Ford and the Importance of Unlearning
As Ford moves to work with cities, they will have to understand all the costs of mobility to both consumers and the municipalities to succeed and lead in the transformed mobility network.
#Toyota #Ford #BMW
For about a decade, I’ve been in communication with Jim Farley, Ford’s president for New Businesses, Technology, & Strategy. We are about the same age. And while I’ve spent my 30 year career pushing the world (the best I can) towards a new mobility paradigm, Jim has spent his three decades working for Toyota and Ford, exclusively within the current automotive ownership paradigm, which was established around the time our grandparents were born.
He and I were introduced in 2009, and since then we’ve had an occasional email correspondence: I would send him emails from time to time with random thoughts, and he would often react.
While my mission has been to reduce the number of automobiles in the world, Jim’s apparent mission has been to put as many cars and trucks onto the surface of the planet as possible. But now his mission has changed, and given his new vital role, I would be surprised if he is not Ford’s CEO in two years or less. He has a massive challenge ahead of him. He has to fundamentally transform Ford, at a time when Uber generates under 10% of Ford’s revenue but has a value nearly twice that of Ford.
I’m sure Jim is busy learning all he can about the coming mobility revolution, and charting a course for Ford to lead. But I feel it will be just as important for Jim to “unlearn” some of what he knows, which may be as important as what he learns. Let me explain.
Last summer, I sent Jim a YouTube link to Nissan’s 2009 “narrow” car concept called the Land Glider. It seemed to me that a major auto company like Ford could create mobility solutions that the leading transportation network companies could not. These solutions would not require consumers to give up driving, nor require them to make such a major leap to shared mobility.
Jim’s response to my email was; “Have seen many of these at Ford, they all lose between $5-10k each even with the car share revenue. Great products for the autoshow, but in the real world, our industry is littered with these because they never made money. Twizy, BMW City C1, etc.”
In the existing structure that we’re familiar with, he’s absolutely right. Small cars are a challenge when it comes to profitability. But consider that there are vehicles like the Renault Twizy, a quadricycle, on sale in China for $3,500. And annual sales are on the order of two-million vehicles.
And think about the implications of the narrow car. It allows cities to split lanes, and put two cars in the space of one. Transportation engineers know that reducing just 5% of the space cars take on a crowded freeway can increase traffic speeds by 50%. Getting freeways around LA moving again would offer tremendous value but may be hard to directly monetize at the moment.
But another area to consider is parking. In crowded NYC, an average parking space costs $700 per month, or $8,400 per year. Splitting those spaces in half for narrow cars would save the consumer $4,200 per year. The point is, if you think of other implications there can be a change in the value proposition.
Another related aspect to parking is the public transit agencies need to build multi-level parking for their park-and-ride customers to encourage transit use. The average cost for these facilities is $40,000 per car parking space. That means a 500-car facility costs $20-million. If 50% of those vehicles parking there were narrow cars, $5-million could be saved. While devoting half of the facility for Twizy parking, $7.5-million could be saved.
As Ford moves to work with cities, they will have to understand all the costs of mobility to both consumers and the municipalities to succeed and lead in the transformed mobility network. Farley’s challenge, like those of other veterans of the auto industry, is not only to learn new things, but to unlearn some things that have long been considered “the way things are done.”
Unlearning is perhaps harder than learning. But I think that odds are good Farley can do it.
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