Ford Motor Company (NYSE: F) will begin testing its autonomous-vehicle technology in at least one city starting in 2018 -- but it's still planning to wait until 2021 to bring its technology to market.
That's according to Jim Farley, Ford's president of global markets. In a blog post on Medium, Farley outlined how Ford is thinking about the business possibilities opened by self-driving technologies.
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One key takeaway? The path that Ford takes to enter the self-driving future might look very different from the routes taken by its leading global rivals.
What we've known about Ford's self-driving plans
We have also known that in recent months, Ford has announced joint self-driving-related projects with Lyft and Domino's Pizza (NYSE: DPZ); they seem to be aimed at better understanding what customers might want from self-driving vehicles.
And we've known that Ford is a major global player in the world of commercial vehicles, and that it's likely to leverage its experience and customer relationships as it develops vehicles and businesses around self-driving technology.
Compared to what we've known about, say, General Motors' (NYSE: GM) autonomous-vehicle plans, that's not much. Farley's post fills in some of the blanks.
How Ford will shape its first self-driving vehicle
Farley said that Ford's self-driving vehicle is being designed around four "core aspects":
- It will be designed to stand up to high-mileage commercial service, with upgraded components intended to last for hundreds of thousands of miles, similar to the parts Ford uses in its commercial vans, Super Duty pickups, and police vehicles.
- It will be a hybrid. Ford thinks hybrids have several advantages over the pure-electric vehicles advocated by some rivals (notably GM): Hybrids don't require downtime for recharging; they can power sensors and computer systems without compromising range; and the technology is familiar (and proven) to existing fleet operators.
- It will be a unique design optimized for autonomous driving in commercial service. (In other words, it won't be a modified Ford Fusion like the company's test cars, it'll be an all-new model.)
- The self-driving-related systems will be fully integrated into the vehicle -- designed in from the start, rather than added to a human-driven model.
Farley also said that next year, Ford will "begin to test both our self-driving technology and business model in a variety of pilot programs in the first city in which we plan to operate an autonomous vehicle business."
What does all that add up to? Don't be surprised if Ford's first self-driving vehicle looks more like a small commercial van than a sedan -- one that can be fitted for passengers, for hauling packages, or for special purposes (like pizza delivery). And don't be surprised if within months we see prototypes, perhaps camouflaged, on the streets of an American city.
Will Ford's offering be competitive?
It's still not clear how the early market for self-driving vehicles will shape up. GM said recently that it's aiming to roll out a whole lot of self-driving Chevrolet Bolt EVs for ride-hailing use in dense urban environments as soon as its system is deemed ready.
Urban ride-hailing is probably a good business model for self-driving vehicles. If GM launches at scale in 2019 (its current estimate), Ford's offering may be late to that particular party. It's possible that by 2021, that market -- at least in the U.S. -- will be dominated by GM, by a partnership between Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Waymo unit and an automaker, or both.
But urban ride-hailing probably won't be only viable business model for self-driving vehicles. Ford's experiment with Domino's, using a modified self-driving Fusion to deliver pizzas in Ann Arbor, showed another possibility -- and there will be plenty of others.
There's value to GM (and Waymo) in being first (or early second) to market with self-driving vehicles. For Ford, which has strongly loyal customers who may initially be skeptical of the technology, there's probably more value in taking its time. That way it can develop an autonomous vehicle that delivers what its customers will recognize as a Ford experience, and that takes advantage of Ford's deep understanding of commercial-vehicle customers and markets.
Ford may miss out on the opportunity to dominate urban ride-hailing. But if it can deliver a high-quality commercial product by 2021, I think it'll find plenty of willing customers.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Ford. The Motley Fool has a disclosure policy.
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