and startup.
This electric vehicle business unit will also create new shopping, buying and ownership experiences that include eCommerce platforms, transparent pricing and personalized customer support.
Asked during the press conference about the revenue-generating opportunities from connected services, one speaker said there are benefits beyond that.
“How I think about it as a CEO is that we have enormous marketing costs in our industry,” Ford President and CEO Jim Farley said during the event. “And one of the biggest opportunities beyond quality improvements is going to be to use connectivity to deliver customer experiences, many of which won’t cost much for the customer, in a way they become so thankful with the experience after they buy the vehicle that we will have much, much higher loyalty than today, and that will dramatically reduce our marketing costs.
Understanding Faults Before They Occur
Ford Model Blue will build ICE vehicles with an eye toward profitability and will provide hardware engineering and manufacturing capabilities for all of Ford. For this business unit, think know-how, volume and iconic brands.
When it comes to connectivity for the business unit, one huge opportunity will be the post-sale business made possible by prognostics — with technology spotting potential problems, alerting the owner and allowing them to get them fixed before they get worse.
“Connectivity gives us a huge opportunity to be able to constantly monitor the vehicle and understand where a fault is about to occur and allow the customer to come in or do an over-the-air update,” Ford Blue President Kumar Galhotra said during the event. “It’s going to be good for our business and reducing warranty costs, and it’s going to be great for the customers to avoid failures because we can watch them before they even happen.”
Providing Fleet Management
Ford Pro, which was formed last year, will continue to focus on fleets and offer both electric vehicles and ICE vehicles as well as software, charging, financing and other services aimed at those who use vehicles for business.
“The early innings would suggest that the big subscription revenues and opportunity and upside are in Ford Pro with telematics, fleet management, energy management and ADAS on the retail side,” Farley said.
Executives said that while the new business units will remain headquartered in Dearborn, Michigan, there will be remote operations as well.
“To attract the very best people, particularly in areas like software, we do need a different way of working and a different environment and the flexibility to do things like remote work, and that is a key part of Model e, is to give us access to the very best talent,” said Ford Model e Chief EV and Digital Systems Officer Doug Field during the event.
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