Ford’s Software and Services Push Helps Pave Road to Connected Car Economy

The rubber meets the road, meets the operating system, meets the online subscription.

Ford announced Monday (Aug. 14) that it has hired Peter Stern — formerly of Apple’s services operations spanning everything from TV to fitness — to lead the auto giant’s customer experience efforts.

Specifically, per the announcement, Stern will helm Ford’s Integrated Services unit that in turn will develop offerings for Ford Blue, Model e (the company’s electric model) and Ford Pro. Ford Pro is the global business unit that aims to deliver software, charging and other solutions to commercial clients/fleets.

Stern’s most immediate tasks, as stated in the announcement, include building out Ford’s BlueCruise hands-free driving system and to “oversee physical services, services marketing and Ford Next.” Ford Next is tasked with, among other things, developing mobility and D2C subscriptions.

An Installed Base

Ford said Monday that it has than 550,000 paid software and services subscribers, with Ford Pro commercial customers today accounting for more than 80% of them.

There are indications, of course, that the connectivity being forged include payments, especially when it comes to actually paying for vehicles. As announced last year, Stripe Connect will enable Ford to facilitate and route a customer’s payments to dealerships. Transactions and subscriptions weave partnerships, which in turn extend the ecosystem beyond just the direct relationship between Ford and drivers.

“We’re powering the financing part of the strategy,” James Dyett, head of global product sales and payments performance at Stripe, told Karen Webster at the time, but the payments part of the equation has been slated through the five-year partnership to move toward paying for other activities such as charging the electric vehicles.

The car-as-wallet concept has been gaining traction over the last several months, as Ford/Stripe is hardly a one-off within the auto industry.

Amid other examples: Mercedes-Benz has embraced using Visa technology to enable native in-car payments. And, elsewhere, JPMorgan bought 75% of its Volkswagen Payments S.A.

Consumers are becoming increasingly used to the idea of an app-driven daily interaction as part of the time that is spent on the road. In one recent ConnectedEconomy report, we found that use of parking apps, for example, was up 30% year on year in the early months of 2023.

For Ford, the groundwork increasingly is being laid to move beyond simply building and selling cars — and toward an immersive experience where the cars are a means toward conducting other activities. As detailed last year, CEO Jim Farley said a Wall Street conference that “his is the biggest, most exciting kind of land grab of revenue in our industry since the Model T.” And the revenue model, itself, will shift, as high-value, high margin subscriptions take root — such as advanced driver assistance systems (ADAS) and self-driving features.

“We’re about to change the ride just like Apple and all the smartphone companies changed the call,” Farley said. Interestingly, the company, with Stern now coming from Apple to, as Farley said, “change the ride” now will look to bring Apple’s own transition away from hardware to services more fully to bear in Michigan.