Ford: Aiming to achieve volume production of driverless vehicles in 2021 for ride-sharing
Establishing a business model of mobility services as a new source of revenue
In September 2016, Ford outlined its mid- to long-term growth plan. The automaker will aggressively expand into the areas of electrification, autonomous driving, and mobility services, and at the same time fortify its core businesses (passenger vehicles, trucks). This report will introduce the OEM's plans to enter new fields.
According to Ford, the shift "from a society of car ownership to a society where ownership and sharing coexist" is progressing rapidly. The automaker will respond to this with its vision to become "an auto and a mobility company." From now on, rather than just focusing on how many cars it sells, Ford will also give attention to what kind of mobility services it offers.
Although the market size of the traditional car market globally is USD 2.3 trillion (JPY 265 trillion when USD 1 = JPY 115), the size of markets like mobility services that Ford has not yet entered amount to USD 5.4 trillion (JPY 620 trillion) and is expected to be a significant source of revenue from now on. The automaker's policy for its mobility services is to focus on cars, while covering everything from bikes (electric assisted bicycle), to shuttles (on-demand service of minibus with a riding capacity of 10 people or less) and buses.
As for technology, Ford will fortify its electrification and autonomous driving capabilities. The company predicts that the market will be divided into approximately 3 segments consisting of internal combustion engine vehicles, HVs, and zero emission vehicles (ZEVs) in 2030 due to technological advancement and cost reductions for electrification.
Regarding autonomous driving, Ford is planning for annual production of approximately 100,000 units of fully autonomous, SAE level 4-capable (full autonomy in defined areas) driverless vehicles for ride-sharing. This is expected to have a major impact as the cost of the driver, which is the largest for ride sharing, will become zero. Ford predicts that 20% of U.S. car sales will be autonomous vehicles in 2030.
BMW's Car Sharing Service: Planning expansion to 10 cities, starting with 3 U.S. cities in 2016 (December 2016)
U.S. NHTSA: Announcement of guidance for autonomous vehicles (November 2016)
Autonomous driving test vehicle based on the Ford Fusion Hybrid (Picture: Ford)
Test vehicle conducting a test operation during snowfall (Picture: Ford)
Ford: Announces its mid- to long-term growth plan targeting electrification, autonomous driving, and mobility
Potential markets such as mobility services have grown to a scale of USD 5.4 trillion per year (Source: Ford)
In September 2016, Ford outlined its mid- to long-term growth plan. Ford will invest in new business opportunities in the areas of electrification, autonomous driving, and mobility services, while also fortifying core businesses such as pickup trucks, SUVs, and commercial vans.
According to Ford, although the size of the global market for traditional automobiles is USD 2.3 trillion (JPY 265 trillion at a rate of USD 1 = JPY 1), the potential market for mobility services and the like is projected to be USD 5.4 trillion (JPY 620 trillion). As the OEM does not have any share in these services, it plans to strengthen its capabilities in them as soon as possible to establish a significant source of revenue for the future.
Electrification and autonomous driving is expected to fortify both Ford's core businesses and its mobility services.
Electrification: Investing USD 4.5 billion by 2020 and introducing 13 new models
Ford was the led sales for PHVs in the U.S. in 2015, and ranked second for cumulative units of electrified vehicles (total HVs, PHVs and EVs) in the US.
In December 2015, the automaker announced that it will invest $4.5 billion and introduce 13 new electric vehicles by 2020. The product line of electrified vehicles is expected to reach 40% of the company's entire lineup in 2020.
Ford predicts that the price per kWh of EV batteries will fall from $120 in 2020 to $85 for the latest lithium-ion batteries in 2030, and to $75 for post-lithium-ion batteries. The company expects that when the costs of owning an EV will fall in comparison to those of an internal combustion engine vehicle as a result of technological innovation and EV mass production. At the same time, the cost of owning an internal combustion engine vehicle is expected to rise due to the tightening of regulations and increased fuel costs. As a result, the cost of owning both kinds of vehicles will become closer in the mid-term.
Ford predicts that the market will be divided into approximately 3 segments consisting of internal combustion engine vehicles, HVs, and ZEVs.
Autonomous vehicles: Introducing high-volume, SAE level 4 autonomous vehicles in 2021 for ride-sharing
Ford announced that it will introduce high-volume, SAE level 4 autonomous vehicles in 2021 for ride-sharing.
