Why Ford Is Investing in High-Tech Buses and Bike Sharing

By Markets Fool.com

Ford's new mobility subsidiary will acquire shuttle-bus start-up Chariot and create a new Ford-branded bike-sharingservice, the Blue Oval said on Friday. Image source: Ford Motor Company.

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In a surprise move, Ford Motor Company (NYSE: F) said on Friday that it will acquire Chariot, a San Francisco-based crowdsourced shuttle-bus service.

Ford also announced that it will collaborate with Motivate, a leading bike-sharing provider, to create a Ford-branded bike-sharing service that will be integrated into the Blue Oval's expanding portfolio of "mobility" offerings.

Both moves are part of CEO Mark Fields' larger vision: to transform Ford into a provider of both vehicles and mobility services.

What these deals are about

Ford said that its acquisition of Chariot "will serve as the cornerstone" for a new global shuttle-services business. Chariot currently operates about 100 shuttle buses in the San Francisco Bay Area that follow routes that are crowdsourced based on passenger demand. The idea is that the shuttles fill a gap between taxi services and traditional bus lines. Significantly, they also provide a lower-cost alternative to ride-hailing services like Uber Technologies.

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Ford has big plans for Chariot: The shuttle service will be expanded to "at least five additional markets in the next 18 months," Ford said in a statement.

Ford also has big plans for its new bike service. It will work with Motivate to expand Motivate's existing services in the Bay Area. The two will create a service called Ford GoBike that will be offered via the Blue Oval's FordPass mobility platform.

The key actor here is Ford's recently created subsidiary, Ford Smart Mobility LLC. Formed in March and placed under the leadership of former Steelcase CEO Jim Hackett, the LLC's mandate is to "design, build, grow and invest in emerging mobility services."

It's that LLC that is acquiring Chariot and partnering with Motivate. Ford also said that the LLC is creating a new City Solutions team that will work with city governments to "lead expanding mobility efforts."

What Ford executives said about these moves

"We're expanding our business to be both an auto and a mobility company, and partnering with cities on current and future transportation needs is the next major step," Fields said on Friday. He added: "For more than 100 years, Ford has been part of the community and the trusted source for automotive transportation. Now, we want to work with communities to offer even more transportation choices and solutions for people -- for decades to come."

"Cities globally are dealing with increased congestion, a growing middle class and environmental issues -- all of which can be alleviated by developing mobility solutions fine-tuned to the unique challenges of each location," said Hackett. "At the same time, by expanding our business model to include new forms of transportation -- from bikes to dynamic shuttles and more -- we are introducing new customers to Ford and creating new revenue and profit opportunities for the future."

What's really happening here

It's not hard to see how this will probably all come together. FordPass, first announced in January and available to anyone who signs up, will be the platform for these and other mobility-related services. It's Ford's way of moving to keep pace with potential "disruptors" like Uber and Lyft by creating a set of affordable, easy-to-access Ford-branded ways to get around in urban areas.

Right now, the services available via the FordPass smartphone app are pretty limited. There's an assortment of services for Ford vehicle owners, as well as a service to help find parking in some cities and a partnership with airport ride-sharing service FlightCar.

It wasn't completely clear at first what Ford had in mind here.But today's announcement brings Ford's vision for FordPass into much sharper focus. Now we know that those services will soon include options to rent a bike and to hail a shuttle bus, at least in a few places (and presumably in many more places, in time).

Will this work?

It seems like a smart set of moves. New innovations that provide mobility as a convenient and affordable service are making it easier than ever for urban dwellers to bypass car ownership entirely. That leaves companies like Ford somewhat in the lurch -- unless they move aggressively to be players in the new world of alternative personal mobility services themselves.

That's why General Motors (NYSE: GM) took a stake in Lyft earlier this year, and it's what Ford's moves on Friday are about. It's hard to say how well this will work out for Ford over time, but it certainly looks like a promising strategy right now.

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John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.