The concepts of car ownership and driving are changing. Plenty of surveys and research indicate that teenagers are delaying that moment when they score their driving licenses, a remarkable shift from prior generations where passing the driver’s test at age 16 was the norm. More consumers are forgoing car ownership, choosing instead to rely on ridesharing services such as Uber and Lyft or opting for short-term rental services like Zipcar. And while multiple reasons explain why silver, black and white are the predominant car paint colors, one factor is that the millennials who choose to purchase cars would rather spend money on a technology package than on snazzy jewel colors.
The automakers are getting a clue. Ford Motor Co. announced last week that it formed a new subsidiary, Ford Smart Mobility LLC, to develop and invest in new mobility services for automobiles. According to Ford, this structure transforms its business model to become both an automobile and a mobility company. The new subsidiary will have new offices in Dearborn, Michigan, and in Palo Alto, California.
Ford insists that its mobility-focused subsidiary will function as a typical Silicon Valley startup company. Adopting buzzwords common in the Bay Area, the company’s announcement talks about the mobility “solutions” this new venture is expected to generate, as well as how it will “collaborate” with other startups and technology firms.
Ford Smart Mobility’s kickoff comes one year after the company announced its long-term mobility plan at the annual Consumer Electronics Show in Las Vegas. The program has five pillars. The first is connectivity: Ford will keep improving SYNC, its entertainment and communications system. On the mobility front, the company has run what it calls “global mobility experiments” to test new products and technologies, including a predictive parking system and a London car-sharing program with guaranteed parking in congested areas. Ford is also ramping up research and investment in autonomous cars, while insisting that it has the largest fleet of test vehicles in the industry — and late last year it inked a partnership with Google. Cooperation with IBM is one example of how it is trying to incorporate more data and analytics in its transportation technologies. Finally, echoing the marketing messages of Apple and Nike, Ford is burnishing its credentials as a lifestyle company by proclaiming that it is working on improving its consumer experience.
Other automakers are cognizant of the evolving relationship between consumers and cars and the fact that more people view the automobile as not necessarily something to own, but as a service. Earlier this year, GM announced it would invest $500 million in Lyft to expand the ridesharing service’s number of vehicles and develop a partnership on autonomous vehicles. BMW’s 5-year-old plug-in electric vehicle brand, BMW i, has its own startup culture that has created a bevy of smartphone apps and electric vehicle charging locator services.
Henry Ford would be gobsmacked by how the industry he kickstarted has evolved. In 1928, a presidential campaign slogan boasted “a chicken in every pot and two cars in every garage.” Fast-forward almost a century later, and many Americans do not necessarily consider a house with a garage their version of the American dream (and yes, going vegetarian is mainstream). This reality gives the automakers no choice: Urbanization, unstable fuel prices, the love for technology and consumers’ burgeoning desires to be free of things and rely on services have forced these companies to rethink how they will stay relevant in the 21st century. Ford’s mobility plunge is just one tiny step toward the vastly different future of transportation.
Image credit: Ford