The autonomous vehicle introduced by Ford in 2021 will be developed exclusively for ride-sharing. It will have no pedals or steering wheel and be intended for "fully autonomous driving in designated areas." The vehicle will cover areas created by LiDAR with a high-resolution three-dimensional map. Ford plans to start operations in major cities in North America including urban and corridor areas in New York City and Detroit City (elongated areas centered on the highway), and expand the use of the vehicle around the world in the long-term.
Providing vehicles for Uber's autonomous driving tests
From the summer of 2016, Ford has provided autonomous vehicles based on the Ford Fusion Hybrid, which are the current test vehicles for autonomous driving tests Uber is conducting in Pittsburgh, Pennsylvania, where customers who wish to do so actually get to ride in autonomous vehicles. Although the vehicles have SAE level 4-level functionality, Uber employees ride in them as drivers (Ford calls these safety drivers) as a precaution.
The introduction of autonomous vehicles will have a significant effect on mobility services. Although the cost per mile is currently USD 2.50 for Uber's ride sharing, it is expected that autonomous driving will reduce this to about USD 1.00.
Ford has not announced which vendor (whether Uber, or Lyft, or another company) they will partner for its ride-sharing business. The company has said that running the ride-sharing business independently is one possibility.
Autonomous vehicles for individual customers to be introduced several years after those for ride sharing
The sale of autonomous vehicles to individuals is expected to begin a few years after 2021 at the earliest.
With Ford's current ride sharing plans it is possible to limit use of autonomous vehicles to areas for which high definition 3D maps have been created, and the move to driverless automobiles (unmanned taxis) will enable significant cost reductions. The advantage of this is that the costs of equipping the vehicles with autonomous driving technology will be absorbed, and Ford will expect to be able to profit from these models.
However, Ford predicts that the realization of level 5 (fully autonomous driving without any conditions) will only be realized further in the future. Introducing level 3 or level 4 autonomous vehicles for individual customers will involve the following challenges, and it is not certain that Ford will be able to achieve the scale of production needed to produce a profit.
Autonomous vehicles for individual customers to be introduced several years after those for ride sharing
|Ford predicts that individual customers will not respond favorably to price increases resulting from vehicles being equipped with autonomous driving technology for automobiles that claim to offer autonomous driving but still require a person to drive (level 3), or those that a person must drive outside designated areas (level 4). Ford thinks it will be difficult to ensure the necessary economies of scale as demand will be limited to luxury vehicles.|
|Moreover, at level 3, the driver must take control of the vehicle when prompted. This introduces the questions of whether such a system is feasible, and if Ford could be held responsible for how the vehicle behaves as the automaker. For these reasons, the OEM is not planning to develop level 3 autonomous vehicles. Regarding this point, in September 2016 the U.S. NHTSA also issued a warning in its "NHTSA Federal Automated Vehicles Policy" that the possibility of drivers being distracted and not complying with regulatory requirements must be taken into account.|
|According to Ford, "autonomous vehicles" that assume the driver taking over for the autonomous driving system will be as complicated as a fully autonomous vehicle.|
Source: Automotive News on August 16, 2016/ October 24, 2016
Strengthening autonomous driving technology development, collaborating with four new start-up companies
A Ford Fusion Hybrid autonomous driving test vehicle's 3D map (Picture: Ford)
Ford has significantly strengthened its autonomous driving technology development system. The automaker announced that it will invest in and collaborate with four start-up companies on 3D maps, LiDAR, radars, and core camera technologies. Including these four companies, Ford is collaborating with over 40 start-ups.
Ford will also expand its research facility in Palo Alto (Silicon Valley). The OEM will construct a new research building and double the current headcount of 130 employees.
Regarding autonomous driving test vehicles based on the Fusion Hybrid sedan, Ford has increased the number of active units from 10 at the beginning of 2016 to 30, which is the largest fleet of all automakers. Ford is running tests in California, Arizona, Michigan, and plans to increase the number of test vehicles to 90 units in 2017. The company has also been conducting tests on snowy roads and at night.
Ford: Collaborating with four new start-up companies
|Velodyne||Ford has invested USD 75 million in Velodyne. The company has been conducting tests with LiDAR for more than 10 years. In collaboration with Velodyne, Ford is aiming for early mass production of low cost LiDAR.|
|SAIPS||Ford acquired SAIPS, an Israeli company that has superior capabilities in computer image analysis and machine learning.|
|Nirenberg Neuroscience||Ford has an exclusive license agreement with Machine Vision Company's Nirenberg Neuroscience. The founder, Sheila Nirenberg, has unraveled the neural code that human eyes send images to the brain with. The application of this concept provides autonomous virtual driving systems with an image recognition ability close to that of human eyes.|
|Civil Maps||Ford has invested in the California-based 3D map company Civil Maps. The automaker aims to develop higher resolution 3D map in collaboration with it.|
Source: Ford press release on August 16, 2016
Note: Ford will use the technology obtained from these partnerships not only for future autonomous vehicles but also for improving ADAS technology in vehicles currently on sale.
Ford Smart Mobility LLC established to expand into mobility services
The environment around automobiles is quickly moving from the era of ownership to one where vehicles are both owned and shared. Ford will respond to this by becoming "an auto and a mobility company" that provides mobility services even as it expands sales of its vehicles. It will lead the Ford Group in the fields of connectivity, mobility, and autonomous driving, and will enter the new field centering on mobility services, which have already become a USD 5.4 trillion market.
Expanding into shuttle and bike sharing in major cities
Ford aims to build a wide ranging business model that covers modes of transport including bicycles, automobiles, shuttles, and buses.
Ford will expand into the sharing business for shuttles and bikes (electric assisted bicycles) in major global cities starting with San Francisco. The company established a City Solution team as part of Ford Smart Mobility LLC. Half of the world's population currently lives in cities, and this ratio is expected to rise to 60% by 2030. Ford aims to play a part in solving the problem of metropolitan traffic, while also acquiring new customers and expanding its future profits.
Although a shuttle usually refers to "a bus that operates in short intervals with specific destinations like at an airport or event venue," Ford will operate an on demand mini bus called Dynamic Shuttle with a capacity for 10 passengers. The automaker aims to offer a premium traveling space with more cabin room for each person than public buses to improve the boarding ratio (actual passenger capacity/riding capacity).
Bike sharing is an integral part of the diverse transportation Ford is aiming for.
The automaker plans to introduce a new bike that is being developed in the spring of 2017 and increase the number deployed in the San Francisco Bay Area from the current 700 to 7,000 by the end of 2018.
Expanding into the sharing business in major global cities
|Acquiring Chariot||Ford will expand into the shuttle business to resolve traffic congestion and provide simpler transportation to users. The business will be rolled out in San Francisco to start, and expand to at least five other major global cities within 18 months.|
|Ford Smart Mobility LLC acquired Chariot, which operates a shuttle service in San Francisco. Chariot began its business in 2014 and operates about 100 Ford Transit vehicles on-demand on 28 routes in San Francisco and the Bay Area (San Francisco, Oakland, and the areas around it).Ford is the industry leader in vans for government and local municipalities and commercial vehicles, and it will look to utilize these strengths.|
|Dynamic Shuttle||Dynamic Shuttle will use Ford Transit units with a riding capacity of 6 to 8 people. When a registered user requests a place to board and a destination with a smartphone, the shuttle calculates an optimal route from all of the passengers' destinations to improve both customer satisfaction and operating profit.|
|When a new customer communicates their current position and destination with a smartphone, the software creates a new schedule without changing the arrival time of users who are already on board and informs the customer who sent the inquiry of the pickup time and time to their destination. They can then accept or reject the proposal. If it is accepted, the information is conveyed to the shuttle driver along with an updated route suitable to the requests of all of the passengers.|
Source: Ford press release on September 9, 2016
Expanding into the bike sharing business
|Collaborating with Motivate||Ford partnered with Motivate, which operates a bike sharing business in San Francisco and the Bay Area. In the future it will provide bike sharing to city dwellers and visitors under the name "Ford GoBike." By collaborating with the Metropolitan Transportation Commission (Bay Area Traffic Authority) and cities in the Bay Area, Ford/Motivate's bike sharing service will be made available throughout the region. Ford plans to increase the number of bikes from the current 700 to 7,000 by the end of 2018.|
Developing an electric bicycle prototype
|In March, 2015, Ford unveiled two electric bicycle prototypes; "Mode: Me" and "Mode: Pro." Mode: Me is for commuting on crowded roads and can be folded and stored in the cargo space of a car. Mode: Pro is a concept for bicycle delivery.|
|Mode: Flex||In June 2015 Ford showcased a higher-class concept called the "Mode: Flex." It can be used for commuting, as a mountain bike, and for road cycling. For commuting, Ford is assuming that people will park their usual vehicles in a relatively low-priced parking lot in the suburbs, take the bike from the cargo space, and use it to go to their destinations (the "last mile" of the journey).|
|Many technologies cultivated in vehicle production have been adopted for the Mode: Flex. It alerts riders to cars approaching from behind using an ultrasonic sensor. The bicycle adopts the same LED as the F-150, Ford GT for headlights and taillights. The batteries can be charged inside the vehicle. It also connects with the passenger's smartphone via the Mode Flex application and provides information such as route selection, road congestion, public transportation connections, weather, and the health condition of the rider.|
Source: Ford press release on September 9, 2016
Ford's sales in 56 major countries in 2019 will be 6.52 million units (LMC Automotive)
（LMC Automotive, Quarter 3 2016)
According to LMC Automotive's sales forecast (3rd Quarter 2016), Ford's light vehicle sales in 56 major countries in 2016 will be 6.21 million units, up 1.4% from 2015 and nearly flat in 2017 (6.24 million units) and 2018 (6.29 million units). However, Ford's sales in 2019 will increase to 6.52 million units, up 3.6% from 2018, due to a flurry of new model releases in 2018, including all-new or fully-redesigned versions of the Ford Focus and Fusion, the Lincoln MKC and a new Midsize SUV. Ford will also bring back the Ranger and Bronco, due to debut in 2019, which will add incremental volume to the brand.
The increase of sales in the US (100k units) and China (60k units) in 2019 from 2018 will account for 70% of the total increase (226k units).
In the US, the largest market for Ford, the company is expected to see share rise over the course of LMC Automotive's forecast. Ford's market share will rise to 14.9% in 2019 from 14.8% in 2015 and will capture more from 2020 on. Growth will be aided by the expectation that the automaker will add numerous new entries to both Ford and Lincoln brands as a part of the series of model launches noted above. Ford plans to add a dedicated hybrid model in 2018, which will come as the C-Max exits. It should be more competitive with the Prius. A Small SUV will be introduced in 2019. The research company does not expect Lincoln's share to increase substantially, especially with new competitors entering the Premium segment from Alfa Romeo, Genesis, and expanding Tesla line-up.
In China, the second largest market for Ford, sales in 2019 will increase to 1,150,000 units from 973,000 units in 2015. Ford Group's sales in Chinese market are set to see ongoing growth, particularly for the Lincoln luxury brand. Indeed, Ford is currently in talks with partner Changan Automobile Group about the production of Lincoln models at the Chongqing facility. This could begin as early as 2018, provided that Lincoln continues its strong growth trajectory in China, where it got off to a rapid start last year. However, no agreement has been reached on key points such as profit-sharing, and it may take until 2020, or later, for the first Lincolns roll off the line in China.
Ford is set for a year of robust European sales in 2016, with the effects of Brexit likely to be postponed until 2017 and beyond. The UK is the biggest European car market for Ford, but the ramifications of Brexit could see the US brand lose valuable UK market volume in coming years. LMC Automotive expects market share in European market to hover just below 8% in 2016, and remains around this level until model-ageing effects start to take hold.
Ford's light vehicle sales in 56 major countries in 2019 will be 6.52 million units
|Czech Republic sub-total||11,362||14,402||17,606||18,363||20,342||20,615||20,498|
|New Zealand sub-total||12,850||14,057||13,840||13,961||14,061||13,952||13,775|
|Source: LMC Automotive "Global Automotive Sales Forecast (Quarter 3 2016)"|
|(Note) 1.||Data indicates figures of only small-size vehicle, including passenger cars and light commercial vehicles with gross vehicle weight of under 6 ton.|
|2.||All rights reserved. Reproduction of any data will require permission of LMC Automotive.|
|3.||For more information or inquiries of forecast data, please contact LMC Automotive.|
Ford, Autonomous driving, ride-sharing, mobility services
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